Introduction to Business Accounting
Exam Answer Key
Course Introduction
Introduction to Business Accounting provides students with a foundational understanding of accounting principles and practices essential for effective business management. The course covers the basics of financial accounting, including the preparation and analysis of financial statements, recording business transactions, and understanding the accounting cycle. Students will also explore the role of accounting in decision-making, budgeting, and internal controls. Through practical examples and exercises, this course equips students with the skills needed to interpret financial information and apply accounting concepts in real-world business scenarios.
Recommended Textbook
Financial Accounting Information for Decisions 6th Edition by John Wild
Available Study Resources on Quizplus
16 Chapters
3236 Verified Questions
3236 Flashcards
Source URL: https://quizplus.com/study-set/3698
Page 2
Chapter 1: Introducing Accounting in Business
Available Study Resources on Quizplus for this Chatper
261 Verified Questions
261 Flashcards
Source URL: https://quizplus.com/quiz/73607
Sample Questions
Q1) Quick Computer Service had net income for the year of $30,000.Its assets at the beginning of the year were $400,000.At the end of the year assets were worth $450,000.Calculate its return on assets.
Answer: $30,000/[($400,000 + $450,000)/2] = $30,000/$425,000 = 7.1%
Q2) Generally Accepted Accounting Principles:
A)Focus on the review of a situation
B)Does not require financial statements
C)Never change
D)Intend to make information on the financial statements relevant,reliable and comparable
E)Oversees Security and Exchange Commission
Answer: D
Q3) Which of the following statements regarding account classification is true?
A)Assets and revenues are the same thing
B)If employees have not yet been paid for their work,the company has wages payable
C)Retained earnings equal cash which the company has earned and kept
D)Revenue is another term for profit
E)Revenue minus expense equals retained earnings
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Analyzing and Recording Transactions
Available Study Resources on Quizplus for this Chatper
221 Verified Questions
221 Flashcards
Source URL: https://quizplus.com/quiz/73606
Sample Questions
Q1) The record in which transactions are first recorded is the:
A)Account balance
B)Ledger
C)Journal
D)Trial balance
E)Cash account
Answer: C
Q2) The journal is known as a book of original entry.
A)True
B)False
Answer: True
Q3) A _______________ is a list of all the accounts used by a company and their identification codes.
Answer: Chart of accounts
Q4) When a company provides services for which cash will not be received until some future date,the company should record unearned revenue for the amount charged to the customer.
A)True
B)False
Answer: False
Page 4
To view all questions and flashcards with answers, click on the resource link above.
Chapter 3: Adjusting Accounts and Preparing Financial Statements
Available Study Resources on Quizplus for this Chatper
268 Verified Questions
268 Flashcards
Source URL: https://quizplus.com/quiz/73605
Sample Questions
Q1) A company had revenue of $550,000,rent expense of $100,000,utility expense of $10,000,salary expense of $125,500,depreciation expense of $39,000,advertising expense of $40,200,dividends in the amount of $183,000,and an ending balance in retained earnings of $402,300.What is the beginning retained earnings for the period?
A)$250,000
B)$235,300
C)$314,700
D)$367,000
E)$350,000
Answer: E
Q2) The current ratio is computed by dividing current liabilities by current assets. A)True
B)False
Answer: False
Q3) Profit margin can also be called return on sales. A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Reporting and Analyzing Merchandising Operations
Available Study Resources on Quizplus for this Chatper
196 Verified Questions
196 Flashcards
Source URL: https://quizplus.com/quiz/73604
Sample Questions
Q1) ______________________ are non-operating activities that include interest expense,losses from asset disposals and casualty losses.
Q2) ABC Corporation had total quick assets $5,888,000,current assets $11,700,000 and current liabilities $8,000,000.Its acid-test ratio equals:
A)0.50
B)0.68
C)0.74
D)1.50
E)2.20
Q3) Which of the following accounts would be closed out with a debit?
A)Sales Discounts
B)Sales Returns and Allowances
C)Cost of Goods Sold
D)Operating Expenses
E)Sales
Q4) FOB _________________ means ownership of goods transfers to the buyer when the goods arrive at the buyer's place of business.The seller is responsible for paying shipping charges and bears the risk of damage or loss in transit.
6
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Reporting and Analyzing Inventories
Available Study Resources on Quizplus for this Chatper
202 Verified Questions
202 Flashcards
Source URL: https://quizplus.com/quiz/73603
Sample Questions
Q1) LIFO assumes that inventory costs flow in the order they were incurred.
A)True
B)False
Q2) An understatement of the ending inventory balance will understate cost of goods sold and overstate net income.
A)True
B)False
Q3) It can be expected that companies that sell perishable goods have higher inventory turnover than companies that sell nonperishable goods.
A)True
B)False
Q4) The matching principle requires that the inventory valuation method follow the physical flow of inventory.
A)True
B)False
Q5) The inventory turnover ratio is computed by dividing average merchandise inventory by cost of goods sold.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Reporting and Analyzing Cash and Internal Controls
Available Study Resources on Quizplus for this Chatper
196 Verified Questions
196 Flashcards
Source URL: https://quizplus.com/quiz/73602
Sample Questions
Q1) Pre-numbered printed checks are an example of which internal control principle?
A)Technological controls
B)Maintain adequate records
C)Perform regular and independent reviews
D)Establish responsibilities
E)Divide responsibility for related transactions
Q2) Checking accounts are also called demand deposits.
A)True
B)False
Q3) In comparing the canceled checks on the bank statement with the entries in the accounting records,it is found that check number 2889 for December's utilities was correctly written and drawn for $790,but was erroneously entered in the accounting records as $970.The journal entry to adjust the books for the bank reconciliation would include which of the following for this situation?
A)$180 decrease to Cash and a $180 decrease to Utility Expense
B)$180 increase to Cash and a $180 decrease to Utility Expense
C)$20 decrease to Cash and a $20 decrease to Utility Expense
D)$20 increase to Cash and a $120 decrease to Utility Expense
E)$970 increase to Cash
Q4) Explain the differences between cash and cash equivalents.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Reporting and Analyzing Receivables
Available Study Resources on Quizplus for this Chatper
169 Verified Questions
169 Flashcards
Source URL: https://quizplus.com/quiz/73601
Sample Questions
Q1) Credit sales are recorded by crediting an account receivable for the specific customer who is making the purchase.
A)True
B)False
Q2) With regard to accounts receivable,both GAAP and IFRS require the allowance method for uncollectibles (unless uncollectibles are immaterial).
A)True
B)False
Q3) If the credit balance of the Allowance for Doubtful Accounts account exceeds the amount of a bad debt being written off,the entry to record the write-off against the allowance account results in:
A)An increase in the expenses of the current period
B)A reduction in current assets
C)A reduction in equity
D)No effect on the expenses of the current period
E)A reduction in current liabilities
Q4) The ________________ method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible (and not before).
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Reporting and Analyzing Long-Term Assets
Available Study Resources on Quizplus for this Chatper
208 Verified Questions
208 Flashcards
Source URL: https://quizplus.com/quiz/73600
Sample Questions
Q1) On April 1 of the current year,a company traded an old machine that originally cost $32,000 and that had accumulated depreciation of $24,000 for a similar new machine that had a cash price of $40,000.
1.Give the entry to record the exchange under the assumption that a $5,000 trade-in allowance was received and the balance of $35,000 was paid in cash.
2.Give the entry to record the exchange under the assumption that instead of a $5,000 trade-in allowance,a $12,500 trade-in allowance was received and the balance of $27,500 was paid in cash.
Q2) A company traded an old forklift for a new forklift,receiving a $10,500 trade-in allowance and paying the remaining $37,200 in cash.The old forklift had cost $39,000 and straight-line accumulated depreciation of $27,200 had been recorded as of the exchange date under the assumption it would last five years and have a $5,000 salvage value.
1.What was the book value of the old forklift on the date of the exchange?
2.What amount of gain or loss (indicate which)should be recognized in recording the exchange?
3.What amount should be recorded as the cost of the new forklift?
Q3) Why is the useful life of a plant asset so difficult to predict?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: Reporting and Analyzing Current Liabilities
Available Study Resources on Quizplus for this Chatper
188 Verified Questions
188 Flashcards
Source URL: https://quizplus.com/quiz/73599
Sample Questions
Q1) Debt guarantees are not disclosed because the guarantor is not the primary debtor.
A)True
B)False
Q2) Amounts received in advance from customers for future products or services:
A)Are revenues
B)Increase income
C)Are liabilities
D)Are not allowed under GAAP
E)Require an outlay of cash in the future
Q3) Contingent liabilities are recorded in the accounts if the future event is _______________ and the amount owed can be _______________.
Q4) Current liabilities are obligations not due within one year or the company's operating cycle,whichever is longer.
A)True
B)False
Q5) A single liability can be divided between current and noncurrent liabilities.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Reporting and Analyzing Long-Term Liabilities
Available Study Resources on Quizplus for this Chatper
188 Verified Questions
188 Flashcards
Source URL: https://quizplus.com/quiz/73598
Sample Questions
Q1) A company issued 10%,5-year bonds with a par value of $400,000.The market rate when the bonds were issued was 8%.The company received $432,458 cash for the bonds.Using the effective interest method,the amount of interest expense for the first semiannual interest period is:
A)$21,622.90
B)$20,000.00
C)$4,324.58
D)$17,298.32
E)$16,000.00
Q2) On April 1,2010,Jared Enterprises issues bonds dated January 1,2010,that have a $2,430,000 par value,mature in 20 years,and pay 7% interest semiannually on June 30 and December 31.The bonds are sold at par plus four months' accrued interest.What is the total amount of cash Jared Enterprises will collect on April 1,2010?
A)$2,600,100
B)$2,430,000
C)$2,486,700
D)$2,750,000
E)$2,515,050
Q3) A bond with a par value of less than $1,000 is called a ______________ bond.
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 11: Reporting and Analyzing Equity
Available Study Resources on Quizplus for this Chatper
208 Verified Questions
208 Flashcards
Source URL: https://quizplus.com/quiz/73597
Sample Questions
Q1) Preferred stock that the issuing corporation at its option may retire by paying a specified amount to the preferred stockholders plus any dividends in arrears is called:
A)Convertible preferred stock
B)Callable preferred stock
C)Premium stock
D)Cumulative preferred stock
E)Participating preferred stock
Q2) Owners of preferred stock often do not have:
A)Ownership rights to assets of the corporation
B)Voting rights
C)Preference to dividends
D)The right to sell their stock on the open market
E)Preference to assets at liquidation
Q3) Stockholders' equity consists of:
A)Long-term assets
B)Contributed capital and retained earnings
C)Contributed capital and par value
D)Retained earnings and cash
E)Premiums and discounts
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: Reporting and Analyzing Cash Flows
Available Study Resources on Quizplus for this Chatper
179 Verified Questions
179 Flashcards
Source URL: https://quizplus.com/quiz/73596
Sample Questions
Q1) Accounting standards:
A)Allow companies to omit the statement of cash flows from a complete set of financial statements if cash is an insignificant asset
B)Require that companies omit the statement of cash flows from a complete set of financial statements if the company has no investing activities
C)Require that companies include a statement of cash flows in a complete set of financial statements
D)Allow companies to include the statement of cash flows in a complete set of financial statements if the cash balance makes up more than 50% of the current assets
E)Allow companies to omit the statement of cash flows from a complete set of financial statements if the company has no financing activities
Q2) The statement of cash flows reports:
A)Assets,liabilities and equity
B)Revenues,gains,expenses and losses
C)Cash inflows and outflows for an accounting period
D)Equity,net income and dividends
E)Changes in equity
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Analyzing and Interpreting Financial Statements
Available Study Resources on Quizplus for this Chatper
186 Verified Questions
186 Flashcards
Source URL: https://quizplus.com/quiz/73595
Sample Questions
Q1) The comparison of a company's financial condition and performance across time is known as ________________________________.
Q2) Market prospects are the ability to provide financial rewards sufficient to attract and retain financing.
A)True
B)False
Q3) Financial statement analysis is the application of analytical tools to general-purpose financial statements and related data for making business decisions.
A)True
B)False
Q4) A company had a return on common stockholders' equity of 22%.Net income equaled $600,000 and average common stockholders' equity equaled $2,500,000.Compute the amount of the preferred dividends declared.
A)$50,000
B)$550,000
C)$132,000
D)$10,763,636
E)$10,000
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Investments and International Operations
Available Study Resources on Quizplus for this Chatper
178 Verified Questions
178 Flashcards
Source URL: https://quizplus.com/quiz/73610
Sample Questions
Q1) Columbia Corp.held 1,500 of Vianco common stock with a cost of $74,387.These shares were classified as a long-term available-for-sale investment.It sold the shares on December 13 for $55,275.Prepare the journal entry to record this sale.
Q2) Hector Corp.purchased 1,000 shares of Landmark Corp.'s common stock for $36,850 cash.This purchase is considered a long-term available-for-sale investment by Hector.Prepare Hector's journal entry to record the purchase.
Q3) Sanuk purchased on credit £20,000 worth of parts from a British company when the exchange rate was $1.66 per British pound.At the year-end balance sheet date the exchange rate increased to $1.69.Sanuk must record a gain of $600.
A)True
B)False
Q4) Accounting for long-term investments in held-to-maturity securities requires companies to record interest revenue as it accrues.
A)True
B)False
Q5) Short-term investments in held-to-maturity debt securities are accounted for using the ___________________________.
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Reporting and Analyzing Partnerships
Available Study Resources on Quizplus for this Chatper
126 Verified Questions
126 Flashcards
Source URL: https://quizplus.com/quiz/73609
Sample Questions
Q1) Force and Zabala are partners.Force's capital balance in the partnership is $98,000 and Zabala 's capital balance is $53,000.Force and Zabala have agreed to share equally in income or loss.Force and Zabala agree to accept Burns with a 25% interest.Burns will invest $56,000 in the partnership.Which of the following statements is correct?
A)Force's capital balance after the admission of Burns is $50,875
B)Burns' capital after admission is $51,750.
C)Zabala's capital after the admission of Burns is $98,000.
D)Burns' capital after admission is $56,000.
E)Force's capital balance after the admission of Burns is $53,000.
Q2) Elaine Valero is a limited partner in a marketing and design firm.During the previous year her return on partnership equity was 14%.During this time,the beginning and ending balances in her capital account were $210,000 and $230,000 respectively.What was Elaine's partnership net income for this year?
A)$29,400.00
B)$30,800.00
C)$32,200.00
D)$1,500,000.00
E)$1,642,857.14
Q3) Partner return on equity is calculated as
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Reporting and Preparing Special Journals
Available Study Resources on Quizplus for this Chatper
165 Verified Questions
165 Flashcards
Source URL: https://quizplus.com/quiz/73608
Sample Questions
Q1) When the sales journal's column for accounts receivable and sales is totaled at the end of the month,its total is:
A)Debited to Sales and credited to Accounts Receivable
B)Debited to Accounts Receivable and credited to Cash
C)Debited to Cash and credited to Accounts Receivable
D)Debited to Accounts Receivable and credited to Sales
E)Debited to Cash and credited to Sales
Q2) In a typical purchases journal,you would expect to see the following columns:
A)Accounts payable dr.
B)Purchase discounts cr.
C)Accounts receivable cr.
D)Inventory dr.(if perpetual method used)
E)Cost of Goods Sold dr.(if perpetual method used)
Q3) Under the perpetual inventory system,special journals are not required.
A)True
B)False
Q4) Discuss how technology based information systems affect accounting.
Q5) Using __________________ ledgers removes unnecessary details from the general ledger.
Page 18
Q6) List the five basic principles of accounting information systems.
To view all questions and flashcards with answers, click on the resource link above.