Introduction to Accounting Exam Questions
Course Introduction
Introduction to Accounting provides students with a foundational understanding of the principles and practices of financial accounting. The course covers essential topics such as the accounting cycle, preparation and interpretation of financial statements, and the role of accounting in business decision-making. Students will learn to analyze and record business transactions, understand the framework of generally accepted accounting principles (GAAP), and gain practical skills in using accounting information for planning, control, and performance evaluation. This course serves as a basis for further study in accounting and finance, equipping students with the knowledge necessary to comprehend financial reports and support organizational objectives.
Recommended Textbook Survey of Accounting 6th Edition by Carl S. Warren
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15 Chapters
1713 Verified Questions
1713 Flashcards
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Chapter 1: The Role of Accounting in Business
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96 Flashcards
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Sample Questions
Q1) Which of the following is an intangible asset?
A) Patent
B) Cash
C) Land
D) Equipment
Answer: A
Q2) Cash collected from sales during the normal course of business would be an example of which type of business activity?
A) Operating
B) Investing
C) Financing
D) None of these
Answer: A
Q3) ________ is an example of internal stakeholders.
A) Managers
B) Creditors
C) Stockholders
D) Suppliers
Answer: A
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Page 3
Chapter 2: Basic Accounting Concepts
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Sample Questions
Q1) Which of the following will increase stockholders' equity?
A) Expenses > revenues
B) Owners' investment
C) Accounts payable
D) Dividends paid
Answer: B
Q2) A to Z Corporation purchased a building for $80,000 cash. On the Statement of Cash Flows, the transaction would be classified as:
A) Cash Flows from Operating Activities.
B) Cash Flows from Investing Activities.
C) Cash Flows from Financing Activities.
D) Noncash transaction.
Answer: B
Q3) The accounting equation "Assets = Liabilities + Stockholders' Equity" is affected by transactions. Is it possible to have a transaction that only impacts one financial element of the equation? Can a transaction impact two elements of the equation? Give examples.
Answer: Yes to both questions. Examples include: (1) increase cash and decrease equipment; (2) increase cash and increase stockholders' equity.
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Page 4
Chapter 3: Accrual Accounting Concepts
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111 Flashcards
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Sample Questions
Q1) Donald Duck Co. Donald Duck Co. has a five-day workweek (Monday through Friday).
Employees earn $500 per day.
Refer to Donald Duck Co. How much cash will be paid on Friday?
A) $500
B) $1,500
C) $2,500
D) $1,000
Answer: C
Q2) Accrued revenues would appear on the balance sheet as:
A) assets.
B) liabilities.
C) stockholders' equity.
D) prepaid expenses.
Answer: A
Q3) Accumulated depreciation is _____ to get the carrying value.
A) added to equipment
B) subtracted from equipment
C) added to accounts payable
D) subtracted from accounts payable
Answer: B
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Chapter 4: Accounting for Merchandising Businesses
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138 Flashcards
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Sample Questions
Q1) The sales discount account is a contra account to Sales.
A)True
B)False
Q2) If the buyer is to pay the delivery expense of delivering merchandise, delivery terms are stated as:
A) FOB shipping point.
B) FOB destination.
C) FOB n/30.
D) FOB buyer.
Q3) The document issued by the seller that informs the buyer of the details of sales returns is called a debit memorandum.
A)True
B)False
Q4) Merchandise inventory shrinkage will decrease Retained Earnings.
A)True
B)False
Q5) Freight in is the amount paid by the seller to deliver merchandise sold to a customer.
A)True
B)False
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Chapter 5: Sarbanes-Oxley, Internal Control, and Cash
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) A remittance advice is the notification accompanying the check issued to a creditor that states the specific invoice being paid.
A)True
B)False
Q2) In preparing a bank reconciliation, the amount of a canceled check omitted from the depositor's records is deducted from the cash balance per books.
A)True
B)False
Q3) The Sarbanes-Oxley Act of 2002 requires companies to maintain strong and effective internal controls over recording transactions and preparing financial statements.
A)True
B)False
Q4) The purpose of the Sarbanes-Oxley Act of 2002 is to:
A) restore public confidence and trust in the financial statements of publicly held companies.
B) require all companies to prepare financial statements.
C) protect companies from demands of investors, stockholders, and creditors.
D) do all of these.
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Chapter 6: Receivables and Inventories
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Sample Questions
Q1) Allowance for Doubtful Accounts has an unadjusted balance of $500 at the end of the year, and uncollectible accounts expense is estimated at 1% of net sales. If net sales are $950,000, the amount of the adjustment to record the provision for doubtful accounts is:
A) $9,500.
B) $500.
C) $8,500.
D) $9,000.
Q2) When merchandise sold is assumed to be in the order in which the expenditures were made, the inventory costing method is called:
A) first-in, last-out.
B) last-in, first-out.
C) first-in, first-out.
D) average cost.
Q3) The FIFO method of costing inventory is based on the assumption that costs should be charged against revenues in the reverse order in which they were incurred.
A)True
B)False
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8
Chapter 7: Fixed Assets and Intangible Assets
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Sample Questions
Q1) Goodwill is:
A) amortized in a manner similar to other intangibles.
B) written down only if an impairment in value occurs.
C) charged to expense immediately.
D) amortized over 40 years or its economic life, whichever is shorter.
Q2) To measure depreciation, all of the following must be known except:
A) market value of asset.
B) residual value of asset.
C) cost of asset.
D) estimated life of asset.
Q3) The estimated amount that an asset can be sold for at the end of its useful life is called its book value.
A)True
B)False
Q4) The exclusive right to use a certain name or symbol is called a:
A) franchise.
B) patent.
C) trademark.
D) copyright.
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Chapter 8: Liabilities and Stockholders Equity
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131 Verified Questions
131 Flashcards
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Sample Questions
Q1) Obligations that depend on future events and are based on past transactions are contingent liabilities.
A)True
B)False
Q2) How is treasury stock shown on the balance sheet?
A) As an asset
B) As a reduction of stockholders' equity
C) As an addition to stockholders' equity
D) Treasury stock is not shown on the balance sheet.
Q3) One of the conditions for paying a cash dividend is formal action by the board of directors.
A)True
B)False
Q4) A corporation has 50,000 shares of $100 par value stock outstanding. If the corporation issues a 4-for-1 stock split, the number of shares outstanding after the split will be:
A) 200,000 shares.
B) 50,000 shares.
C) 250,000 shares.
D) 12,500 shares.
Page 10
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Chapter 9: Financial Statement Analysis
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Sample Questions
Q1) The rate earned on total common stockholders' equity for most thriving businesses will be less than the rate earned on total assets.
A)True
B)False
Q2) The independent auditor's report does which of the following?
A) Describes that the common-sized statements are covered by the audit.
B) Gives the auditor's opinion regarding the fairness of the financial statements.
C) Summarizes what the auditor did.
D) States that the financial statements are effective.
Q3) The percentage change in long-term liabilities between two balance sheet dates is an example of:
A) vertical analysis.
B) solvency analysis.
C) profitability analysis.
D) horizontal analysis.
Q4) The excess of current liabilities over quick assets is referred to as working capital.
A)True
B)False
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Chapter 10: Accounting Systems for Manufacturing Businesses
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120 Verified Questions
120 Flashcards
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Sample Questions
Q1) Each account in the subsidiary ledger for work in process is called a:
A) finished goods sheet.
B) stock record.
C) materials requisition.
D) job cost sheet.
Q2) An activity-based costing system allocates factory overhead rates to products or services using:
A) a single plantwide overhead rate.
B) the cost of activities based on an activity rate times the number of activity-based usage quantities.
C) an allocation of budgeted revenues produced by a product or service.
D) an end-of-year allocation of costs to products or services.
Q3) During the year, Cambridge Corporation applied factory overhead costs of $205,000 to production. At the end of the year, total overapplied factory overhead is $17,000. What was the amount of actual factory overhead cost incurred during the year?
A) $222,000
B) $200,000
C) $205,000
D) $188,000
Page 12
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Chapter 11: Cost Behavior and Cost-Volume-Profit Analysis
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140 Verified Questions
140 Flashcards
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Sample Questions
Q1) Monthly rent on a factory building is an example of a fixed cost.
A)True
B)False
Q2) Currently, fixed costs are $561,000 and the unit contribution margin is $10. What would be the break-even point in units if variable cost is decreased by $0.50 per unit?
A) 59,053 units
B) 56,100 units
C) 53,429 units
D) 60,000 units
Q3) The range of activity over which changes in cost are of interest to management is called the relevant range.
A)True
B)False
Q4) DeGiaimo Co. has an operating leverage of 5. If next year's sales are expected to increase by 10%, then the company's operating income will increase by 50%.
A)True
B)False
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Chapter 12: Differential Analysis and Product Pricing
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Sample Questions
Q1) The product cost concept includes the selling and administrative expenses in the cost amount to which the markup is added to determine product price.
A)True
B)False
Q2) Soap Company manufactures Soap X and Soap Y and can sell all it can make of either. Hours available to produce the products is the constrained resources.Based on the following data, which statement is true? \(\begin{array}{|c|c|l|}
\hline\mathrm{Y} & \mathrm{X}\\
\hline \$ 25 & \$ 20 & \text { Sales Price } \\
\hline 15 & 14 & \text { Variable Cost } \\
\hline 5 & 3 & \text { Hours needed to process } \\
\hline
\end{array}\)
A) X is more profitable than Y.
B) Y is more profitable than X.
C) Neither X nor Y have a positive contribution margin.
D) X and Y are equally profitable.
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Page 14
Chapter 13: Budgeting and Standard Cost Systems
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168 Flashcards
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Sample Questions
Q1) Nonmanufacturing activities are usually controlled using a static budget rather than a standard costing system.
A)True
B)False
Q2) If the actual quantity of direct materials used in producing a commodity differs from the standard quantity, the variance is termed:
A) controllable variance.
B) price variance.
C) quantity variance.
D) rate variance.
Q3) The process of developing budget estimates by requiring all levels of management to estimate sales, production, and other operating data as though operations were being initiated for the first time is referred to as:
A) flexible budgeting.
B) continuous budgeting.
C) zero-based budgeting.
D) master budgeting.
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Chapter 14: Performance Evaluation for Decentralized Operations
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Sample Questions
Q1) Blancher Corporation had $495,000 in invested assets, sales of $660,000, income from operations amounting to $99,000, and a desired minimum rate of return of 15%. The investment turnover for Blancher is:
A) 1.20.
B) 1.00.
C) 1.10.
D) 1.33.
Q2) The profit center income statement should include only controllable revenues and expenses.
A)True
B)False
Q3) Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are termed: A) miscellaneous administrative expenses.
B) indirect expenses.
C) direct expenses.
D) variable expenses.
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Page 16
Chapter 15: Capital Investment Analysis
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Sample Questions
Q1) The process by which management plans, evaluates, and controls long-term investment decisions involving fixed assets is called capital investment analysis.
A)True
B)False
Q2) The net present value has been computed for Proposals A and B. Relevant data are as follows: \(\begin{array}{lll}
\text { Proposal B } & \text { Proposal A } & \\ \hline \$125,000 & \$ 75,000 & \text { Amount to be invested } \\ 136,250 & 84,000 & \text { Total present value of net cash flow } \\ 11,250 & 9,000 & \text { Net present value } \end{array}\)
Determine the present value index for each proposal.
Q3) When evaluating a proposal by use of the net present value method, if the present value is less than the amount to be invested, the rate of return on the proposal is more than the rate used in the analysis.
A)True
B)False
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