Fundamentals of Accounting Test Preparation
Course Introduction
Fundamentals of Accounting introduces students to the basic principles and concepts underlying financial accounting and reporting. The course covers the accounting cycle, including transaction analysis, journal entries, ledgers, trial balances, and the preparation of financial statements such as the income statement, balance sheet, and cash flow statement. Emphasis is placed on understanding the role of accounting in business decision-making, the importance of ethical practices, and the interpretation of financial information for internal and external users. By the end of the course, students will have a solid foundation in accounting concepts and be able to apply them to real-world business scenarios.
Recommended Textbook
Fundamental Financial Accounting Concepts 10th Edition by Thomas P Edmonds
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13 Chapters
1246 Verified Questions
1246 Flashcards
Source URL: https://quizplus.com/study-set/3735 Page 2
Chapter 1: An Introduction to Accounting
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94 Verified Questions
94 Flashcards
Source URL: https://quizplus.com/quiz/74483
Sample Questions
Q1) What was the balance of Packard's Retained Earnings account before closing in Year 1?
A)$400
B)$0
C)$350
D)$450
Answer: B
Q2) What is Yowell's ending notes payable balance?
A)$0
B)$25,000
C)($15,000)
D)$10,000
Answer: D
Q3) The value created by a business is created by its assets.
A)True
B)False
Answer: False
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Chapter 2: Accounting for Accruals and Deferrals
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92 Verified Questions
92 Flashcards
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Sample Questions
Q1) What is the term used to describe the policies and procedures that are designed to reduce the opportunities for fraud?
A)Internal controls
B)Asset source transactions
C)Accounting standards
D)Financial systems
Answer: A
Q2) What is the balance of the retained earnings that will be reported on the balance sheet as of December 31,Year 1?
A)$1,200
B)$1,000
C)$1,400
D)$13,200
Answer: A
Q3) Providing services to customers on account is an asset exchange transaction.
A)True
B)False
Answer: False
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Chapter 3: The Double-Entry Accounting System
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106 Verified Questions
106 Flashcards
Source URL: https://quizplus.com/quiz/74481
Sample Questions
Q1) Which of the following accounts is increased with a debit?
A)Insurance Expense
B)Service Revenue
C)Accounts Payable
D)Common Stock
Answer: A
Q2) A $200 credit to Interest Payable was instead recorded in error as a $200 credit to Cash in an adjusting entry,which has been posted to the ledger accounts.Which of the following is the result of this error?
A)The trial balance is out of balance by $200.
B)Total assets are understated by $200.
C)Net income is overstated by $200.
D)Total liabilities are overstated by $200.
Answer: B
Q3) To record the purchase of supplies on account,an accountant would credit Supplies.
A)True
B)False
Answer: False
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Chapter 4: Accounting for Merchandising Businesses
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114 Verified Questions
114 Flashcards
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Sample Questions
Q1) The entry to record the amount of inventory shrinkage affects both the balance sheet and the income statement.
A)True
B)False
Q2) What happens when merchandise is delivered FOB shipping point?
A)The buyer pays the freight cost.
B)The seller pays the freight cost.
C)The buyer records transportation cost as an expense.
D)The seller records transportation-out expense.
Q3) Which accounts would affect gross margin?
A)Account numbers 2 and 9
B)Account numbers 3 and 9
C)Account numbers 3,4,7,and 9
D)Account numbers 3,7,8,and 9
Q4) Which of the following statements about period costs is true?
A)Most period costs are expensed in the period the costs are incurred.
B)Period costs are expensed when the products associated with these costs are sold.
C)Period costs are usually recorded as assets.
D)Period costs do not adhere to the matching principle.
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Chapter 5: Accounting for Inventories
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86 Verified Questions
86 Flashcards
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Sample Questions
Q1) If a company is using the lower-of-cost-or-market rule and a write-down is required,how will that write-down affect the elements of the company's financial statements?
A)Net income will increase.
B)Gross margin will decrease.
C)Total assets will decrease.
D)Gross margin and total assets will both decrease.
Q2) When using the gross margin method to estimate inventory,which of the following is a step in the computation?
A)Add the amount goods available for sale to estimated cost of goods sold
B)Add estimated gross margin to sales
C)Subtract estimated goods available for sale from beginning inventory
D)Subtract estimated cost of goods sold from the amount of goods available for sale
Q3) What is Glasgow's cost of goods sold under FIFO?
A)$1,650
B)$1,860
C)$2,310
D)$2,100
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Chapter 6: Internal Control and Accounting for Cash
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82 Verified Questions
82 Flashcards
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Sample Questions
Q1) What is an outstanding check?
A)A check that has been issued by the company but has not been presented to the bank for payment.
B)A check that is guaranteed for payment by the bank.
C)A check that has been presented to the bank for payment but has not been reported on the bank statement.
D)A check that was written for an amount that is greater than the balance in the account holder's bank account.
Q2) Which of the following is not a primary role of an independent auditor?
A)Assume legal and professional responsibilities to the public.
B)Advise client on tax strategies.
C)Determine whether a company's financial statements are materially correct.
D)All of these answer choices are correct.
Q3) Which of the following is not one of the nine features of an internal control system?
A)Establishment of clear lines of authority
B)Having employees covered by a fidelity bond
C)Requiring regular vacations for certain employees
D)Customer service comment cards
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Chapter 7: Accounting for Receivables
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83 Verified Questions
83 Flashcards
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Sample Questions
Q1) When is it acceptable to use the direct write-off method?
A)If the dollar amount of uncollectible accounts is not material.
B)If most uncollectible accounts do not occur in the period of sale.
C)If most sales are made to other businesses.
D)All of these answer choices are correct.
Q2) Which of the following is not a significant difference between the allowance method and the direct write-off method?
A)One method requires writing off of uncollectible accounts and the other does not.
B)One method conforms to GAAP and the other typically does not.
C)One method reports net realizable value on the balance sheet and the other does not.
D)One method requires the estimation of uncollectible accounts and the other does not.
Q3) How is the accounts receivable turnover ratio computed?
A)Sales ÷ Net accounts receivable
B)Net accounts receivable ÷ Sales
C)Cost of goods sold ÷ Inventory
D)365 days ÷ Net accounts receivable
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9
Chapter 8: Accounting for Long-Term Operational Assets
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) On January 1,Year 1,Friedman Company purchased a truck that cost $48,000.The truck had an expected useful life of 100,000 miles over 8 years and an $8,000 salvage value.During Year 2,Friedman drove the truck 18,500 miles.Friedman uses the units-of-production method.What is depreciation expense in Year 2?
A)$8,880
B)$7,400
C)$6,000
D)$5,000
Q2) Which of the following intangible assets does not convey a specific legal right or privilege?
A)Copyrights
B)Franchises
C)Goodwill
D)Trademarks
Q3) When using the modified accelerated cost recovery system (MACRS)the highest amount of depreciation expense will be recognized in the year the asset is acquired.
A)True
B)False
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Chapter 9: Accounting for Current Liabilities and Payroll
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86 Verified Questions
86 Flashcards
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Sample Questions
Q1) When calculating interest expense on a 6-month note,multiply the principal by the interest rate,and then multiply by (6 ÷ 12).
A)True
B)False
Q2) During Year 1,Bradley Corporation issued a $20,000 face value discount note to Fidelity Bank.The note had a 6% discount rate and a one-year term to maturity.On December 31,Year 1,Bradley failed to make the adjusting entry to accrue the related interest.Which of the following summarizes the effect of this error?
A)Net income for Year 1 is overstated and liabilities for Year 1 are overstated
B)Net income for Year 1 is understated and net income for Year 2 is overstated
C)Net income for Year 1 is understated and liabilities for Year 1 are overstated
D)Net income for Year 2 is understated and liabilities for Year 1 are understated
Q3) Vacation pay is considered a contingent liability.
A)True
B)False
Q4) Employers must withhold unemployment taxes from employee salaries.
A)True
B)False
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Page 11
Chapter 10: Accounting for Long-Term Debt
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105 Verified Questions
105 Flashcards
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Sample Questions
Q1) Jacobs Company issued bonds with a $300,000 face value on January 1,Year 1.The bonds were issued at 102 and carried a 5-year term to maturity.They had a 9% stated rate of interest that was payable in cash on December 31st of each year.Jacobs uses the straight-line method to amortize bond discounts and premiums.Based on this information alone,how does the recognition of interest expense during Year 1 affect the company's accounting equation?
A)Decrease equity by $25,800,decrease liabilities by $1,200,and decrease assets by $27,000
B)Decrease both assets and stockholders' equity by $2,700
C)Decrease both assets and stockholders' equity by $25,800
D)Increase liabilities by $1,200,decrease assets by $25,800,and decrease equity by $27,000
Q2) If a bond discount is amortized using the effective interest method,the total amount of interest recognized over the life of the bond is the same as if the straight-line method is used.
A)True
B)False
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Page 12
Chapter 11: Proprietorships,partnerships,and Corporations
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92 Verified Questions
92 Flashcards
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Sample Questions
Q1) Which of the following entities would report income tax expense on its income statement?
A)Sole proprietorship.
B)Corporation.
C)Partnership.
D)All of these answer choices are correct.
Q2) For Year 2,the Sacramento Corporation had beginning and ending Retained Earnings balances of $208,054 and $231,012,respectively.Also during Year 2,the board of directors declared cash dividends of $29,000,which were paid during Year 2.The board also declared a stock dividend,which was issued and required a transfer in the amount of $16,000 to paid-in capital.Total expenses during Year 2 were $32,916.Based on this information,what was the amount of total revenue for Year 2?
A)$68,158
B)$143,154
C)$100,874
D)$179,132
Q3) A separate capital account is maintained for each partner in a partnership.
A)True
B)False
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Page 13
Chapter 12: Statement of Cash Flows
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88 Verified Questions
88 Flashcards
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Sample Questions
Q1) Which of the following would not be reported in the body of the statement of cash flows?
A)The payment of a cash dividend
B)The issuance of preferred stock for cash
C)The purchase and retirement of treasury stock
D)A 2-for-1 stock split
Q2) The amount of increase in accounts receivable is added to credit sales to calculate the amount of cash inflow from customers when using the direct method to prepare the operating activities section of the statement of cash flows.
A)True
B)False
Q3) The FASB requires that companies report cash flow per share in their audited financial statements.
A)True
B)False
Q4) The three main sections of the statement of cash flows are,in order,operating activities,investing activities,and financing activities.
A)True
B)False
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Chapter 13: Financial Statement Analysis
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108 Verified Questions
108 Flashcards
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Sample Questions
Q1) Which of the following statements is true?
A)Investors need to understand that the value of a company's earnings per share is affected by its choices of accounting principles and assumptions.
B)Earnings per share is calculated for a company's preferred stock.
C)The most widely quoted measure of a company's earnings performance is return on equity.
D)The book value per share measures the market value of a corporation's stock.
Q2) Dennis Company reported net income of $50,000 on sales of $300,000.The company has average total assets of $500,000 and average total liabilities of $100,000.What is the company's return on equity ratio?
A)10.0%
B)16.7%
C)12.5%
D)50.0%
Q3) Profitability ratios attempt to assess the company's ability to generate earnings.
A)True
B)False
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