Introduction to Financial Accounting Pre-Test
Questions
Course Introduction
Introduction to Financial Accounting provides students with a foundational understanding of accounting principles, concepts, and practices as they relate to the preparation and interpretation of financial statements. The course covers topics such as the accounting cycle, measurement and reporting of assets, liabilities, and equity, revenue recognition, and the role of ethics in accounting. Students will learn how to record financial transactions, prepare balance sheets, income statements, and cash flow statements, and analyze financial information to support decision-making in business environments. The course emphasizes both the conceptual framework and practical skills essential for further study in accounting and finance.
Recommended Textbook Cornerstones of Financial Accounting 3rd Edition by Jay Rich
Available Study Resources on Quizplus
14 Chapters
2651 Verified Questions
2651 Flashcards
Source URL: https://quizplus.com/study-set/3315 Page 2
Chapter 1: Accounting and the Financial Statements
Available Study Resources on Quizplus for this Chatper
239 Verified Questions
239 Flashcards
Source URL: https://quizplus.com/quiz/65788
Sample Questions
Q1) Which of the following best describes the term "expenses"?
A)The cost of assets used in the investing activities of a business.
B)The amount of interest or claim that the owners have in the business.
C)The future economic resources of a business entity.
D)The cost of assets used in the operations of a business.
Answer: D
Q2) In which section of the annual report would you find: "The financial statements, in our opinion, present fairly the financial position, operating results, and cash flows, in conformity with generally accepted accounting principles"?
A)Management report
B)Notes to the Financial Statements
C)Management's Discussion and Analysis
D)Report of the Independent Accountants
Answer: D
Q3) A company with healthy cash flows from operating activities is in a good position to repay its debts.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: The Accounting Information System
Available Study Resources on Quizplus for this Chatper
249 Verified Questions
249 Flashcards
Source URL: https://quizplus.com/quiz/65787
Sample Questions
Q1) Credits are always on the ____________________ side of a T-account.
Answer: right
Q2) Which of the following accounts is increased by a credit entry?
A)cash
B)dividends
C)capital stock
D)salary expense
Answer: C
Q3) The purchase of office equipment on credit has what effect on the accounting equation?
A)assets and stockholders' equity decrease
B)liabilities increase and stockholders' equity decreases
C)assets and liabilities increase
D)assets and liabilities decrease
Answer: C
Q4) This principle is used to determine when revenue is recorded and reported.
Answer: J
Q5) Requires that publicly traded companies file financial information on a timely basis. Answer: C
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Accrual Accounting
Available Study Resources on Quizplus for this Chatper
216 Verified Questions
216 Flashcards
Source URL: https://quizplus.com/quiz/65786
Sample Questions
Q1) Which of the following adjusting entries involves the cash account?
A)Deferred Revenues
B)Accrued Expenses
C)Deferred Liabilities
D)None of these.
Answer: D
Q2) Which one of the following adjustments decreases net income for the period?
A)Recognition of depreciation on plant assets
B)Recognition of interest earned on a note receivable
C)Recognition of services that had been provided to customers but the cash has not yet been received
D)Recognition of rent earned that had been received in advance from customers
Answer: A
Q3) When cash is paid before an expense is incurred, an accrual is necessary.
A)True
B)False Answer: False
Q4) Rent Revenue Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Internal Control and Cash
Available Study Resources on Quizplus for this Chatper
210 Verified Questions
210 Flashcards
Source URL: https://quizplus.com/quiz/65785
Sample Questions
Q1) During the bank reconciliation process, an accountant identified an error. A check written for $20 to pay a supplier for goods purchased on credit was erroneously recorded in the company's records for $200. Which of the following entries would correct this error?
A)Cash 180 Accounts Payable 180
B)Cash 180 Accounts Receivable 180
C)Account Receivable 180 Accounts Payable 180
D)None of these, as the error should be corrected by the supplier's personnel
Q2) A debit memo appeared on the May bank statement. How should this amount be treated on the May bank reconciliation?
A)Add it to the company's balance.
B)Add it to the bank balance.
C)Deduct it from the company's balance.
D)Deduct it from the bank balance.
Q3) The clerk in the accounting department records both purchases and payments of invoices.
Q4) An accounting department employee records cash receipts from customers and prepares the bank deposit slips.
Q5) Segregation of duties
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Sales and Receivables
Available Study Resources on Quizplus for this Chatper
158 Verified Questions
158 Flashcards
Source URL: https://quizplus.com/quiz/65784
Sample Questions
Q1) The principal amount of a note receivable plus the interest due is referred to as the note's
A)face valve.
B)promissory value.
C)expected value.
D)maturity value.
Q2) How will the lender of the promissory note record the note on its books?
A)The promissory note will be recorded as an asset.
B)The promissory note will be recorded as a contra asset.
C)The promissory note will be recorded as revenue.
D)The promissory note will be recorded as an expense.
Q3) Refer to Absolute Appliances. What amount should the company recognize as interest revenue in 2013?
A)$ -0-
B)$1,000
C)$2,000
D)$3,000
Q4) Net Sales = Total credit sales - Sales Discounts - Sales Returns and Allowances
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Cost of Goods Sold and Inventory
Available Study Resources on Quizplus for this Chatper
238 Verified Questions
238 Flashcards
Source URL: https://quizplus.com/quiz/65783
Sample Questions
Q1) Describe how the inventories of manufacturers differ from the inventories of retailers.
Q2) Under a periodic inventory system, the Purchases account accumulates the cost of the inventory acquired during the period.
A)True
B)False
Q3) Refer to the information provided for Stallworth Corp. How many units did the company sell during November?
A)240
B)140
C)100
D)50
Q4) Refer to the information provided for Dollar Town. Calculate the company's gross margin.
A)$40,800
B)$43,200
C)$46,800
D)$51,000
Q5) Merchandise held for sale in the normal course of business.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Operating Assets
Available Study Resources on Quizplus for this Chatper
193 Verified Questions
193 Flashcards
Source URL: https://quizplus.com/quiz/65782
Sample Questions
Q1) What impact does materiality have on the determination of how a cost related to a plant asset is reported on the financial statements?
Q2) All intangible assets are subject to amortization.
A)True
B)False
Q3) Refer to Fantasy Cruise Lines. What will be the book value of the ship after 10 years?
A)$200,000
B)$400,000
C)$ 0
D)$100,000
Q4) A company sold equipment at a loss. What is the impact on the balance sheet of removing the equipment account and its related accumulated depreciation account?
A)reduces total assets
B)increases total assets
C)has no effect on total assets
D)increase total assets and decrease total equity
Q5) Represent future economic benefit to the company but they lack physical substance
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Current and Contingent Liabilities
Available Study Resources on Quizplus for this Chatper
187 Verified Questions
187 Flashcards
Source URL: https://quizplus.com/quiz/65781
Sample Questions
Q1) During 2013, Going, Going, Gone sold 100 hot air balloons for $4,000 each. The balloons carry a 5-year warranty for defects. Estimates indicate that repair costs will average 4% of the total selling price. The estimated warranty liability at the beginning of the year was $42,000. $11,000 in claims was actually incurred during the year to honor their warranty. What was the balance in the estimated warranty liability at the end of the year?
A)$47,000
B)$42,000
C)$37,000
D)$ 5,000
Q2) Accounts payable represent amounts owed to outside suppliers of goods and services; whereas ____________________ reflect amounts owed in which a formal agreement or contract has been signed.
Q3) Liabilities created by adjusting entries
Q4) (Cash + Marketable Securities)/ Current Liabilities
Q5) Your sales increased by 10% over the two years but your income increased by 120%.This is an indication that you controlled your expenses quite well.
Q6) Social security and medicare taxes owed.
Q7) (Cash + Marketable Securities + Accounts Receivable)/ Current Liabilities
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Long-Term Liabilities
Available Study Resources on Quizplus for this Chatper
160 Verified Questions
160 Flashcards
Source URL: https://quizplus.com/quiz/65780
Sample Questions
Q1) On January 01, 2013, Kale Farms purchased a tractor for $20,000. The company signed a 6% installment note to pay off the debt with 48 monthly payments over four years. Each payment is $469.70. How much interest must be paid over the life of the loan?
A)$4,800.00
B)$2,545.60
C)$1,200.00
D)$0 since all of the interest was paid at the time the loan was recorded.
Q2) When a bond is issued at a discount, the amortization of the bond interest increases each year using the straight line method.
A)True
B)False
Q3) Refer to King Cotton Company. What is the percent increase/decrease of long-term liabilities from 2012 to 2013? Which liability appears to have caused the greatest change?
Q4) A contract that gives one party the right to use an asset that belongs to another party.
Q5) Give the lender the option to convert the debt into other securities-typically shares of common stock.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Stockholders Equity
Available Study Resources on Quizplus for this Chatper
242 Verified Questions
242 Flashcards
Source URL: https://quizplus.com/quiz/65779
Sample Questions
Q1) Represents the owners' claims against the assets of a corporation after all liabilities have been deducted.
Q2) If preferred stock is convertible, then the preferred shareholders have the option to trade voting privileges for the dividend payment preference.
A)True
B)False
Q3) Lending Branch, Inc. was incorporated as a new business on May 1, 2014. The company is authorized to issue 50,000 shares of $1 par common stock and 10,000 shares of 4%, $5 par cumulative, participating preferred stock. On May 1, 2014, the company issued 15,000 shares of common stock for $8 per share. Net income for the period ended December 31, 2014 ,was $115,000. Cash dividends in the amount of $30,000 were declared, but only $25,000 were paid as of year-end.Prepare the stockholders' equity section of the balance sheet at December 31, 2014.
Q4) A corporate charter is sometimes called the articles of incorporation.
A)True
B)False
Q5) The number of shares the corporation has sold to stockholders.
Q6) If a corporation has only one class of stock, this is usually it.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: The Statement of Cash Flows
Available Study Resources on Quizplus for this Chatper
206 Verified Questions
206 Flashcards
Source URL: https://quizplus.com/quiz/65778
Sample Questions
Q1) Refer to Merry Maids Company. Give some examples of circumstances that would result in net cash used by investing activities as shown above.
Q2) Refer to Mary Kay Cosmetics. What amount was paid to acquire equipment during 2014?
Q3) Refer to Merry Maids Company. Describe the link(s)between a statement of cash flows, the balance sheet, and the income statement if a company uses the indirect method to prepare the operating activities section of the statement of cash flows.
Q4) Determines operating cash flow by adjusting each item on the income statement by the changes in the related current asset or liability accounts.
Q5) A transaction that represents both an investing and financing activity but that does not involve the receipt or payment of cash.
Q6) Cash flows from selling machinery would be classified as investing activities. A)True B)False
Q7) Issued long term mortgage to acquire land and a building.
Q8) Include cash sales to customers and cash dividends received.
Q9) Sold common stock for cash.
Page 13
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: Financial Statement Analysis
Available Study Resources on Quizplus for this Chatper
233 Verified Questions
233 Flashcards
Source URL: https://quizplus.com/quiz/65777
Sample Questions
Q1) The relationship between dividends and the market price of a company's stock.
Q2) Refer to Rapid Sign Corporation. What is the total payout ratio for 2015?
A)102%
B)88%
C)66%
D)30%
Q3) Refer to Rags to Riches. Which of the following would result from a horizontal analysis of the company's income statement?
A)Cost of goods sold is 42.1% of net sales for 2015.
B)Gross profit is 57.9% of net sales for 2015.
C)Cost of goods sold decreased 23.8% from 2014 to 2015.
D)Inventory decreased $4,000 or 20% during 2014.
Q4) Refer to Regency Lighting. Complete a common size horizontal analysis of the current assets section of the balance sheet for 2015. Your answers should be expressed as percentages and rounded to one decimal place. Provide a short explanation of this analysis.
Q5) What do profitability ratios measure?
Q6) Dividend yield ratio
Q7) Interest expense
Q8) Times interest earned ratio
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Investments
Available Study Resources on Quizplus for this Chatper
73 Verified Questions
73 Flashcards
Source URL: https://quizplus.com/quiz/65790
Sample Questions
Q1) Method of accounting for all investments in debt securities that are classified as held-to-maturity securities
Q2) Equity or debt investments that management intends to sell in the near term, typically within a single month
Q3) Method of accounting required for all passive investments in which the investment is valued at the price for which the investor could sell the asset in an orderly transaction between market participants
Q4) A business combination is recorded at the cost of acquisition, without regard to the seller's ____________________ value.
Q5) The Allowance to Adjust Trading Securities to Market account is
A)an asset account.
B)a contra asset account.
C)a liability account.
D)an unrealized gain or loss account.
Q6) A passive investment is one in which the owner
A)is not attempting to exert influence over the company.
B)owns between 15-25% of the company's outstanding stock. C)uses the equity method of accounting for the investment. D)is gradually attempting to gain control over the company.
Page 15
To view all questions and flashcards with answers, click on the resource link above.
Chapter 14: Time Value of Money
Available Study Resources on Quizplus for this Chatper
47 Verified Questions
47 Flashcards
Source URL: https://quizplus.com/quiz/65789
Sample Questions
Q1) The future value of a single amount is the original cash flow plus simple interest as of a specific future date.
A)True
B)False
Q2) Compound interest is a method of calculating the time value of money in which interest is earned on the previous periods' interest.
A)True
B)False
Q3) Jack and Jill are saving for a house. How much will they have saved if they make 8 deposits of $5,000 each (one at the end of each year)into an account that earns 4% interest compounded annually?
A)$51,169.86
B)$63,732.74
C)$46,071.15
D)$49,506.11
Q4) The interest period is the time interval between interest calculations.
A)True B)False
Q5) Cash flows are described as either single cash flows or _______________.
To view all questions and flashcards with answers, click on the resource link above. Page 16