Introduction to Financial Accounting
Exam Materials
Course Introduction
Introduction to Financial Accounting provides students with a foundational understanding of the principles, concepts, and techniques used to record, classify, and interpret financial transactions of organizations. The course covers essential topics such as the accounting cycle, preparation of financial statements, the double-entry system, and the roles of revenue, expenses, assets, liabilities, and equity. Emphasis is placed on the use and analysis of financial information for decision-making purposes, the application of generally accepted accounting principles (GAAP), and the importance of ethical considerations in financial reporting. By the end of the course, students will be able to prepare and analyze basic financial statements, understand the impact of accounting choices on organizational performance, and communicate key financial information effectively.
Recommended Textbook
Financial Managerial Accounting 14th Edition by Carl Warren
Available Study Resources on Quizplus
26 Chapters
4705 Verified Questions
4705 Flashcards
Source URL: https://quizplus.com/study-set/3661
Page 2
Chapter 1: Introduction to Accounting and Business
Available Study Resources on Quizplus for this Chatper
176 Verified Questions
176 Flashcards
Source URL: https://quizplus.com/quiz/72876
Sample Questions
Q1) Net income and net profit do not mean the same thing.
A)True
B)False
Answer: False
Q2) Within the United States,the dominant body in the primary development of accounting principles is the
A) American Institute of Certified Public Accountants (AICPA)
B) American Accounting Association (AAA)
C) Financial Accounting Standards Board (FASB)
D) Institute of Management Accountants (IMA)
Answer: C
Q3) Based on this information,is Scott Industries profitable? Explain your answer. Answer: ($165,000 Fees earned + $3,000 Interest revenue) ($40,000 Salaries & wages expense + $44,000 Selling expenses + $18,000 Income taxes expense + $20,000 Rent expense)= $46,000 Net income Scott Industries had net income for the period of $46,000.Since revenues exceeded expenses for the period,the company would be considered profitable.
Q4) What are the three sections of the statement of cash flows?
Answer: Operating Activities,Investing Activities,and Financing Activities
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Analyzing Transactions
Available Study Resources on Quizplus for this Chatper
210 Verified Questions
210 Flashcards
Source URL: https://quizplus.com/quiz/72868
Sample Questions
Q1) A debit signifies a decrease in
A) assets
B) expenses
C) dividends
D) revenues
Answer: D
Q2) The balance of the account can be determined by adding all of the debits,adding all of the credits,and adding the amounts together.
A)True
B)False
Answer: False
Q3) Which of the following accounts would be increased with a credit?
A) Land; Accounts Payable; Dividends
B) Accounts Payable; Unearned Revenue; Common Stock
C) Dividends; Accounts Receivable; Unearned Revenue
D) Cash; Accounts Receivable; Common Stock
Answer: B
Q4) Prepare a trial balance,listing the accounts in their proper order. Answer: 11ea8952_b5b6_efd3_861b_e994a5741833_TB6238_00
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: The Adjusting Process
Available Study Resources on Quizplus for this Chatper
183 Verified Questions
183 Flashcards
Source URL: https://quizplus.com/quiz/72867
Sample Questions
Q1) If the adjustment for accrued salaries at the end of the period is inadvertently omitted,both liabilities and stockholders' equity will be understated for the period.
A)True
B)False
Answer: False
Q2) The updating of accounts when financial statements are prepared is called the adjusting process.
A)True
B)False
Answer: True
Q3) If there is a balance in the unearned subscriptions account after adjusting entries are made,it represents a(n)
A) deferral
B) accrual
C) dividend
D) revenue
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Completing the Accounting Cycle
Available Study Resources on Quizplus for this Chatper
168 Verified Questions
168 Flashcards
Source URL: https://quizplus.com/quiz/72866
Sample Questions
Q1) Which of the accounts below would be closed by posting a debit to the account?
A) Unearned Revenue
B) Fees Earned
C) Dividends
D) Miscellaneous Expense
Q2) The chart of accounts,the journal,and the ledger are essential parts of the accounting system.
A)True
B)False
Q3) You evaluate loan requests as part of your job at Eastwood National Bank.One loan request you received is from Surfer Dude Supplies,a small company.Richard Tracy,the CEO,is requesting $105,000 and brings you a trial balance (or statement of accounts)for his first year of operations ended December 31.
While you are willing to work with Richard,how would you explain to him that a complete set of financial statements from his accountant would be more useful for evaluating the loan request?
Q4) Describe a classified balance sheet.
To view all questions and flashcards with answers, click on the resource link above.
6
Chapter 5: Accounting for Merchandising Businesses
Available Study Resources on Quizplus for this Chatper
205 Verified Questions
205 Flashcards
Source URL: https://quizplus.com/quiz/72865
Sample Questions
Q1) A company using the periodic inventory system has the following account balances: Inventory at the beginning of the year,$3,600; Freight In,$650; Purchases,$10,700; Purchases Returns and Allowances,$1,950; Purchases Discounts,$330.The cost of merchandise purchased is equal to
A) $12,670
B) $9,070
C) $8,420
D) $17,230
Q2) A business using the perpetual inventory system,with its detailed subsidiary records,does not need to take a physical inventory.
A)True
B)False
Q3) Under the perpetual inventory system,when a sale is made,both the sale and cost of goods sold are recorded.
A)True
B)False
Q4) Freight-in is considered a cost of purchasing inventory.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Inventories
Available Study Resources on Quizplus for this Chatper
161 Verified Questions
161 Flashcards
Source URL: https://quizplus.com/quiz/72864
Sample Questions
Q1) If ending inventory for the year is understated,net income for the year is overstated.
A)True
B)False
Q2) If the perpetual inventory system is used,the inventory account is debited for purchases of merchandise.
A)True
B)False
Q3) Control of inventory should begin as soon as the inventory is received.Which of the following internal control steps is not done to meet this goal?
A) check the invoice to the receiving report
B) check the invoice to the purchase order
C) check the invoice with the person who specifically purchased the item
D) check the invoice extensions and totals
Q4) Use of the retail inventory method requires taking a physical count of inventory.
A)True
B)False
Q5) Average cost periodic (round average to nearest cent)
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Internal Control and Cash
Available Study Resources on Quizplus for this Chatper
155 Verified Questions
155 Flashcards
Source URL: https://quizplus.com/quiz/72863
Sample Questions
Q1) Which of the following would be subtracted from the balance per bank on a bank reconciliation?
A) outstanding checks
B) deposits in transit
C) notes collected by the bank
D) service charges
Q2) The objectives of internal control are to
A) control the internal organization of the accounting department personnel and equipment
B) provide reasonable assurance that assets are safeguarded and used for business purposes,business information is accurate,and laws and regulations are complied with C) prevent fraud,and promote the social interest of the company
D) provide control over "internal-use only" reports and employee internal conduct
Q3) The bank reconciliation is an important part of the system of internal controls.
A)True
B)False
Q4) Create an outstanding checks list for Madison at the end of May.
2.What is the total amount of checks that cleared the bank (written in May)?
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Receivables
Available Study Resources on Quizplus for this Chatper
163 Verified Questions
163 Flashcards
Source URL: https://quizplus.com/quiz/72862
Sample Questions
Q1) Receivables that are expected to be collected in cash in eighteen months or less are reported in the current asset section of the balance sheet.
A)True
B)False
Q2) After the accounts are adjusted and closed at the end of the fiscal year,Accounts Receivable has a balance of $340,000 and Allowance for Doubtful Accounts has a balance of $51,000.What is the net realizable value of the accounts receivable?
A) $51,000
B) $289,000
C) $340,000
D) $391,000
Q3) Discuss the similarities and differences between accounts receivable,notes receivable,and other receivables.
Q4) Discuss the (a)focus and (b)financial statement emphasis of the percent of sales and the analysis of receivables methods of estimating bad debts.
Q5) Discuss the two methods for recording bad debt expense.What type of company uses each method?
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Long-Term Assets: Fixed and Intangible
Available Study Resources on Quizplus for this Chatper
177 Verified Questions
177 Flashcards
Source URL: https://quizplus.com/quiz/72861
Sample Questions
Q1) A capital expenditure results in a debit to
A) an expense account
B) a capital account
C) a liability account
D) an asset account
Q2) The natural resources of some companies include
A) timber,metal ores,and minerals
B) timber,equipment,and patents
C) minerals,trademarks,and land
D) metal ores,copyrights,and supplies
Q3) Fixed assets are ordinarily presented on the balance sheet
A) at current market values
B) at replacement costs
C) at cost less accumulated depreciation
D) in a separate section along with intangible assets
Q4) Land acquired as a speculation is reported under Investments on the balance sheet.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 10: Liabilities: Current,installment Notes,and
Contingencies
Available Study Resources on Quizplus for this Chatper
188 Verified Questions
188 Flashcards
Source URL: https://quizplus.com/quiz/72886
Sample Questions
Q1) The discount on a note payable is charged to an account that has a normal credit balance.
A)True
B)False
Q2) Which of the following is the most desirable quick ratio?
A) 1.20
B) 1.00
C) 0.95
D) 0.50
Q3) Current liabilities are
A) due and receivable within one year
B) due and to be paid out of current assets within one year
C) due,but not payable for more than one year
D) payable if a possible subsequent event occurs
Q4) FICA tax is a payroll tax that is paid only by employers.
A)True B)False
Q5) Federal income taxes withheld increase the employer's payroll tax expense. A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Liabilities: Bonds Payable
Available Study Resources on Quizplus for this Chatper
154 Verified Questions
154 Flashcards
Source URL: https://quizplus.com/quiz/72885
Sample Questions
Q1) On the first day of the fiscal year,a company issues an $800,000,6%,5-year bond that pays semiannual interest of $24,000 ($800,000 × 6% × 1 / 2),receiving cash of $690,960.Journalize the entry to record the first interest payment and the amortization of the related bond discount using the straight-line method.
Q2) The present value of an annuity is the sum of the present values of each cash flow. A)True B)False
Q3) The balance in Premium on Bonds Payable
A) should be reported on the balance sheet as a deduction from the related bonds payable
B) should be allocated to the remaining periods for the life of the bonds by the straight-line method,if the results obtained by that method materially differ from the results that would be obtained by the effective interest rate method C) would be added to the related bonds payable on the balance sheet D) should be reported in the paid-in capital section of the balance sheet
Q4) Bondholders are creditors of the issuing corporation. A)True B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: Corporations: Organization, stock Transactions, and Dividends
Available Study Resources on Quizplus for this Chatper
193 Verified Questions
193 Flashcards
Source URL: https://quizplus.com/quiz/72884
Sample Questions
Q1) A stock split results in a transfer at market value from retained earnings to paid-in capital.
A)True
B)False
Q2) A class of stock having first rights to dividends of a corporation
A)authorized shares
B)issued shares
C)outstanding shares
D)par value
E)common stock
F)preferred stock
G)Paid-In Capital in Excess of Par
H)transfer agent
Q3) A corporation has 50,000 shares of $25 par stock outstanding.If the corporation issues a 3-for-1 stock split,the number of shares outstanding after the split will be
A) 150,000 shares
B) 50,000 shares
C) 100,000 shares
D) 16,666 shares
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Statement of Cash Flows
Available Study Resources on Quizplus for this Chatper
175 Verified Questions
175 Flashcards
Source URL: https://quizplus.com/quiz/72883
Sample Questions
Q1) The last item on the statement of cash flows prior to the schedule of noncash investing and financing activities reports
A) the change in cash
B) cash at the end of the year
C) net cash flow from investing activities
D) net cash flow from financing activities
Q2) To determine cash payments for merchandise for the statement of cash flows using the direct method,a decrease in accounts payable is added to the cost of goods sold.Assume all accounts payable are owed to merchandise suppliers.
A)True
B)False
Q3) The statement of cash flows reports a firm's major sources of cash receipts and major uses of cash for a period of time.
A)True
B)False
Q4) The statement of cash flows is not one of the basic financial statements.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Financial Statement Analysis
Available Study Resources on Quizplus for this Chatper
189 Verified Questions
189 Flashcards
Source URL: https://quizplus.com/quiz/72882
Sample Questions
Q1) Using measures to assess a business's ability to pay its current liabilities is called current position analysis.
A)True B)False
Q2) The excess of current assets over current liabilities is referred to as working capital.
A)True
B)False
Q3) If the accounts receivable turnover for the current year has decreased when compared with the ratio for the preceding year,there has been an acceleration in the collection of receivables.
A)True
B)False
Q4) A firm selling food should have higher inventory turnover rate than a firm selling office furniture.
A)True B)False
Q5) What information is generally included in the Management Discussion and Analysis (MD&A)section of a corporate annual report?
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Introduction to Managerial Accounting
Available Study Resources on Quizplus for this Chatper
195 Verified Questions
195 Flashcards
Source URL: https://quizplus.com/quiz/72881
Sample Questions
Q1) All of the following are examples of indirect labor except
A) maintenance personnel
B) janitorial personnel
C) machine operators
D) plant managers
Q2) Rent expense on a factory building would be treated as a(n)
A) period cost
B) product cost
C) indirect cost
D) direct material cost
Q3) Cost of oil used to lubricate factory machinery and equipment is an example of a direct materials cost.
A)True
B)False
Q4) Which of the following manufacturing costs is an indirect cost of producing a product?
A) oil lubricants used for factory machinery
B) commissions for sales personnel
C) hourly wages of an assembly worker
D) memory chips for a microcomputer manufacturer
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Job Order Costing
Available Study Resources on Quizplus for this Chatper
185 Verified Questions
185 Flashcards
Source URL: https://quizplus.com/quiz/72880
Sample Questions
Q1) A difference in quantity of materials used on two comparable jobs may be caused by
A) inadequately trained employees
B) poor quality materials
C) employee carelessness
D) all of these
Q2) The direct labor and overhead costs of providing services to clients are accumulated in a work in process account.
A)True
B)False
Q3) What is the balance of Sales for Adams Company at the end of the first quarter?
A) $1,685
B) $2,685
C) $1,000
D) $685
Q4) Perpetual inventory controlling accounts and subsidiary ledgers are maintained for materials,work in process,and finished goods in job order costing systems.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 18
Chapter 17: Process Cost Systems
Available Study Resources on Quizplus for this Chatper
180 Verified Questions
180 Flashcards
Source URL: https://quizplus.com/quiz/72879
Sample Questions
Q1) The cost of production report summarizes (1)the units for which the department is accountable and the units to be assigned costs and (2)the costs charged to the department and the allocation of those costs.
A)True
B)False
Q2) Assuming that all direct materials are placed in process at the beginning of production and that the first-in,first-out method of inventory costing is used,what is the equivalent units for materials and conversion costs,respectively?
A) 14,000 and 12,160
B) 10,400 and 10,960
C) 14,000 and 13,600
D) 10,400 and 10,240
Q3) Process manufacturers typically use large machines to process a continuous flow of raw materials into a finished state.
A)True
B)False
Q4) Conversion costs are generally added evenly throughout the process.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 19
Chapter 18: Activity-Based Costing
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/72878
Sample Questions
Q1) Using multiple department factory overhead instead of a single plantwide factory overhead rate:
A) results in more accurate product costs
B) results in distorted product costs
C) is simpler and less expensive to compute than a plantwide rate
D) applies overhead costs to all departments equally
Q2) Pinacle Corp.budgeted $700,000 of overhead cost for the current year.Actual overhead costs for the year were $650,000.Pinacle's plantwide allocation base,machine hours,was budgeted at 100,000 hours.Actual machine hours were 80,000.A total of 100,000 units was budgeted to be produced and 98,000 units were actually produced.Pinacle's plantwide factory overhead rate for the current year is:
A) $8.13 per machine hour
B) $7.00 per machine hour
C) $6.50 per machine hour
D) $8.75 per machine hour
Q3) When a plantwide factory overhead rate is used,the total overhead costs allocated to all products are the same.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 20
Chapter 19: Cost-Volume-Profit Analysis
Available Study Resources on Quizplus for this Chatper
421 Verified Questions
421 Flashcards
Source URL: https://quizplus.com/quiz/72877
Sample Questions
Q1) Unit variable cost does not change as the number of units of activity changes.
A)True
B)False
Q2) If a business sells four products,it is not possible to estimate the break-even point.
A)True
B)False
Q3) If a business had sales of $4,000,000 and a margin of safety of 25%,the break-even point was
A) $5,000,000
B) $3,000,000
C) $12,000,000
D) $1,000,000
Q4) If the volume of sales is $6,000,000 and sales at the break-even point amount to $4,800,000,the margin of safety is 25%.
A)True
B)False
Q5) The Dean Company has sales of $500,000,and the break-even point in sales dollars of $300,000.Determine the company's margin of safety percentage.
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 20: Variable Costing for Management Analysis
Available Study Resources on Quizplus for this Chatper
151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/72875
Sample Questions
Q1) Under absorption costing,the amount of income reported from operations can be increased by producing more units than are sold.
A)True
B)False
Q2) For a period during which the quantity of inventory at the end equals the inventory at the beginning,income from operations reported under variable costing will be smaller than income from operations reported under absorption costing.
A)True
B)False
Q3) On the variable costing income statement,deduction of the variable cost of goods sold from sales yields manufacturing margin.
A)True
B)False
Q4) For a period during which the quantity of product manufactured was less than the quantity sold,income from operations reported under absorption costing will be smaller than income from operations reported under variable costing.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 22
Chapter 21: Budgeting
Available Study Resources on Quizplus for this Chatper
181 Verified Questions
181 Flashcards
Source URL: https://quizplus.com/quiz/72874
Sample Questions
Q1) The number of pounds of materials A and B required for July production is
A) 216,000 lbs.of A; 36,000 lbs.of B
B) 216,000 lbs.of A; 72,000 lbs.of B
C) 234,000 lbs.of A; 39,000 lbs.of B
D) 225,000 lbs.of A; 37,500 lbs.of B
Q2) Goal conflict can be avoided if budget goals are carefully designed for consistency across all areas of the organization.
A)True
B)False
Q3) The master budget of a small manufacturer would normally include all component budgets that impact on the financial statements.
A)True
B)False
Q4) Past performance is the best overall basis for evaluating current performance and assessing the need for corrective action.
A)True
B)False
Q5) What is a cash budget? How does management use a cash budget?
Q6) What is a capital expenditures budget?
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 22: Evaluating Variances From Standard Costs
Available Study Resources on Quizplus for this Chatper
130 Verified Questions
130 Flashcards
Source URL: https://quizplus.com/quiz/72873
Sample Questions
Q1) Ideal standards are developed under conditions that assume no idle time,no machine breakdowns,and no materials spoilage.
A)True
B)False
Q2) The direct labor time variance measures the efficiency of the direct labor force.
A)True
B)False
Q3) Jaxson Corporation has the following data related to direct labor costs for September: actual costs are 10,200 hours at $15.75 per hour and standard costs are 10,800 hours at $15.50 per hour.
What is the direct labor time variance?
A) $9,300 favorable
B) $9,300 unfavorable
C) $9,450 favorable
D) $9,450 unfavorable
Q4) Standard costs serve as a device for measuring efficiency.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 24
Chapter 23: Evaluating Decentralized Operations
Available Study Resources on Quizplus for this Chatper
175 Verified Questions
175 Flashcards
Source URL: https://quizplus.com/quiz/72872
Sample Questions
Q1) The minimum accepted divisional income from operations is set by top management by establishing a maximum rate of return considered acceptable for invested assets.
A)True
B)False
Q2) The income from operations for the Rails Division is
A) $60,800
B) $33,600
C) $8,700
D) $21,150
Q3) Income from operations for Division L is $250,000,total service department charges are $400,000 and operating expenses are $2,750,000.What are the revenues for Division L?
A) $650,000
B) $3,000,000
C) $3,400,000
D) $2,750,000
Q4) Developing and retaining quality managers are advantages of decentralization. A)True
B)False
Page 25
To view all questions and flashcards with answers, click on the resource link above.
Chapter 24: Differential Analysis and Product Pricing
Available Study Resources on Quizplus for this Chatper
173 Verified Questions
173 Flashcards
Source URL: https://quizplus.com/quiz/72871
Sample Questions
Q1) In addition to the differential costs in an equipment-replacement decision,the remaining useful life of the old equipment and the estimated life of the new equipment are important considerations.
A)True
B)False
Q2) Assume that Widgeon produced enough product with the highest contribution margin per unit to use 1,000 hours of machine time.Product demand does not warrant any more production of that product.What is the maximum additional contribution margin that can be realized by utilizing the remaining 1,000 hours on the product with the second highest contribution margin per hour?
A) $35,000
B) $7,000
C) $4,000
D) $28,000
Q3) Make-or-buy decisions should be made only with related parties.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 25: Capital Investment Analysis
Available Study Resources on Quizplus for this Chatper
186 Verified Questions
186 Flashcards
Source URL: https://quizplus.com/quiz/72870
Sample Questions
Q1) Which of the following is not considered a complicating factor in capital investment decisions?
A) income tax
B) lease versus purchasing options
C) equal proposal lives
D) qualitative factors
Q2) Determine the average rate of return for a project that is estimated to yield total income of $250,000 over 4 years,cost $480,000,and has a $20,000 residual value.
Q3) The amount of the average investment for a proposed investment of $120,000 in a fixed asset with a useful life of 4 years,straight-line depreciation,no residual value,and an expected total net income of $21,600 for the 4 years,is
A) $30,000
B) $21,600
C) $5,400
D) $60,000
Q4) A project has estimated annual net cash flows of $80,000.It is estimated to cost $600,000.Determine the cash payback period.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 26: Lean Manufacturing and Activity Analysis
Available Study Resources on Quizplus for this Chatper
121 Verified Questions
121 Flashcards
Source URL: https://quizplus.com/quiz/72869
Sample Questions
Q1) What do lean manufacturers demand from their vendors?
A) High quality materials
B) Low cost materials
C) On-time deliveries
D) All of the above
Q2) The lean philosophy views inventory as a necessary buffer to protect against process problems.
A)True
B)False
Q3) From the above schedule,calculate the internal failure costs.
Q4) Which of the following is not a prevention cost?
A) preventive maintenance
B) operator training
C) design engineering
D) testing finished products
Q5) Inventory reduction is a ____ principle.
A) lean
B) traditional processing
C) economic
D) wait time
To view all questions and flashcards with answers, click on the resource link above. Page 28