Financial Reporting Exam Preparation
Guide
Course Introduction
Financial Reporting is a foundational course that introduces students to the principles, practices, and standards involved in preparing and presenting financial statements for external users. Emphasizing Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS), the course covers the measurement, recognition, and disclosure of assets, liabilities, equity, revenues, and expenses. Students will learn how to analyze and interpret balance sheets, income statements, and cash flow statements, gaining the skills necessary to assess the financial health and performance of organizations. The course also explores contemporary issues in financial reporting, including ethical considerations and the impact of evolving regulatory requirements.
Recommended Textbook
Financial Accounting 11th Edition by W. Steve Albrecht
Available Study Resources on Quizplus
24 Chapters
2549 Verified Questions
2549 Flashcards
Source URL: https://quizplus.com/study-set/2648 Page 2
Chapter 1: Accounting Information: Users and Uses
Available Study Resources on Quizplus for this Chatper
47 Verified Questions
47 Flashcards
Source URL: https://quizplus.com/quiz/52833
Sample Questions
Q1) Internal reports are generally used by
A) Management
B) Suppliers
C) Lenders
D) Employees
Answer: A
Q2) Accountants are MOST concerned with
A) Foreign companies operating in the US
B) U.S. companies with domestic customers
C) U.S. companies with foreign customers
D) All of these are correct
Answer: D
Q3) Which of the following is NOT an important aspect of management accounting?
A) Planning
B) Product design
C) Implementing plans
D) Controlling costs
Answer: B
Q4) List the four steps in the decision making process.
Answer: 11ea6d11_706f_d4ca_b460_8bf3a579d007_TB1384_00
Page 3
To view all questions and flashcards with answers, click on the resource link above.
Chapter 2: Financial Statements: An Overview
Available Study Resources on Quizplus for this Chatper
117 Verified Questions
117 Flashcards
Source URL: https://quizplus.com/quiz/52822
Sample Questions
Q1) Retained earnings are
A) The earnings of a company that have been distributed to the owners.
B) The earnings of a company that have been retained in the company.
C) The amount of cash that a company has.
D) The amount of cash required for company investments.
Answer: B
Q2) The idea that certain figures on an operating statement help to explain changes in figures on comparative balance sheets is referred to as
A) Liquidity
B) Double entry
C) Articulation
D) Classification Answer: C
Q3) Which of the following usually is NOT considered to be an owners' equity account?
A) Capital stock
B) Retained earnings
C) Inventory
D) All these are owners' equity accounts
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: The Accounting Cycle: The Mechanics of Accounting
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/52816
Sample Questions
Q1) The accounting record where all accounts are posted and summarized is the A) General Ledger
B) General Journal
C) Balance sheet
D) Posting reference
Answer: A
Q2) Revenue accounts are
A) Increased with debit entries
B) Assets
C) Increased with credit entries
D) Subtracted from capital stock
Answer: C
Q3) Assuming no other changes except a decrease in assets of $20,000, increase in liabilities of $10,000, and expenses of $60,000, by how much did owners' equity increase or decrease and what were revenues for the period?
A) Owners' equity increased $30,000; revenues were $90,000
B) Owners' equity decreased $30,000; revenues were $30,000
C) Owners' equity increased $10,000; revenues were $70,000
D) Owners' equity decreased $10,000; revenues were $70,000
Answer: B
Page 5
To view all questions and flashcards with answers, click on the resource link above.
Chapter 4: Completing the Accounting Cycle
Available Study Resources on Quizplus for this Chatper
112 Verified Questions
112 Flashcards
Source URL: https://quizplus.com/quiz/52815
Sample Questions
Q1) For which of the following types of adjusting entries is there no original entry?
A) Prepaid expenses
B) Unearned revenues
C) Unrecorded liabilities
D) None of these are correct
Q2) The entry to close the revenue accounts normally includes a
A) Debit to each revenue account
B) Credit to each revenue account
C) Debit to each expense account
D) Credit to each expense account
Q3) The entry to close the expense accounts normally includes a
A) Debit to each revenue account
B) Credit to each revenue account
C) Debit to each expense account
D) Credit to each expense account
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Internal Controls: Ensuring the Integrity of Financial Information
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/52814
Sample Questions
Q1) Discuss the three types of problems that can occur in financial statements.
Q2) Control activities can be defined as
A) The lines of authority and responsibility within a company.
B) The actions, policies, and procedures that reflect the overall attitudes of top management about control.
C) The members of a company's board of directors who are responsible for dealing with the external and internal auditors.
D) The policies and procedures used by management to meet their objectives.
Q3) External audits are performed by
A) Certified Internal Auditors
B) Certified Public Accountants
C) Certified Financial Analysts
D) Certified Management Accountants
Q4) Restoring public confidence in the financial reporting process requires that management ensure financial statement users of the steps taken to provide quality financial information. How does the Sarbanes-Oxley Act constrain management to achieve that public confidence?
Q5) List the five major concerns that companies must keep in mind when designing their internal control system.
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Receivables: Selling a Product or a Service
Available Study Resources on Quizplus for this Chatper
114 Verified Questions
114 Flashcards
Source URL: https://quizplus.com/quiz/52813
Sample Questions
Q1) When a U.S. company enters into a credit sales transaction denominated in a foreign currency, the transaction must be recorded in U.S. dollars. The exchange is measured at the exchange rate on the
A) Date of collection
B) Date of conversion
C) Date of sale
D) Date of record
Q2) In preparing a bank reconciliation, interest paid by the bank on the account is
A) Added to the bank balance
B) Subtracted from the bank balance
C) Added to the book balance
D) Subtracted from the book balance
Q3) Which type of the major activities of a business are best described as those events that raise money by means other than operations?
A) Financing activities
B) Operating activities
C) Investing activities
D) Earning activities
To view all questions and flashcards with answers, click on the resource link above.
8
Chapter 7: Inventory and the Cost of Sales
Available Study Resources on Quizplus for this Chatper
148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/52812
Sample Questions
Q1) If a firm's beginning inventory is $70,000, goods purchased during the period cost $260,000, and the cost of goods sold is $300,000, what is the ending inventory?
A) $30,000
B) $50,000
C) $40,000
D) $90,000
Q2) The net sales figure of XYZ Company in 2012 was $300,000. If the cost of goods available for sale was $280,000 and gross margin was 35 percent of net sales, ending inventory must have been
A) $70,000
B) $85,000
C) $195,000
D) $105,000
Q3) If a company sold merchandise for a profit, the accounting equation would show a(n)
A) Net increase in assets and increase in revenues
B) Net increase in assets and decrease in liabilities
C) Net decrease in assets and increase in revenues
D) Increase in liabilities and increase in revenues
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Completing the Operating Cycle
Available Study Resources on Quizplus for this Chatper
93 Verified Questions
93 Flashcards
Source URL: https://quizplus.com/quiz/181652
Sample Questions
Q1) Which of the following is the required treatment of research and development costs under FASB?
A) Research and development costs are expensed as incurred
B) Research and development costs are capitalized
C) Research costs are expensed and development costs are capitalized
D) Research costs are capitalized and development costs are expensed
Q2) Which of the following items would NOT be classified in the "Other Revenues and Expenses" section of the income statement?
A) Dividends on investments
B) Gain on sale of buildings
C) Interest expense
D) Property tax expense
Q3) Income taxes shown on the income statement are based on
A) Net income
B) Gross margin
C) Income before taxes
D) Sales
Q4) Accounting rules give specific instructions on whether to expense or capitalize research and development costs and advertising costs. List the rules associated with these two costs.
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Investments: Property, Plant, and Equipment and Intangible Assets
Available Study Resources on Quizplus for this Chatper
130 Verified Questions
130 Flashcards
Source URL: https://quizplus.com/quiz/210406
Sample Questions
Q1) When the cost of equipment is divided by its estimated useful life, the result is referred to as
A) Book value
B) Accumulated depreciation
C) Carrying value
D) Depreciation expense
Q2) On January 1, 2012, Eugene Inc. entered into a capital lease to acquire the use of a computer for 5 years. The present value of the lease payments is $85,000, the applicable interest rate is 10 percent, and payments of $24,000 are due at the end of each year. The entry to record the first $24,000 payment on December 31, 2012, will include a debit to
A) Lease Expense, $24,000
B) Interest Expense, $24,000
C) Leased Computer, $85,000
D) Lease Liability, $15,500
Q3) Which of the following is considered to be an intangible asset?
A) A gold mine
B) A copyright
C) Land improvement
D) Building
Page 11
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Financing: Long-Term Liabilities
Available Study Resources on Quizplus for this Chatper
113 Verified Questions
113 Flashcards
Source URL: https://quizplus.com/quiz/210407
Sample Questions
Q1) Which of the following is LEAST likely to be classified as a long-term liability?
A) Salaries payable
B) Mortgage payable
C) Lease obligations
D) Deferred income taxes payable
Q2) When a company issues bonds that promise only to pay the face amount at the maturity date, the bonds issued are called
A) Junk bonds
B) Debenture bonds
C) Term bonds
D) Zero coupon bonds
Q3) Assuming an annual interest rate of 8 percent, what factor from the tables would be used to calculate the amount that should be deposited in a bank today to grow to a specified amount nine years from today?
A) 0.5002
B) 0.5019
C) 1.9926
D) 1.9990
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Financing: Equity
Available Study Resources on Quizplus for this Chatper
86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/52831
Sample Questions
Q1) Which of the following is NOT true regarding "legal capital"?
A) It is intended as a means to protect a company's creditors.
B) It represents an amount that cannot be returned to the owners so long as the corporation exists.
C) The dollar amount of legal capital is established by federal statutes.
D) It is intended to prevent corporations from paying excessive dividends.
Q2) On April 30, 2012, Loufti Company declared a dividend of $40,000. Loufti Company decided that the dividend would be paid on June 15, 2012, to all shareholders of record on May 25, 2012. The journal entry to record the payment of the dividend on June 15 would include a
A) Credit to Dividends of $40,000
B) Debit to Dividends of $40,000
C) Debit to Cash of $40,000
D) Debit to Dividends Payable of $40,000
Q3) Which form of financing requires repayment, regardless of whether the company receiving the funds does well?
A) A loan
B) An investment
C) Both a loan and an investment
D) Neither a loan nor an investment
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Investments: Debt and Equity Securities
Available Study Resources on Quizplus for this Chatper
89 Verified Questions
89 Flashcards
Source URL: https://quizplus.com/quiz/52830
Sample Questions
Q1) When an investor uses the equity method to account for investments in common stock, cash dividends received by the investor from the investee should be recorded as
A) An increase in the investment account
B) A deduction from the investment account
C) Dividend revenue
D) A deduction from the investor's share of the investee's profits
Q2) The journal entry to record the amortization of a premium resulting from an investment in bonds would cause
A) An increase in Investment in Bonds
B) An increase in Bond Interest Revenue
C) A decrease in Bond Interest Revenue
D) No change in Investment in Bonds
Q3) Johnson Company owns 90% of the outstanding stock of Smith Company. The equity of the remaining 10% of Smith Company stock is called the
A) Parent
B) Minority interest
C) Majority interest
D) Subsidiary
To view all questions and flashcards with answers, click on the resource link above.
14
Chapter 13: Statement of Cash Flows
Available Study Resources on Quizplus for this Chatper
97 Verified Questions
97 Flashcards
Source URL: https://quizplus.com/quiz/52829
Sample Questions
Q1) Significant noncash financing transactions
A) Are included parenthetically on a statement of cash flows
B) Should not be disclosed at all since they are irrelevant to actual performance
C) Should not be disclosed in the body of a statement of cash flows but should appear elsewhere
D) Are deducted from net income to determine cash provided by operating activities on a statement of cash flows
Q2) Refer to Exhibit 13-4. Given the information above, cash collected from customers is
A) $98,000
B) $100,000
C) $102,000
D) $122,000
Q3) Refer to Exhibit 13-5. Given the information above, net cash inflow (outflow) from financing activities is
A) $80,000
B) $68,000
C) ($12,000)
D) ($52,000)
To view all questions and flashcards with answers, click on the resource link above.
15
Chapter 14: Analyzing Financial Statements
Available Study Resources on Quizplus for this Chatper
91 Verified Questions
91 Flashcards
Source URL: https://quizplus.com/quiz/52828
Sample Questions
Q1) Which of the following ratios is calculated using only income statement numbers?
A) Debt ratio
B) Return on sales
C) Return on equity
D) Current ratio
Q2) A useful tool in financial statement analysis is the common-size financial statement. What does this tool enable the financial analyst to do?
A) Evaluate financial statements of companies within a given industry of approximately the same value.
B) Determine which companies in the same industry are at approximately the same stage of development.
C) Ascertain the relative potential of companies of similar size in different industries.
D) Compare the mix of revenue, and expenses, and determine efficient use of resources within a company over time or between companies within a given industry without respect to relative size.
Q3) List five efficiency ratios and write out the equation for each one.
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Management Accounting and Cost Concepts
Available Study Resources on Quizplus for this Chatper
102 Verified Questions
102 Flashcards
Source URL: https://quizplus.com/quiz/210409
Sample Questions
Q1) Segment A had sales revenue of $900,000 and the following costs: direct materials, $252,000; direct labor, $36,000; variable manufacturing overhead, $72,000; and fixed manufacturing overhead, $315,000. If segment A is dropped, 25% of the fixed manufacturing overhead costs would be avoided. Calculate the segment profit.
A) $225,000
B) $303,750
C) $461,250
D) $540,000
Q2) Costs that are specifically traceable to a unit of business are known as which of the following costs to that unit?
A) Indirect
B) Direct
C) Opportunity
D) Differential
Q3) Costs that do NOT change as the result of a future decision are known as:
A) Out-of-pocket costs
B) Variable costs
C) Sunk costs
D) Differential costs
To view all questions and flashcards with answers, click on the resource link above.
Page 17
Chapter 16: Cost Flows and Business Organizations
Available Study Resources on Quizplus for this Chatper
136 Verified Questions
136 Flashcards
Source URL: https://quizplus.com/quiz/210408
Sample Questions
Q1) A company that produces expensive customized machines would probably use which of the following methods of product costing?
A) Job order costing
B) Process costing
C) Marginal costing
D) Some combination of job order costing and process costing
Q2) When materials are requisitioned from raw materials inventory, the journal entry includes:
A) A debit to Work-in-Process Inventory or Manufacturing Overhead
B) A debit to Work-in-Process Inventory only
C) A debit to Raw Materials Inventory
D) A debit to Manufacturing Overhead only
Q3) Work-in-Process Inventory is debited when:
A) Direct materials are issued to production
B) Direct laborers have earned wages for production output
C) Manufacturing overhead is applied
D) All of these occur
To view all questions and flashcards with answers, click on the resource link above.
18
Chapter 17: Activity-Based Costing
Available Study Resources on Quizplus for this Chatper
63 Verified Questions
63 Flashcards
Source URL: https://quizplus.com/quiz/181653
Sample Questions
Q1) Refer to Exhibit 17-5. What is Dakota Company's gross margin for Product 2 using activity based costing?
A) $300,000
B) $350,000
C) $480,000
D) $30,000
Q2) A more accurate allocation of manufacturing overhead and product costing can take place when costs are assigned on the basis of:
A) Direct labor hours
B) Machine setups
C) Cost drivers
D) Production volume
Q3) Refer to Exhibit 17-4. The total manufacturing cost per tent is:
A) $128
B) $140
C) $255
D) $268
Q4) Define activity-based costing and list the five steps in implementing and using an activity-based costing system.
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Budgeting and Control
Available Study Resources on Quizplus for this Chatper
128 Verified Questions
128 Flashcards
Source URL: https://quizplus.com/quiz/181654
Sample Questions
Q1) Theodore's Musical Toys makes xylophones. Each xylophone takes 3 labor hours to make at a rate of $10.00 per hour. What is the budgeted production of xylophones if the budgeted direct labor cost for July is $16,200?
A) 540
B) 1,200
C) 1,620
D) 5,400
Q2) Pro-forma financial statements typically include all of the following EXCEPT:
A) Statement of cash flows
B) Income statement
C) Cash budget
D) Balance sheet
Q3) Which of the following is NOT an uncontrollable external factor affecting sales?
A) The state of technology
B) Customer needs
C) Government policies
D) Product promotion
Q4) Describe the differences between authoritative budgeting and participative budgeting. Include advantages of each type of budgeting.
To view all questions and flashcards with answers, click on the resource link above. Page 20
Chapter 19: Controlling Cost and Profit
Available Study Resources on Quizplus for this Chatper
137 Verified Questions
137 Flashcards
Source URL: https://quizplus.com/quiz/181655
Sample Questions
Q1) The difference between the standard price and the actual price multiplied by the actual quantity of materials is the:
A) Materials quantity variance
B) Overhead efficiency variance
C) Overhead spending variance
D) Materials price variance
Q2) When other factors remain constant, an increase in average total assets:
A) Increases the return on investment
B) Decreases the return on investment
C) Does not change the return on investment
D) Does not always have the same effect on total assets
Q3) The difference between the amount of money actually incurred for variable manufacturing overhead and the amount that should have been incurred for the actual activity level achieved, measured in terms of direct labor hours, is:
A) The variable manufacturing overhead efficiency variance
B) The variable manufacturing overhead spending variance
C) The total variable manufacturing overhead variance
D) None of these are correct
To view all questions and flashcards with answers, click on the resource link above.
21
Chapter 20: Inventory Management and Variable and
Absorption Costing
Available Study Resources on Quizplus for this Chatper
88 Verified Questions
88 Flashcards
Source URL: https://quizplus.com/quiz/181656
Sample Questions
Q1) What is the main difference between an absorption costing system and a variable costing system?
A) The handling of variable production costs
B) The handling of fixed production costs
C) The handling of variable selling and administrative costs
D) The handling of fixed selling and administrative costs
Q2) Which of the following is an opportunity cost associated with financial holding costs?
A) Too much inventory
B) Too little inventory
C) Both too much inventory and too little inventory
D) Neither too much inventory nor too little inventory
Q3) Lead time is the:
A) Number of days that it takes to place an order
B) Number of days between placing an order and receiving the order
C) Number of days between running out of inventory and receiving new inventory
D) Number of days an order is in transit
To view all questions and flashcards with answers, click on the resource link above.
22
Chapter 21: Cost Behavior and Decisions Using C-V-P Analysis
Available Study Resources on Quizplus for this Chatper
152 Verified Questions
152 Flashcards
Source URL: https://quizplus.com/quiz/52820
Sample Questions
Q1) One method that a multi-product firm can employ to promote a high-contribution margin product is:
A) Increase advertising for the product
B) Pay lower sales commissions for the product
C) Base sales commissions on total sales
D) None of these are correct
Q2) Mosely Company's per-unit cost is the same at all levels of activity. The company's cost structure must have all:
A) Fixed costs
B) Variable costs
C) Mixed costs
D) Stepped costs
Q3) Everclean Company cleans draperies. It charges $75 to clean a full-size drape, and its variable and fixed costs are $45 per drape and $8,000 per year, respectively. Given this data, approximately how many drapes must the company clean to break even?
A) 134
B) 267
C) 300
D) 320
23
To view all questions and flashcards with answers, click on the resource link above.
Chapter 22: Relevant Information and Decisions
Available Study Resources on Quizplus for this Chatper
97 Verified Questions
97 Flashcards
Source URL: https://quizplus.com/quiz/210405
Sample Questions
Q1) Assuming a firm has excess capacity, which of the following is NOT a reason that the firm would decide to reduce the normal price of a product or service in order to obtain a special order?
A) The demand for the firm's products has dropped sharply in the last three months
B) The firm is being offered a contract from a foreign distributor based in a country where normal selling prices are lower
C) Market demand is strong and the firm is able to produce more products and still sell them at normal price
D) The firm is able to sell its excess product to be retailed under a generic brand name, the product will sell at lower than normal price
Q2) Which type of data might cause a manager to erroneously reject an order?
A) Total cost
B) Effect on sales
C) Future costs that would change
D) Differential costs
To view all questions and flashcards with answers, click on the resource link above.
Chapter 23: Capital Investment Decisions
Available Study Resources on Quizplus for this Chatper
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/181658
Sample Questions
Q1) The formula, Investment Cost divided by Annual Net Cash Inflows, is used to determine an interval of time in which method?
A) Net present value method
B) Payback method
C) Internal rate of return method
D) Unadjusted rate of return method
Q2) Which of the following does NOT consider the time value of money?
A) Internal rate of return method
B) Unadjusted rate of return method
C) Net present value method
D) None of these consider the time value of money
Q3) Which of the following is LEAST preferable for measuring profitability of an investment?
A) Internal rate of return method
B) Payback method
C) Net present value method
D) Unadjusted rate of return method
Q4) List and describe the three aspects of capital investment decisions that are critical to long-run profitability.
To view all questions and flashcards with answers, click on the resource link above. Page 25
Chapter 24: New Measures of Performance
Available Study Resources on Quizplus for this Chatper
82 Verified Questions
82 Flashcards
Source URL: https://quizplus.com/quiz/181659
Sample Questions
Q1) Which of the following requires that quality be manufactured rather than inspected into products?
A) ABC
B) JIT
C) Restructured environment
D) TMP
Q2) Which of the following is NOT one of the components of residual income?
A) Operating profit
B) Average total assets
C) Weighted average cost of capital
D) Minimum required rate of return
Q3) A signaling device that pulls parts forward through the production system is known as a(n):
A) Kanban
B) Safety stock
C) Leading measure
D) Outcome measure
Q4) List and describe the three major differences between residual income and economic value added.
To view all questions and flashcards with answers, click on the resource link above. Page 26