Introduction to Accounting Final
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Course Introduction
Introduction to Accounting provides students with a foundational understanding of accounting principles, concepts, and practices. The course covers essential topics such as the accounting cycle, financial statement preparation and analysis, recording business transactions, and the role of accounting information in decision-making. Students will gain practical skills in bookkeeping, learn how to interpret financial data, and explore the ethical and regulatory environment of the accounting profession. By the end of the course, students will be equipped with the knowledge needed to manage basic financial records for businesses and pursue further studies in accounting or related fields.
Recommended Textbook
Horngrens Financial and Managerial Accounting 4th Edition by Miller Nobles
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Chapter 1: Accounting and the Business Environment
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Sample Questions
Q1) Ace Inc.had the following transactions in June: Sold goods for $4,000 on account; received cash on account,$5,000; paid $800 for repair expense; paid $2,000 to a supplier that it owed from the previous month.What is the combined effect on Cash of the June transactions?
A)a $2,200 increase
B)a $2,200 decrease
C)a $5,000 increase
D)a $2,800 decrease
Answer: A
Q2) The Sarbanes-Oxley Act (SOX)made it a criminal offense to ________.
A)transfer shares of stock
B)issue debentures
C)declare bankruptcy
D)falsify financial information
Answer: D
Q3) Local,state,and federal governments use accounting information to calculate income tax.
A)True
B)False
Answer: True
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Chapter 2: Recording Business Transactions
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Sample Questions
Q1) When a business collects cash,the Cash account is debited.
A)True
B)False Answer: True
Q2) An accounts receivable requires the business to pay cash in future.
A)True
B)False Answer: False
Q3) Which of the following is the final step in the journalizing and posting process?
A)posting the accounts to the ledger
B)identifying each account affected and its type
C)determining whether the accounting equation is in balance
D)determining whether each account has increased or decreased Answer: C
Q4) A business paid salaries of $6,000 in cash.Record the transaction in the journal. Answer: 11ea84d1_1114_f988_83dc_d382de7262d7_TB3006_00
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Chapter 3: The Adjusting Process
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Sample Questions
Q1) Which of the following accounts does cash basis accounting ignore?
A)Payables
B)Revenue
C)Cash
D)Expenses
Answer: A
Q2) Paramount Event Planning Services collects fees from its customers in advance.On January 1,2015,the balance of its Unearned Revenue account had a balance of $6,000 (Cr.).During January and February,the company collected $3,000 and $1,000 as advance fees.During the two-month period,it rendered services of $6,500 related to the prepaid revenue.What is the balance in Unearned Revenue at the end of February?
A)debit balance of $6,000
B)credit balance of $6,000
C)debit balance of $3,500
D)credit balance of $3,500
Answer: D
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Chapter 4: Completing the Accounting Cycle
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Sample Questions
Q1) In a balance sheet,assets are classified as either current or long-term depending on their liquidity.
A)True
B)False
Q2) Which of the following accounts will be included in a post-closing trial balance?
A)Service Revenue
B)Rent Expense
C)Interest Expense
D)Unearned service revenue
Q3) Which of the following statements is true if the income statement credit column exceeds the income statement debit column on a worksheet?
A)The company made a net profit.
B)The company incurred a net loss.
C)The retained earnings account decreased during the period.
D)The total liabilities exceed total assets.
Q4) The Salaries Expense account is a temporary account.
A)True
B)False
Q5) Provide the closing entry for Service Revenue.
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Chapter 5: Merchandising Operations
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Sample Questions
Q1) A single-step income statement shows subtotals for gross profit and operating income.
A)True
B)False
Q2) A company sold merchandise for $1,000 on account with terms of 2/10,n/30.The company uses a perpetual inventory system.Defective merchandise of $200 was returned 2 days later.If the payment was received after 20 days,the journal entry to record the cash receipt will include ________.
A)a debit to Cash for $980 and a credit to Accounts Receivable for $980.
B)a debit to Cash for $800 and a credit to Accounts Receivable for $800.
C)a credit to Sales for $800 and a debit to Cash for $ 800.
D)a credit to Cost of Goods Sold for $1000 and a debit to Sales for $1,000.
Q3) Cost of Goods Sold appears on a multi-step income statement but not on a single-step income statement.
A)True
B)False
Q4) Give journal entry to close the expense accounts and contra revenue accounts with a debit balance.
Q5) Give the journal entry to close the Sales Revenue account.
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Chapter 6: Merchandise Inventory
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Sample Questions
Q1) Which of the following inventory costing methods is based on the actual cost of each particular unit of inventory?
A)specific identification
B)weighted-average
C)last-in,first-out
D)first-in,first-out
Q2) Rubal Inc.earned revenue of $400,000 and incurred cost of goods sold of $320,000.Calculate the gross profit percent.
A)75%
B)20%
C)60%
D)80%
Q3) Which of the following requires that financial statements should report the least favorable figures?
A)conservatism principle
B)materiality concept
C)disclosure principle
D)consistency principle
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Chapter 7: Internal Control and Cash
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Sample Questions
Q1) Which of the following items are reconciling items on the book side of the reconciliation?
A)outstanding checks and correction of book error
B)deposit in transit and NSF check
C)bank service charge and outstanding checks
D)bank service charge and correction of book error
Q2) As long as the same person deposits customer checks and records the deposits into the journal,there will be good internal control over cash receipts.
A)True
B)False
Q3) At Radiant Inc.,the operations department is also responsible for recording cash transactions as it does not have a separate accounting department. In the above situation,which internal control procedure needs strengthening?
A)assignment of responsibilities
B)competent,reliable,and ethical personnel
C)separation of duties
D)documents
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Chapter 8: Receivables
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Sample Questions
Q1) An acid-test ratio of 1.0 is considered safer than a ratio of 0.50.
A)True
B)False
Q2) On October 1,2015,Android Inc.made a loan to one of its customers.The customer signed a 4-month note for $100,000 at 15%.Calculate the total interest earned on the note.
A)$5,000
B)$3,750
C)$1,250
D)$15,000
Q3) Notes receivable represents an undertaking by a debtor to pay a fixed amount along with interest at a certain future date.
A)True
B)False
Q4) A company will have receivables whenever it sells goods or services on credit. A)True
B)False
Q5) Give journal entry to record the dishonor of a note receivable at the maturity date.
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Chapter 9: Plant Assets, natural Resources, and Intangibles
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Sample Questions
Q1) Steel Rolling Corp.purchased a mine on January 1,2015,for $500,000 and it is estimated to contain 30,000 tons of iron ore.There is no residual value.The corporation has extracted 2,500 tons of ore in 2015 and 3,800 tons of ore in 2016.What is depletion expense for 2016? (Do not round your intermediate calculations).
A)$33,333
B)$42,667
C)$63,333
D)$63,667
Q2) On January 1,2015,Anodel Inc.acquired a machine for $1,000,000.The estimated useful life of the asset is 5 years.Residual value at the end of 5 years is estimated to be $50,000.Calculate the depreciation expense per year using the straight-line method.
A)$200,000
B)$190,000
C)$240,000
D)$250,000
Q3) A natural resource is an asset that comes from the earth and is consumed.
A)True
B)False
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Chapter 10: Investments
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Sample
Questions
Q1) The unrealized holding gains and losses on available-for-sale investments are reported on the income statement.
A)True
B)False
Q2) Investment income may come from interest earned from debt investments,dividends earned from stock investments,and/or increases in the market value of the security.
A)True
B)False
Q3) Aurum Services Inc.acquired 100,000 shares of Gamma Metals Inc.on January 1,2015.Gamma pays a cash dividend of $0.25 per share on March 2,2015.With the current investment,Aurum Services Inc.holds 8% of Gamma.In the journal entry on March 2,2015,________.
A)Long-term Investments-Available-for-Sale will be credited
B)Dividend Revenue will be credited
C)Long-term Investments-Held-to-Maturity will be debited
D)Long-term Investments-Available-for-Sale will be debited
Q4) A preferred stock is an example of a debt security.
A)True
B)False
Page 12
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Chapter 11: Current Liabilities and Payroll
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Sample Questions
Q1) Where does unearned revenue to be earned in six months appear on the balance sheet?
A)under long-term investments
B)under current liabilities
C)under current assets
D)under long-term assets
Q2) Berkley's gross pay for this month is $8,750.His gross pay year-to-date,prior to this month totaled $102,500.Berkley's rate for federal income tax is 20%.His voluntary deductions total $950.What is Berkley's net pay? (Assume an OASDI rate of 4.2%,applicable on the first $110,100 earnings,and a Medicare rate of 1.45%,applicable on all earnings.)
A)$6,553.92
B)$6050.00
C)$7,000.00
D)$5,603.92
Q3) What amount represents the current portion of Long-term Notes Payable at December 31,2014?
Q4) Northwest Inc.records indicate that January sales on account were $109,000.The company's management estimates warranty expense to be 3.6% of sales.Provide the journal entry to record warranty expense.
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Chapter 12: Long-Term Liabilities
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Sample Questions
Q1) Each yearly installment will include both principal repayment of $5,000 and interest payment for the preceding one-year period.On March 1,2016,________.
A)Vantage must accrue $5,000 of Interest Expense
B)Vantage must accrue for the coming $5,000 as current portion of principal payment
C)Vantage must pay out $750 of Interest Expense to the note holder
D)Vantage will receive $5,000 as an installment payment
Q2) Trek Holidays Company signed a 9%,10-year note for $150,000.The company paid $1,900 as the installment for the first month.What portion of the first monthly payment is interest expense?
A)$4,800
B)$16,000
C)$14,400
D)$1,125
Q3) The fact that invested cash earns income over time is called the time value of money.
A)True
B)False
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Chapter 13: Stockholders Equity
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Sample Questions
Q1) The account to be debited when a stock dividend is declared and distributed on the same date would be ________.
A)Common Stock-Par Value
B)Retained Earnings
C)Cash
D)Paid-In Capital in Excess of Par-Common
Q2) Dallkin Corporation issued 5,000 shares of common stock on January 1,2015.The stock has no par value and was sold at $18 per share.The journal entry for this transaction would include a ________.
A)debit to Cash for $90,000 and a credit to Common Stock-No-Par Value for $90,000
B)debit to Cash for $90,000 and a credit to Paid-In Capital in Excess of Par-Common for $600,000
C)credit to Cash for $90,000 and a debit to Common Stock-No-Par Value for $90,000
D)credit to Cash for $90,000,a debit to Paid-In Capital in Excess of Par-Common for $5,000,and a debit to Common Stock-No-Par Value for $85,000
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Chapter 14: The Statement of Cash Flows
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Sample Questions
Q1) Financing activities on the statement of cash flows affect the long-term liability and equity accounts,such as Long-Term Notes Payable,Bonds Payable,Common Stock,and Retained Earnings.
A)True
B)False
Q2) Martin Ceramics Company is preparing its statement of cash flows using the indirect method.During the year,they sold equipment for $5,990 cash.The net book value of the asset prior to sale was $5,550.Which of the following statements is true?
A)The gain on sale of $440 would be added back to net income in the operating activities section.
B)The book value of the assets sold would be shown as a negative cash flow in the investing activities section.
C)The cash receipt of $5,990 would be shown as a positive cash flow in the investing activities section.
D)The gain on sale of $440 would be shown as a positive cash flow in the financing activities section.
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Chapter 15: Financial Statement Analysis
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Sample Questions
Q1) Which of the following items is a measure of a company's ability to collect receivables?
A)inventory turnover ratio
B)current ratio
C)days' sales in receivables
D)account receivable balance
Q2) An annual report provides information about a company's financial condition.
A)True
B)False
Q3) In a vertical analysis of the income statement,each line item is shown as a percentage of net sales.
A)True
B)False
Q4) The study of percentage changes in comparative financial statements is called horizontal analysis.
A)True
B)False
Q5) The price/earnings ratio shows the market price of $1 of earnings.
A)True
B)False
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Chapter 16: Introduction to Managerial Accounting
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Sample Questions
Q1) Manufacturing overhead includes indirect manufacturing costs,such as insurance and depreciation on the factory building.
A)True
B)False
Q2) What is the ending balance in the Work-in-Process Inventory account?
A)$24,650
B)$12,000
C)$49,500
D)$65,350
Q3) In a manufacturing company,accounting,legal,and administrative costs are typical examples of product costs.
A)True
B)False
Q4) Which of the following will be included in manufacturing overhead costs?
A)indirect labor and indirect materials
B)salaries of salesmen
C)direct materials and direct labor
D)delivery costs to ship goods to customers
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Chapter 17: Job Order Costing
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Sample Questions
Q1) Neptune Accounting Services expects its accountants to work a total of 24,000 direct labor hours per year.The company's estimated total indirect costs are $240,000.The company uses direct labor hours as the allocation base for indirect costs.What is the indirect cost allocation rate?
A)$10 per hour
B)$20 per hour
C)$100 per hour
D)$120 per hour
Q2) The Rearland Inc.uses a job order costing system to accumulate client-related costs.The overhead rate is 60% of direct labor cost.Staff engineer's time is charged at a rate of $80 per hour.A recent job for a client involved 30 staff labor hours.How much was the total job cost?
A)$1,600
B)$2,400
C)$3,840
D)$360
Q3) At the end of the year,Delta Inc.has an unadjusted debit balance in the Manufacturing Overhead account of $3,950.Provide the year-end adjusting entry needed to clear the balance to zero.
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Chapter 18: Process Costing
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Sample Questions
Q1) Both job order costing and process costing ________.
A)maintain a single Work-in-Process Inventory account
B)treat all period costs as product costs
C)follow last-in,first-out method for inventory valuation
D)have the same type of product costs
Q2) The Raw Materials Inventory account is debited when direct materials are issued for production.
A)True
B)False
Q3) Direct labor costs are accumulated in the Manufacturing Overhead account. A)True
B)False
Q4) A production cost report shows only the calculations for the physical flow of products.
A)True B)False
Q5) Under process costing,direct materials and direct labor are assigned to Work-in-process Inventory for each process that uses them. A)True
B)False
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Sample Questions
Q1) Companies using just-in-time management systems are far more vulnerable to production shutdowns if they receive poor-quality or defective raw materials.
A)True
B)False
Q2) Quality management systems emphasize external failure costs.
A)True
B)False
Q3) Activity-based management is not suitable for service companies as it deals with the proper allocation of manufacturing overhead.
A)True
B)False
Q4) J-Time Inc.is planning to launch a new brand of watches for kids.Similar watches are available in the market for $50.In order to penetrate the market,the company plans to use target pricing and desires a 20% net profit markup on total cost.Calculate the target cost.
A)$60.00
Chapter 20: Cost-Volume-Profit Analysis
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Q1) Divine Foods produces a gourmet condiment which sells for $16.00 per unit.Variable costs are $6 per unit,and fixed costs are $5,000 per month.If Divine expects to sell 1,500 units,compute the margin of safety in dollars.
A)$16,000
B)$15,000
C)$10,000
D)$6,000
Q2) Arturo Company's Model A generator sells for $456 and Model B sells for $390.The variable cost of Model A is $404 and of Model B is $320.The company will generate lower revenues but a higher net income if it sells more of Model B than Model A.
A)True
B)False
Q3) The Purely Pizza Company sells pizzas in two different sizes-medium and large.The two products sell in equal numbers.The contribution margin of a medium pizza is $12 and the contribution margin of a large pizza is $18.The weighted average contribution margin is $15.
A)True
B)False
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Chapter 21: Variable Costing
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Q1) High-Tech Computer Services provide services to corporate and individual customers.During the month of June,the corporate business segment provided services to 500 customers and earned $60,000 in revenue.The individual business segment provided services to 400 customers and earned $35,000 in revenue.The variable costs for the corporate and individual business segment amounted $32,500 and $25,300,respectively.Additionally,the fixed costs of the company amounted to $8,500.Calculate the contribution margin from each corporate customer.
A)$24.25
B)$52.60
C)$56.40
D)$55.00
Q2) When there are no beginning or ending finished goods inventories,________.
A)variable and absorption costing will result in different values for ending finished goods inventories
B)variable and absorption costing will result in the same operating profits
C)variable and absorption costing will result in different sales revenue
D)variable and absorption costing will result in different values for cost of goods sold
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Chapter 22: Master Budgets
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Sample Questions
Q1) The cash balance on April 1 is $12,000.Assume that there will be no financing transactions or costs during the quarter.Calculate the cash balance at the end of June.
A)$26,500
B)$40,800
C)$85,700
D)$21,800
Q2) A company with different segments using different software configurations can easily combine budget data of different segments to create the master budget.
A)True
B)False
Q3) Calculate the final cash balance at the end of August taking into consideration all the financing transactions.
A)$6,958
B)$5,254
C)$7,100
D)$4,320
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Chapter 23: Flexible Budgets and Standard Cost Systems
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Q1) Which of the following is used to charge the cost of direct labor to the production?
A)Debit for standard quantity for actual production times standard cost per hour
B)Credit for standard quantity usage for actual production times actual cost per hour
C)Debit for actual quantity times standard cost per hour
D)Credit for standard quantity for actual production times standard cost per hour
Q2) The fixed overhead volume variance is a volume variance,not a cost variance.
A)True
B)False
Q3) When a manufacturing company uses standard costing system,the direct material cost variance will be recorded at the time of issue of raw material for production.
A)True
B)False
Q4) A standard cost system helps management set performance standards. A)True
B)False
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Chapter 24: Responsibility Accounting and Performance Evaluation
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Q1) Long-term investments are made by the manager of an investment division for the purpose of ________.
A)increasing profits
B)decreasing profits
C)increasing interest liability
D)decreasing debt liability
Q2) Managers of investment centers are responsible not only for generating profits but also to ensure the efficient use of assets of the investment centers.
A)True
B)False
Q3) Operating income alone does not indicate how efficiently a segment is using its assets.
A)True
B)False
Q4) A company in which the major planning and controlling decisions are made by top management is considered as a centralized company
A)True
B)False
Page 26
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Chapter 25: Short-Term Business Decisions
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Q1) A company is a price-taker when ________.
A)it operates in a highly competitive market
B)its product is unique
C)it has considerable flexibility in setting prices of its products
D)it has very high fixed costs
Q2) Nordic Avionics makes aircraft instrumentation.Its basic navigation radio requires $80 in variable costs and requires $2,000 per month in fixed costs.If the company upgrades the radio further to enhance its functionality,it will require an additional $25 per unit of variable costs,plus an increase in fixed costs of $800 per month.The marketing manager believes that they would be able to boost the price of the radio from $260 to $300.Nordic sells 30 radios per month.If Nordic decides to produce the improved version of the radio,what would the impact be on monthly operating income?
A)It would increase by $1,050.
B)It would increase by $250.
C)It would decrease by $350.
D)It would decrease by $750.
Q3) Price-setters emphasize a cost-plus pricing approach.
A)True
B)False
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Chapter 26: Capital Investment Decisions
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Q1) The discounted cash flow methods of evaluating capital investments are superior because they consider both the time value of money and the profitability of the investment.
A)True
B)False
Q2) Which of the following is a capital budgeting method that is used to screen potential investments?
A)return on assets
B)acid test ratio
C)accounting rate of return
D)debt-to-equity ratio
Q3) When the internal rate of return is the same as the required rate of return,the net present value of an investment will be positive.
A)True
B)False
Q4) If an investment project's internal rate of return (IRR)is higher than a company's required rate of return,the company should reject the investment.
A)True
B)False
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Chapter 27: Accounting Information Systems
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Q1) An automobile company purchases spark plugs,on account,for the production of its vehicles.When using a manual accounting information system,the company will record this transaction in the ________.
A)purchases journal
B)general journal
C)cash payments journal
D)sales journal
Q2) The Other Accounts DR columns of a purchases journal are used for recording merchandise inventory and office supplies.
A)True
B)False
Q3) The sale of merchandise inventory for cash is recorded in the ________.
A)general journal
B)cash receipts journal
C)sales journal
D)accounts receivable journal
Q4) A source document provides the evidence and data for accounting transactions.
A)True
B)False
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