Introduction to Financial Accounting Review
Questions
Course Introduction
Introduction to Financial Accounting provides students with a foundational understanding of the principles and practices used to record, classify, and summarize financial transactions for businesses and other organizations. The course covers key topics such as the accounting cycle, preparation and analysis of financial statements, understanding assets, liabilities, equity, revenues, and expenses, as well as the regulatory environment governing financial reporting. Through practical examples and exercises, students will develop the skills necessary to interpret financial information, make informed business decisions, and communicate financial data effectively.
Recommended Textbook
Fundamental Financial Accounting Concepts 10th Edition by Thomas P Edmonds
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13 Chapters
1246 Verified Questions
1246 Flashcards
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Page 2
Chapter 1: An Introduction to Accounting
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94 Verified Questions
94 Flashcards
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Sample Questions
Q1) Which of the following would be reported in the cash flow from financing activities section of a statement of cash flows?
A)Paid cash for dividends
B)Received cash for common stock
C)Sold land for cash
D)Paying cash for dividends and receiving cash from common stock
Answer: D
Q2) Borrowing cash from the bank is an example of which type of transaction?
A)Asset source
B)Claims exchange
C)Asset use
D)Asset exchange
Answer: A
Q3) In a market,a company that manufactures cars would be referred to as a conversion agent.
A)True
B)False
Answer: True
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Chapter 2: Accounting for Accruals and Deferrals
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92 Flashcards
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Sample Questions
Q1) Asset use transactions always involve the payment of cash.
A)True
B)False
Answer: False
Q2) The entry to recognize depreciation expense incurred on equipment involves which of the following?
A)A decrease in assets
B)An increase in liabilities
C)An increase in assets
D)A decrease in liabilities
Answer: A
Q3) What is the amount of net income that will be reported on the Year 1 income statement?
A)$2,200
B)$3,200
C)$1,000
D)$200
Answer: C
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4
Chapter 3: The Double-Entry Accounting System
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106 Verified Questions
106 Flashcards
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Sample Questions
Q1) Which of the following accounts is decreased with a credit?
A)Unearned Revenue
B)Prepaid Insurance
C)Accounts Payable
D)Service Revenue
Answer: B
Q2) The Baker Company purchased $1,000 of supplies on account.How would this event be reflected in T-accounts?
A)On the right side of the Supplies T-account
B)On the left side of the Supplies T-account
C)On the left side of the Accounts Payable T-account
D)On the right side of the Cash T-account
Answer: B
Q3) The entry to record revenue earned on account includes a debit to accounts receivable and a credit to revenue.
A)True
B)False Answer: True
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5
Chapter 4: Accounting for Merchandising Businesses
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114 Verified Questions
114 Flashcards
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Sample Questions
Q1) A company's amount of cost of goods sold reported on the income statement will be the same with a periodic inventory system as it would be with a perpetual system.
A)True
B)False
Q2) What effect will the return of merchandise to the supplier in event (2)have on Darlington's financial statements?
A)Assets and stockholders' equity decrease by $1,176.
B)Assets and liabilities decrease by $1,176.
C)Assets and liabilities decrease by $1,200.
D)None.It is an asset exchange transaction.
Q3) What is (are)the term(s)used to describe a discount given to encourage prompt payment?
A)Cash discount.
B)Sales discount by the seller.
C)Purchase discount by the buyer.
D)All of these answer choices are correct.
Q4) Costs of selling inventory are product costs.
A)True
B)False
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Chapter 5: Accounting for Inventories
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86 Flashcards
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Sample Questions
Q1) A discount merchandiser is likely to have a higher inventory turnover than more upscale stores with higher merchandise prices.
A)True
B)False
Q2) Blake Company purchased two identical inventory items.The item purchased first cost $16.00,and the item purchased second cost $18.00.Blake sold one of the items for $24.00.Which of the following statements is true?
A)Ending inventory will be lower if Blake uses the weighted-average rather than the FIFO inventory cost flow method.
B)Cost of goods sold will be higher if Blake uses the FIFO rather than the weighted-average inventory cost flow method.
C)The dollar amount assigned to ending inventory will be the same no matter which inventory cost flow method is used.
D)Gross margin will be higher if Blake uses LIFO rather than the FIFO inventory cost flow method.
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Chapter 6: Internal Control and Accounting for Cash
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82 Flashcards
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Sample Questions
Q1) Internal controls designed to evaluate performance and the degree of compliance with company policies and public laws are classified as administrative controls.
A)True
B)False
Q2) How will a certified check be shown on a company's bank reconciliation?
A)As a deduction to the company's unadjusted book balance.
B)As an increase to the bank's unadjusted bank balance.
C)As a deduction to the bank's unadjusted bank balance.
D)There is no adjustment when preparing the bank reconciliation.
Q3) Which of the following is an internal control procedure used to safeguard a company's assets?
A)Depositing cash receipts in a bank on a timely basis
B)Segregation of duties
C)Preparing a bank reconciliation
D)All of these answer choices are correct
Q4) Typical adjustments to the unadjusted bank balance on a bank reconciliation include deposits in transit and outstanding checks.
A)True
B)False
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Chapter 7: Accounting for Receivables
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Sample Questions
Q1) If a company uses the percent of receivables method to estimate uncollectible accounts,the company will first determine the required ending balance in Allowance for Doubtful Accounts;the Uncollectible Accounts Expense will be the difference between that amount and the unadjusted credit balance in the Allowance for Doubtful Accounts.
A)True B)False
Q2) How would accountants estimate the amount of a company's uncollectible accounts expense?
A)Consider new circumstances that are anticipated to be experienced in the future.
B)Compute as a percentage of credit sales.
C)Consult with trade association and business associates.
D)All of these answer choices are correct.
Q3) Some accountants believe that the percent of revenue method for estimating uncollectible accounts expense is superior to the percent of receivables method because it is more conservative.
A)True B)False
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Chapter 8: Accounting for Long-Term Operational Assets
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) A trademark is a tangible asset with an indefinite useful life.
A)True
B)False
Q2) If the original expected life remained the same (i.e. ,5-years),but at the beginning of Year 4,the salvage value was revised to $8,000,what is the annual depreciation expense for each of the remaining years?
A)$5,440
B)$27,200
C)$13,600
D)$14,800
Q3) A substantial amount spent to improve the quality or extend the life of a long-term asset is called a revenue expenditure.
A)True
B)False
Q4) Title search and transfer document costs incurred to purchase a building are expensed in the period the building is acquired.
A)True
B)False
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Chapter 9: Accounting for Current Liabilities and Payroll
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86 Flashcards
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Sample Questions
Q1) Based on this information alone,what are the amounts of total liabilities that would appear on Riley's December 31 balance sheets for Year 1 and Year 2,respectively?
A)$36,000 and $0
B)$37,890 and $0
C)$37,890 and $38,520
D)$1,890 and $630
Q2) Which of the following statements is true regarding discount notes?
A)They are recorded in the account "notes payable" at more than face value on the day of issue.
B)They are recorded in the account "notes payable" at face value on the day of issue.
C)They are recorded in the account "notes payable" at less than face value on the day of issue.
D)They are not recorded until the maturity date.
Q3) Which of the following is a claims exchange transaction?
A)Accrual of interest on a note payable
B)Issued a note to purchase equipment
C)Repaid principal on a note payable
D)Paid interest on a note payable
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11
Chapter 10: Accounting for Long-Term Debt
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105 Verified Questions
105 Flashcards
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Sample Questions
Q1) Which of the following statements is true when bonds are issued at a premium?
A)The carrying value decreases by equal amounts each year if straight-line amortization is used.
B)The carrying value decreases by equal amounts each year if effective interest amortization is used.
C)The carrying value decreases by larger and larger amounts each year if effective interest amortization is used.
D)The carrying value decreases by equal amounts each year if straight-line amortization is used and decreases by increasing amounts each year if effective interest amortization is used.
Q2) If a bond discount is amortized using the effective interest method,the total amount of interest recognized over the life of the bond is the same as if the straight-line method is used.
A)True
B)False
Q3) Loans that require payment of interest at regular intervals and payment of principal at maturity are installment notes.
A)True
B)False
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Page 12
Chapter 11: Proprietorships,partnerships,and Corporations
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92 Flashcards
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Sample Questions
Q1) The most commonly reported measure of a company's value is earnings per share.
A)True
B)False
Q2) A high price-earnings ratio generally means that investors are optimistic about a company's future growth.
A)True
B)False
Q3) The number of shares of stock outstanding generally is greater than the number of shares of stock issued.
A)True
B)False
Q4) Preferred stockholders' claims to a corporation's assets take precedence over the claims of some creditors.
A)True
B)False
Q5) The book value of a share of stock is equal to the market or selling price of the stock.
A)True
B)False
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Chapter 12: Statement of Cash Flows
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Sample Questions
Q1) The amount of increase in accounts receivable is added to credit sales to calculate the amount of cash inflow from customers when using the direct method to prepare the operating activities section of the statement of cash flows.
A)True
B)False
Q2) How are interest expense and interest paid reported?
A)Interest expense is reported as an operating item on the income statement and interest paid is reported as an investing activity on the statement of cash flows.
B)Interest paid is reported as an operating activity on the statement of cash flows and interest expense is reported as a nonoperating expense on the income statement.
C)Interest expense is reported as an operating expense on the income statement and interest paid is reported as a financing activity on the statement of cash flows.
D)Interest paid is reported as a financing activity on the statement of cash flows and interest expense is reported as an operating item on the income statement.
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Chapter 13: Financial Statement Analysis
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108 Flashcards
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Sample Questions
Q1) Net income divided by net sales is the formula for which of these analytical measures?
A)Return on assets
B)Return on equity
C)Earnings per share
D)Net margin
Q2) You are considering an investment in IBM stock and wish to assess the firm's long-term debt-paying ability and its use of debt financing.All of the following ratios can be used to assess solvency except:
A)Number of times interest is earned.
B)Debt to assets ratio.
C)Debt to equity ratio.
D)Net margin.
Q3) Short-term creditors are usually most interested in assessing:
A)Liquidity.
B)Solvency.
C)Managerial effectiveness.
D)Profitability.
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