Course Introduction
Financial Accounting
Test Preparation
Financial Accounting is an introductory course that explores the fundamental principles and practices of accounting used to prepare, analyze, and interpret financial statements. Students will learn how organizations measure and report their financial performance in accordance with generally accepted accounting principles (GAAP). The course covers essential topics such as the accounting cycle, revenue recognition, asset and liability valuation, and the preparation of balance sheets, income statements, and cash flow statements. Emphasis is placed on understanding the role of financial information in decision-making by internal and external stakeholders, including managers, investors, and regulators.
Recommended Textbook
Intermediate Accounting 6th Edition Volume 1 by Thomas H. Beechy
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10 Chapters
1408 Verified Questions
1408 Flashcards
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Page 2
Chapter 1: The Framework for Financial Reporting
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79 Verified Questions
79 Flashcards
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Sample Questions
Q1) Cash flow prediction is a common internal user reporting objective.
A)True
B)False Answer: False
Q2) FASB and International Accounting Standards are secondary sources of GAAP.
A)True
B)False Answer: True
Q3) The International Accounting Standards Board is responsible for the creation of International Financial Reporting Standards used by companies whose securities are traded on international markets.
A)True
B)False Answer: True
Q4) In North America,the principal stakeholder to whom general-purpose financial statements are geared is the shareholder.
A)True
B)False Answer: True
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Chapter 2: Accounting Judgements
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129 Verified Questions
129 Flashcards
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Sample Questions
Q1) A large international corporation immediately expenses the $50 cost of a small item of office equipment.This is an example of:
A)reliability.
B)conservatism.
C)materiality.
D)an accounting error.
E)None of these answers are correct.
Answer: C
Q2) Under IFRS,a change in accounting policy must result in information that is more reliable and relevant.
A)True
B)False
Answer: True
Q3) The continuity assumption holds that a business will carry on indefinitely.
A)True
B)False
Answer: False
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Chapter 3: Statements of Income and Comprehensive Income
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130 Verified Questions
130 Flashcards
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Sample Questions
Q1) An income statement showing depreciation expense a line item is showing its expenses by nature.
A)True
B)False
Answer: False
Q2) The date on which a gain or loss from the disposal of a segment of a business is measured is the:
A)date that operations cease (if disposal is by abandonment).
B)last day of the fiscal year in which the decision to dispose is made plan.
C)date that the assets are sold.
D)date that the entity makes a formal commitment to disposal.
Answer: D
Q3) A company had 70,000 shares of common stock outstanding throughout the year.Income before taxes and extraordinary items was $166,000.The tax rate was 40 percent.EPS for net income is:
A)$1.20
B)$1.42
C)$2.00
D)$2.37
Answer: B
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Chapter 4: Statements of Financial Position and Changes in Equity; Disclosure Notes
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131 Verified Questions
131 Flashcards
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Sample Questions
Q1) Which of the following would NOT appear under the Equity section of a Balance Sheet prepared under ASPE?
A)Share Capital.
B)Retained Earnings.
C)Accumulated Other Comprehensive Income.
D)Contributed Capital.
Q2) Monetary assets should be disclosed at their fair value on the Balance Sheet.
A)True
B)False
Q3) Contingent gains are never disclosed in the notes to the financial statements,no matter how likely.
A)True
B)False
Q4) A restriction on Retained Earnings is usually the result of a contractual or legal obligation and is intended to limit the amount of dividends paid.
A)True
B)False
Q5) Define liability without using the word "liability".
Q6) Define current assets without using the word "asset."
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Chapter 5: The Statement of Cash Flows
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177 Verified Questions
177 Flashcards
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Sample Questions
Q1) The Statement of Cash Flows does not report the effects of:
A)Common shares purchased for cancellation.
B)Cash dividends paid.
C)Common shares issued for cash to pay for assets or to pay debt.
D)Common shares issued as the result of a stock dividend.
Q2) A Statement of Cash Flows would not report the effects of:
A)Cash dividends paid.
B)A purchase and immediate retirement of common stock.
C)Stock dividends declared and issued.
D)Common shares issued for cash.
Q3) In the preparation of a Statement of Cash Flows:
A)The statement must include most noncash exchanges.
B)The statement must be prepared using the working capital definition of funds.
C)Stock dividends and stock splits must be reported on the statement.
D)The statement must be cumulative over the last two reporting periods.
E)None of these answers are correct.
Q4) Sale of an asset for less than its book value results in an inflow of cash.
A)True
B)False
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Chapter 7: Financial Assets: Cash and Receivables
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119 Verified Questions
119 Flashcards
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Sample Questions
Q1) Which of the following procedures is not consistent with good control of cash receipts?
A)Assignment of cash custody and reconciliation to the same individual
B)Separate responsibilities for cash-handling and cash-recording functions
C)Assignment of responsibilities to ensure a continuous and uninterrupted flow of cash from initial receipt to deposit in an authorized bank account
D)Continuous and close supervision of all cash-handling and cash-recording functions
Q2) The allowance method of recognizing bad debt expense (as opposed to the direct write-off method) can be applied in more than one way.What two conditions must be met before the allowance method can be used?
A)Bad debts must be expected and material.
B)Bad debts must be relevant and reliable.
C)Bad debts must be consistent over time and the method used to estimate them must be consistently applied.
D)Bad debts must be probable and estimable.
Q3) Simple interest is always computed based on the principal amount.
A)True
B)False
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Chapter 8: Cost-Based Inventories and Cost of Sales
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169 Verified Questions
169 Flashcards
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Sample Questions
Q1) The gross margin method is frequently used for all of the following except to:
A)Estimate replacement cost of ending inventory lost or damaged.
B)Test the reasonableness of an inventory valuation made by some other means.
C)Estimate ending inventory for interim financial reports.
D)Estimate the required inventory quantity needed for the next period.
Q2) When the retail inventory method is used,markdowns are commonly ignored in the computation of the cost to retail ratio because:
A)mark-ups are also ignored.
B)this tends to result in the showing of a normal profit margin in a period when no markdown goods have been sold.
C)there may be no markdowns in a given year.
D)this tends to give a better approximation of the lower-of-cost or market.
Q3) During 2014,XYZ Furniture Villa sold an inventory item for $200 that cost $130.At date of sale,$60 was collected and the balance was to be paid in seven equal instalments.After making two payments,the customer defaulted (in the year following the sale).The item was repossessed in damaged condition; estimates at that date were: Cost to repair,$22; resale costs,$12,and resale value after repair,$80.Give the entry to record the repossession,assuming a perpetual inventory system is used.
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9
Goodwill
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191 Verified Questions
191 Flashcards
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Sample Questions
Q1) Web content development costs may be expensed or capitalized.
A)True
B)False
Q2) Only identifiable intangible assets meet the criteria for capitalization.
A)True
B)False
Q3) When a basket purchase of several ling-lived assets is made,the purchase price will normally be assigned using the relative fair values of those assets.
A)True
B)False
Q4) Under IFRS,Property,Plant and Equipment should be broken down to its major components and depreciated accordingly.
A)True
B)False
Q5) Donated land and buildings would normally be credited to a contributed capital account at their fair market values.
A)True
B)False
10
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Chapter 10: Depreciation,Amortization,and Impairment
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165 Flashcards
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Sample Questions
Q1) On January 1,2001,FR purchased a machine that cost $50,000 (estimated 10-year life and residual value $6,000).FR's president is considering several amortization methods that could be used for this machine.For analytical purposes,you have been asked to complete the following schedule (round all amounts to the nearest dollar).FR's year-end is December 31 and only accounts for amortization at year-end. \(\begin{array}{llc} &&\text { Balance in }\\ &&\text { Accumulated }\\ & \text { Amortization } & \text { Amort, at Dec. 31, } \\ \text { Amortization Method } & \text { Expense for } 2002 & 2002 \end{array}\) (a) Straight-line.\(\quad\)\(\$\_\_\_\)\(\quad\)\(\$\_\_\_\) (b) SYD\(\quad\)\(\$\_\_\_\)\(\quad\)\(\$\_\_\_\) (c) DDB\(\quad\)\(\$\_\_\_\)\(\quad\)\(\$\_\_\_\) (d) Productive Output (UNITS: total estimated,20,000; actual \(2001,4,000 ; 2002,2,000 ) \ldots \ldots\)\(\quad\)\(\$\_\_\_\)\(\quad\)\(\$\_\_\_\)
Q2) The half-year convention is applied to CCA calculations. A)True B)False
Q3) With the exception of Goodwill,all impairment losses are reversible under ASPE. A)True B)False
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Chapter 11: Financial Instruments: Investments in Debt and Equity Securities
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118 Verified Questions
118 Flashcards
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Sample Questions
Q1) On 1-1-2014 Sea Inc.purchased 40% of Gull Corporation for $30,000.At that time,Gull's owners' equity was $4,000,and Gull had the following assets with market values exceeding book value by the following amounts: Land $20,000 Buildings 30,000 (10 years life remaining) Patent 10,000 (5 years life remaining) Gull earned $10,000 in 2014 and paid $20,000 dividends.We amortize all intangibles over 5 years.What is the 2014 ending balance in the Investment in Gull account?
A)$23,330
B)$23,120
C)$23,000
D)$33,400
Q2) Impairment losses on all investments are reversible under ASPE.
A)True
B)False
Q3) Only FVTPL and amortized cost investments are considered passive investments.
A)True
B)False
Q4) List 3 factors that exhibit evidence of the existence of significant influence.
Page 12
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