Financial Accounting Practice Exam
Course Introduction
Financial Accounting introduces students to the fundamental principles and concepts of accounting as they relate to the preparation and interpretation of financial statements. The course covers topics such as the accounting cycle, measurement and reporting of assets, liabilities, and equity, revenue and expense recognition, and the use of financial information in decision-making. Emphasis is placed on understanding Generally Accepted Accounting Principles (GAAP) and the relevance of financial information for external users, including investors, creditors, and regulatory agencies. Through practical exercises and real-world examples, students gain the skills needed to analyze and communicate financial data in a business context.
Recommended Textbook
Financial and Managerial Accounting 11th Edition by Carl S. Warren
Available Study Resources on Quizplus
15 Chapters
2679 Verified Questions
2679 Flashcards
Source URL: https://quizplus.com/study-set/3939
Page 2
Chapter 1: Introduction to Accounting and Business
Available Study Resources on Quizplus for this Chatper
194 Verified Questions
194 Flashcards
Source URL: https://quizplus.com/quiz/78548
Sample Questions
Q1) On April 25, Gregg Repair Service extended an offer of $115,000 for land that had been priced for sale at $140,000. On May 3, Gregg Repair Service accepted the seller's counteroffer of $127,000. On June 20, the land was assessed at a value of $88,000 for property tax purposes. On August 4, Gregg Repair Service was offered $150,000 for the land by a national retail chain. At what value should the land be recorded in Gregg Repair Service's records?
A) $115,000
B) $88,000
C) $140,000
D) $127,000
Answer: D
Q2) How does the purchase of equipment by signing a note affect the accounting equation?
A) assets increase; assets decrease
B) assets increase; liabilities decrease
C) assets increase; liabilities increase
D) assets increase; stockholders' equity increases
Answer: C
Q3) What are the three sections of the statement of cash flows?
Answer: Operating Activities, Investing Activities, and Financing Activities
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Analyzing Transactions
Available Study Resources on Quizplus for this Chatper
222 Verified Questions
222 Flashcards
Source URL: https://quizplus.com/quiz/78541
Sample Questions
Q1) Revenue accounts are increased by credits.
A)True
B)False
Answer: True
Q2) Retained earnings will be reduced by the amount in the dividends account.
A)True
B)False
Answer: True
Q3) (a) On October 10th, Nikle Company purchased supplies worth $2,750 on account. Prepare the journal entry to record this transaction.
(b) Nikle Company paid for the supplies purchased in (a) on October 25th. Prepare the journal entry to record this transaction.
Answer: 11ea9299_7dcd_4f35_85c7_2314535ed26b_TB6235_00
Q4) Which of the following is true about a T account?
A) The left-hand side of the T account is called the debit side.
B) The left-hand side of the T account is called the credit side.
C) The right-hand side of the T account is called the debit side.
D) None of these are true.
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: The Adjusting Process
Available Study Resources on Quizplus for this Chatper
179 Verified Questions
179 Flashcards
Source URL: https://quizplus.com/quiz/78540
Sample Questions
Q1) The supplies account has a balance of $1,200 at the beginning of the year and was debited during the year for $2,300, representing the total of supplies purchased during the year. If $650 of supplies are on hand at the end of the year, the supplies expense to be reported on the income statement for the year is
A) $650
B) $1,750
C) $4,150
D) $2,850
Answer: D
Q2) Revenues and expenses should be recorded in the same period to which they relate. A)True
B)False
Answer: True
Q3) On January 1st, Power House Co. prepays the year's rent, $10,140 to its landlord. Prepare the journal entry by recording the prepayment to an asset account.
Answer: 11ea9299_7dc2_eeac_85c7_d79ddf78ad9b_TB6235_00
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Completing the Accounting Cycle
Available Study Resources on Quizplus for this Chatper
196 Verified Questions
196 Flashcards
Source URL: https://quizplus.com/quiz/78539
Sample Questions
Q1) After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns show debits of $36,678 and the credits of $41,101. This indicates that
A) neither net income or loss can be calculated because it is found on the income statement
B) the company has a net loss of $4,423 for the period
C) the company has a net income of $4,423 for the period
D) The amounts are out of balance and need to be corrected
Q2) A post-closing trial balance should be prepared before the financial statements are prepared.
A)True
B)False
Q3) Examples of temporary accounts are supplies and prepaid expenses which are in the ledger for just a short time before they expire.
A)True
B)False
Q4) All income statement accounts will be closed at the end of the period.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Accounting for Merchandising Businesses
Available Study Resources on Quizplus for this Chatper
221 Verified Questions
221 Flashcards
Source URL: https://quizplus.com/quiz/78538
Sample Questions
Q1) Freight-in is considered a cost of purchasing inventory.
A)True
B)False
Q2) A sale of $750 on account, subject to a sales tax of 6%, would be recorded as an account receivable of $750.
A)True
B)False
Q3) The primary difference between a periodic and perpetual inventory system is that a A) periodic system determines the inventory on hand only at the end of the accounting period
B) periodic system keeps a record showing the inventory on hand at all times C) periodic system provides an easy means to determine inventory shrinkage D) periodic system records the cost of the sale on the date the sale is made
Q4) Abbey Co. sold merchandise to Gomez Co. on account, $35,000, terms 2/15, net 45. The cost of the merchandise sold is $24,500. Abbey Co. issued a credit memo for $3,600 for merchandise returned that originally cost $1,700. Gomez Co. paid the invoice within the discount period. What is the amount of gross profit earned by Abbey Co. on the above transactions?
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: Inventories
Available Study Resources on Quizplus for this Chatper
167 Verified Questions
167 Flashcards
Source URL: https://quizplus.com/quiz/78537
Sample Questions
Q1) The average cost method will always yield results between FIFO and LIFO.
A)True
B)False
Q2) During a period of falling prices, which of the following inventory methods generally results in the lowest balance sheet amount for inventory.
A) average method
B) LIFO method
C) FIFO method
D) can not tell without more information
Q3) Safeguarding inventory and proper reporting of the inventory in the books are the reasons for controlling the inventory.
A)True
B)False
Q4) The lower-of-cost-or-market method of determining the value of ending inventory can be applied on an item by item, by major classification of inventory, or by the total inventory.
A)True
B)False
Q5) List three different security measures taken by stores to safeguard inventory.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Sarbanes-Oxley, Internal Control, and Cash
Available Study Resources on Quizplus for this Chatper
174 Verified Questions
174 Flashcards
Source URL: https://quizplus.com/quiz/78536
Sample Questions
Q1) The sum of the money on hand and petty cash receipts in a petty cash fund will always be equal to the balance in the Petty Cash account.
A)True
B)False
Q2) For each of the following, explain whether the issue would require you to prepare a journal entry for your company, assuming any original entry is correct. If an entry is required, please include it as part of your answer.
(1) The bank recorded your deposit as $75 rather than the actual amount of $175.
(2) Two outstanding checks amounted to $280.
(3) Company check number 538 for postage was recorded incorrectly by the company bookkeeper as $79 instead of $97.
(4) The bank paid a check for $500 after the company had issued a stop payment and voided the check.
(5) An EFT deposit was made by one of the company's customers, Atlas Design, for merchandise received. The sale had previously been recorded when shipped and was equal to the payment amount of $85.
Q3) Describe the features of a voucher system and list typical supporting documents for a voucher.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Receivables
Available Study Resources on Quizplus for this Chatper
147 Verified Questions
147 Flashcards
Source URL: https://quizplus.com/quiz/78535
Sample Questions
Q1) Trade receivables occur when two companies trade or exchange notes receivables.
A)True
B)False
Q2) Notes or accounts receivables that result from sales transactions are often called
A) non-trade receivables.
B) trade receivables.
C) merchandise receivables.
D) sales receivables.
Q3) If the allowance method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer's account as uncollectible?
A) Uncollectible Accounts Expense
B) Accounts Receivable
C) Allowance for Doubtful Accounts
D) Interest Expense
Q4) Receivables that are expected to be collected in cash in eighteen months or less are reported in the Current Asset section of the balance sheet.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
10
Chapter 9: Fixed Assets and Intangible Assets
Available Study Resources on Quizplus for this Chatper
175 Verified Questions
175 Flashcards
Source URL: https://quizplus.com/quiz/78534
Sample Questions
Q1) Equipment acquired on January 2, 2011 at a cost of $273,500 has an estimated useful life of eight years and an estimated residual value of $35,500.
Required:
(1)What was the amual amount of depreciation for the years 2011,2012 , and 2013 , assuming the straight-line method of depreciation is used?
(2)What was the book value of the equipment on January 1,2014 ?
(3)Assuming that the equipment was sold on J anuary 2,2014 , for \( \$ 170,500 \), joumalize the entry to rec ord the sale.
(4)Assuming that the equipment had been sold on J amary 2,2014 , for \( \$ 189,000 \) inste ad of \( \$ 168,500 \), journalize the entry to record the sale.
Q2) Capital expenditures are costs that are charged to Stockholders' Equity accounts. A)True B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Current Liabilities and Payroll
Available Study Resources on Quizplus for this Chatper
172 Verified Questions
172 Flashcards
Source URL: https://quizplus.com/quiz/78547
Sample Questions
Q1) The total net pay for a period is determined from the payroll register.
A)True
B)False
Q2) FICA tax becomes a liability to the federal government at the time an employee's payroll is prepared.
A)True
B)False
Q3) An employee receives an hourly rate of $15, with time and a half for all hours worked in excess of 40 during the week. Payroll data for the current week are as follows: hours worked, 48; federal income tax withheld, $120; cumulative earnings for the year prior to this week, $24,500; Social security tax rate, 6% on maximum of $100,000; and Medicare tax rate, 1.5% on all earnings; state unemployment compensation tax, 3.4% on the first $7,000; federal unemployment compensation tax, .8% on the first $7,000. What is the net amount to be paid the employee?
A) $568.74
B) $601.50
C) $660.00
D) $574.90
Q4) List five internal controls that relate directly to payroll.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Corporations: Organization, Stock Transactions,
and Dividends
Available Study Resources on Quizplus for this Chatper
168 Verified Questions
168 Flashcards
Source URL: https://quizplus.com/quiz/78546
Sample Questions
Q1) Organizational expenses are classified as intangible assets on the balance sheet.
A)True
B)False
Q2) The ability of a corporation to obtain capital is
A) less than a partnership.
B) about the same as a partnership.
C) restricted because of the limited life of the corporation.
D) enhanced because of limited liability and ease of share transferability.
Q3) If common stock is issued for an amount greater than par value, the excess should be credited to
A) Retained Earnings.
B) Cash.
C) Legal Capital.
D) Paid-in Capital in Excess of Par Value.
Q4) The declaration of a stock dividend decreases a corporation's stockholders' equity and increases its liabilities.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Long-Term Liabilities: Bonds and Notes
Available Study Resources on Quizplus for this Chatper
181 Verified Questions
181 Flashcards
Source URL: https://quizplus.com/quiz/78545
Sample Questions
Q1) Bonds with a face amount $1,000,000, are sold at 98. The entry to record the issuance is
A) Cash 1,000,000 Premium on Bonds Payable 20,000
Bonds Payable 980,000
B) Cash 980,000 Premium on Bonds Payable 20,000
Bonds Payable 1,000,000
C) Cash 980,000 Discount on Bonds Payable 20,000
Bonds Payable 1,000,000
D) Cash 980,000 Bonds Payable 980,000
Q2) A bond indenture is
A) a contract between the corporation issuing the bonds and the underwriters selling the bonds
B) the amount due at the maturity date of the bonds
C) a contract between the corporation issuing the bonds and the bond trustee, who is acting on behalf of the bondholders.
D) the amount for which the corporation can buy back the bonds prior to the maturity date
Q3) A bond is simply a form of an interest bearing note.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Investments and Fair Value Accounting
Available Study Resources on Quizplus for this Chatper
137 Verified Questions
137 Flashcards
Source URL: https://quizplus.com/quiz/78544
Sample Questions
Q1) On May 1, 2012, Chase Inc. purchases $60,000 of 10-year, Manus Corporation 8% bonds dated March 1, 2012 at 100 plus accrued interest. What entry would Chase record when receiving its semiannual interest on March 1, 2013?
Q2) Most companies invest excess cash in bonds as investments in order to profit long-term from the growth of the investment. A)True B)False
Q3) On April 1, 2012, ValueTime, Inc. had a market price per common share of $32. For the previous year ValueTime paid a dividend of $1.20 per share. Compute the dividend yield for ValueTime, Inc.
Q4) On January 1, 2012, Valuation Allowance for Available-for-Sale Investments had a zero balance. On December 31, 2012, the cost of the available-for-sale securities was $48,700, and the fair value was $39,200. Prepare the adjusting entry to record the unrealized gain or loss for available-for-sale investments on December 31, 2012.
Q5) Define (1) debt securities and (2) equity securities. Include their similarities and differences in your discussion.
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: Statement of Cash Flows
Available Study Resources on Quizplus for this Chatper
162 Verified Questions
162 Flashcards
Source URL: https://quizplus.com/quiz/78543
Sample Questions
Q1) Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?
A) a decrease in inventory
B) a decrease in accounts payable
C) preferred dividends declared and paid
D) a decrease in accounts receivable
Q2) The cost of merchandise sold during the year was $50,000. Merchandise inventories were $12,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable were $6,000 and $5,000 at the beginning and end of the year, respectively.
Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total
A) $49,000
B) $47,000
C) $51,000
D) $53,000
Q3) In preparing the statement of cash flows, the correct order of reporting cash activities is Financing, Operating, Investing.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Financial Statement Analysis
Available Study Resources on Quizplus for this Chatper
184 Verified Questions
184 Flashcards
Source URL: https://quizplus.com/quiz/78542
Sample Questions
Q1) Which of the following should be classified as an extraordinary item on the income statement?
A) Gain on a sale of a long term investment.
B) Loss due to discontinued operations.
C) Restructuring charges.
D) Loss resulting from an infrequent natural disaster.
Q2) When computing the rate earned on total common stockholders' equity, preferred stock dividends are subtracted from net income.
A)True
B)False
Q3) Unusual items affecting the prior period's income statement consist of errors and change in accounting principles.
A)True
B)False
Q4) When a corporation discontinues a segment of its operations at a loss, the loss should be reported as a separate item after income from continuing operations on the income statement.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 17