Intermediate Accounting
Exam Materials
Course Introduction
Intermediate Accounting is designed to deepen students' understanding of accounting principles and financial reporting. Building upon introductory accounting concepts, this course focuses on the preparation, analysis, and interpretation of financial statements in accordance with generally accepted accounting principles (GAAP). Key topics include revenue recognition, asset and liability measurement, equity transactions, and the application of accounting standards to complex business transactions. Through problem-solving and case studies, students develop the skills necessary to address the challenges faced by accountants in a dynamic business environment and to prepare for advanced coursework in accounting.
Recommended Textbook
Corporate Financial Accounting 13th Edition by Carl Warren
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15 Chapters
2586 Verified Questions
2586 Flashcards
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Page 2
Chapter 1: Introduction to Accounting and Business
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Sample Questions
Q1) 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
Q2) The Sarbanes-Oxley Act established standards for corporate responsibility and disclosure.
A)True
B)False
Answer: True
Q3) An example of a general-purpose financial statement would be a report about projected price increases related to transportation costs.
A)True
B)False
Answer: False
Q4) What are the three sections of the statement of cash flows?
Answer: Operating Activities,Investing Activities,and Financing Activities
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Chapter 2: Analyzing Transactions
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210 Flashcards
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Sample Questions
Q1) The process of initially recording a business transaction is called
A)closing
B)posting
C)journalizing
D)balancing
Answer: C
Q2) Which of the following is true regarding normal balances of accounts?
A)All accounts have a normal debit balance.
B)The normal balance of all accounts will have either a positive or negative balance.
C)Accounts that have a normal debit balance will only have debit entries,never credit entries.
D)The normal balance is on the increase side of the account.
Answer: D
Q3) A cash payment is recorded in the cash account as
A)neither a debit nor a credit
B)a credit
C)a debit
D)either a debit or a credit
Answer: B
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Page 4
Chapter 3: The Adjusting Process
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Sample Questions
Q1) If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account,which of the following describes the effect of the debit portion of the entry?
A)increases the balance of a contra asset account
B)increases the balance of an asset account
C)decreases the balance of an stockholders' equity account
D)increases the balance of an expense account
Answer: D
Q2) Which one of the accounts below would likely be included in an accrual adjusting entry?
A)Insurance Expense
B)Prepaid Rent
C)Interest Expense
D)Unearned Rent
Answer: C
Q3) Revenues and expenses should be recorded in the same period to which they relate.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Completing the Accounting Cycle
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Sample Questions
Q1) The entry to close the dividends account would be
A)debit Retained Earnings,$3,000; credit Dividends,$3,000
B)debit Retained Earnings,$12,000; credit Dividends,$12,000
C)debit Dividends,$3,000; credit Retained Earnings,$3,000
D)debit Dividends,$12,000; credit Retained Earnings,$12,000
Q2) When accounts do not appear on the unadjusted trial balance but are needed to post adjustments,they are simply added to the account title column.
A)True
B)False
Q3) The post-closing trial balance differs from the adjusted trial balance in that it does not
A)take into account closing entries
B)take into account adjusting entries
C)include balance sheet accounts
D)include income statement accounts
Q4) Cross-referencing is useful in assuring that the debits and credits are in balance.
A)True
B)False
Q5) List and describe the purpose of the four closing entries.
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Chapter 5: Accounting for Merchandising Businesses
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Sample Questions
Q1) Under the perpetual inventory system,a company purchases merchandise on terms 2/10,n/30.The entry to record the purchase will include a debit to Cash and a credit to Sales.
A)True
B)False
Q2) Under the periodic inventory system,the journal entry to record the cost of merchandise sold at the point of sale will include which of the following?
A)none of these
B)Cost of Merchandise Sold
C)Inventory
D)Purchases
Q3) A chart of accounts for a merchandising business
A)usually is the same as the chart of accounts for a service business
B)usually requires more accounts than does the chart of accounts for a service business
C)usually is standardized by the FASB for all merchandising businesses
D)always uses a three-digit numbering system
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Chapter 6: Inventories
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Sample Questions
Q1) One negative effect of carrying too much inventory is risk that customers will change their buying habits.
A)True
B)False
Q2) If a fire destroys the merchandise inventory,the gross profit method can be used to estimate the cost of merchandise destroyed.
A)True
B)False
Q3) In valuing merchandise for inventory purposes,net realizable value is the estimated selling price less any direct costs of disposal.
A)True
B)False
Q4) Of the three widely used inventory costing methods FIFO,LIFO,and average cost,the LIFO method of costing inventory assumes costs are charged based on the most recent purchases first.
A)True
B)False
Q5) List three different security measures taken to safeguard inventory.
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Chapter 7: Sarbanes-Oxley,internal Control,and Cash
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160 Flashcards
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Sample Questions
Q1) The debit balance in Cash Short and Over at the end of an accounting period is reported as
A)an expense on the income statement
B)income on the income statement
C)an asset on the balance sheet
D)a liability on the balance sheet
Q2) The Sarbanes-Oxley Act applies only to companies whose stock is traded on public exchanges.
A)True
B)False
Q3) SarbanesOxley's purpose is to maintain public confidence and trust in the financial reporting of companies.
A)True
B)False
Q4) In preparing a bank reconciliation,the amount of a canceled check omitted from the journal is added to the balance per company's records.
A)True
B)False
Q5) List the principal advantages of electronic funds transfers.
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Chapter 8: Receivables
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Sample Questions
Q1) In accounting for uncollectible receivables,the balance in Allowance for Doubtful Accounts will directly impact the amount of the adjustment when applying which method?
A)direct write-off method
B)percentage of sales method
C)analysis of receivables method
D)both percentage of sales and analysis of receivables methods
Q2) Using the allowance method of accounting for uncollectible receivables,the entry to reinstate a specific receivable previously written off would include a
A)credit to Bad Debt Expense
B)credit to Accounts Receivable
C)debit to Allowance for Doubtful Accounts
D)debit to Accounts Receivable
Q3) Receivables not currently collectible are reported in the investments section of the balance sheet.
A)True
B)False
Q4) Other than Accounts Receivable and Notes Receivable,name other receivables that might be included in the general ledger.
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Chapter 9: Fixed Assets and Intangible Assets
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Sample Questions
Q1) The formula for depreciable cost is
A)Initial cost + Residual value
B)Initial cost - Residual value
C)Depreciable cost = Initial cost
D)Initial cost - Accumulated depreciation
Q2) A fixed asset with a cost of $52,000 and accumulated depreciation of $47,500 is traded for a similar asset priced at $60,000 fair market value in a transaction with commercial substance.Assuming a trade-in allowance of $5,000,at what cost will the new equipment be recorded in the books?
A)$60,500
B)$60,000
C)$54,000
D)$59,500
Q3) On July 1,Andrew Company purchased equipment at a cost of $150,000 that has a depreciable cost of $120,000 and an estimated useful life of 3 years or 60,000 hours.
Using straight-line depreciation,prepare the journal entry to record depreciation expense for a the first year,b the second year,and c the last year.
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Chapter 10: Current Liabilities and Payroll
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Sample Questions
Q1) All long-term liabilities eventually become current liabilities.
A)True
B)False
Q2) Journalize the following entries on the books of the borrower and creditor.Label accordingly.Assume a 360-day year is used for interest calculations.
Jun.1 James Co.purchased merchandise on account from O'Leary Co.,$90,000,terms n/30.
Jun.30 James Co.issued a 60-day,5% note for $90,000 on account.Aug.29 James Co.paid the amount due.
Q3) Assuming a 360-day year,when a $50,000,90-day,9% interest-bearing note payable matures,total payment will be
A)$51,125
B)$54,500
C)$1,125
D)$4,500
Q4) The amount borrowed is equal to the face amount of the note on an interest bearing note payable.
A)True
B)False
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Chapter 11: Corporations: Organization,stock
Transactions,and Dividends
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Sample Questions
Q1) The retained earnings statement may be combined with the income statement. A)True
B)False
Q2) A corporation has 10,000 shares of $100 par stock outstanding.If the corporation issues a 5-for-1 stock split,the number of shares outstanding after the split will be 40,000. A)True
B)False
Q3) Prepare entries to record the following:
a- Issued 1,000 shares of $15 par common stock at $54 for cash.
b- Issued 1,400 shares of no-par common stock in exchange for equipment with a fair market price of $24,000.
c- Purchased 100 shares of treasury stock at $26.
d- Sold 100 shares of treasury stock purchased in c at $29.
Q4) Stockholders' equity
A)is usually equal to cash on hand
B)includes paid-in capital and liabilities
C)includes retained earnings and paid-in capital
D)is shown on the income statement
Page 13
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Chapter 12: Long-Term Liabilities: Bonds and Notes
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Sample Questions
Q1) The balance in Premium on Bonds Payable
A)should be reported on the balance sheet as a deduction from the related bonds payable
B)should be allocated to the remaining periods for the life of the bonds by the straight-line method,if the results obtained by that method materially differ from the results that would be obtained by the effective interest rate method
C)would be added to the related bonds payable on the balance sheet
D)should be reported in the paid-in capital section of the balance sheet
Q2) The interest rate specified in the bond indenture is called the
A)discount rate
B)contract rate
C)market rate
D)effective rate
Q3) To determine the six-month interest payment amount on a bond,you would take one-half of the market rate times the face value of the bond.
A)True
B)False
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Chapter 13: Investments and Fair Value Accounting
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Sample Questions
Q1) On May 1,Cedar Inc.purchases $150,000 of 10-year,Knox Corporation 8% bonds dated March 1 at 100 plus accrued interest.What entry would Cedar record when receiving its semiannual interest on March 1?
Q2) The income statement for Dodson Corporation reported net income of $22,400 for the year ended December 31 before considering the following:
During the year the company purchased available-for-sale securities. At year end, the fair value of the investment portfolio was $2,100 more than cost. The balance of Retained Earnings was $83,000 on January 1. Dobson Corporation paid $9,000 in cash dividends during the year.
Calculate the balance of Retained Earnings on December 31.
Q3) Accounting for the sale of stock is the same for both the cost and the equity methods of accounting for investments.
A)True B)False
Q4) a Discuss factors contributing to the trend to fair value accounting. b What are some of the disadvantages associated with using fair value?
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Page 15
Chapter 14: Statement of Cash Flows
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Sample Questions
Q1) A company had net income of $252,000.Depreciation expense is $26,000.During the year,accounts receivable and inventory increased by $15,000 and $40,000,respectively.Prepaid expenses and accounts payable decreased by $2,000 and $4,000,respectively.There was also a loss on the sale of equipment of $3,000.How much was the net cash flow from operating activities on the statement of cash flows using the indirect method?
A)$217,000.
B)$224,000.
C)$284,000.
D)$305,000.
Q2) Cash dividends paid on capital stock would be reported in the statement of cash flows in
A)the cash flows from financing activities section
B)the cash flows from investing activities section
C)a separate schedule
D)the cash flows from operating activities section
Q3) Under the direct method of reporting cash flows from operations,the primary source of cash is cash received from customers.
A)True
B)False
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Chapter 15: Financial Statement Analysis
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Sample Questions
Q1) Using measures to assess a business's ability to pay its current liabilities is called current position analysis.
A)True
B)False
Q2) Which of the following is required by the Sarbanes-Oxley Act?
A)a price-earnings ratio
B)a report on internal control
C)a vertical analysis
D)a common-sized statement
Q3) What is the price earnings ratio for Diane Company?
A)8.0 times
B)2.5 times
C)4.0 times
D)6.0 times
Q4) Based on the above data,what is the quick ratio,rounded to one decimal point?
A)2.7
B)2.6
C)1.7
D)0.9
Q5) Define solvency and profitability.How are they alike?
Page 17
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