Introduction to Financial Accounting Question
Bank
Course Introduction
Introduction to Financial Accounting provides students with a foundational understanding of the principles and practices involved in the preparation and interpretation of financial statements. The course covers key topics such as accounting concepts, the accounting cycle, asset and liability measurement, revenue recognition, and the use of financial information in decision-making. By examining real-world examples and case studies, students develop the skills necessary to analyze financial statements and understand the impact of accounting choices on business performance, preparing them for more advanced studies or professional roles in accounting and finance.
Recommended Textbook
Financial Accounting 4th Canadian Edition by Robert; Libby
Available Study Resources on Quizplus
13 Chapters
1686 Verified Questions
1686 Flashcards
Source URL: https://quizplus.com/study-set/3872
Page 2
Chapter 1: Financial Statements and Business Decisions
Available Study Resources on Quizplus for this Chatper
119 Verified Questions
119 Flashcards
Source URL: https://quizplus.com/quiz/77165
Sample Questions
Q1) What is the amount of revenue recognized in the income statement by a company that sells goods to customers?
A)The cash collected from customers during the current period.
B)Total sales,both cash and credit sales,for the period.
C)Total sales minus beginning amount of trade receivables.
D)The amount of cash collected plus the beginning amount of trade receivables.
Answer: B
Q2) During 20B,its second year in operation,Banner Company delivered goods to customers for which customers paid or promised to pay $5,850,000.Assume all sales were on account and the amount of cash collected from customers was $5,960,000.The amount of trade receivables at the beginning of 20B was $1,200,000.Based on this information,what is the amount of trade receivables that Banner would report at the end of 20B?
A)$110,000.
B)$1,090,000.
C)$1,310,000.
D)$5,850,000.
Answer: B
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Investing and Financing Decisions and the Accounting System
Available Study Resources on Quizplus for this Chatper
100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/77160
Sample Questions
Q1) A T-account shows total debits of $25,000 and total credits of $22,000; therefore,it has a $3,000 credit balance.
A)True
B)False
Answer: False
Q2) The unit-of-measure assumption states that financial information is reported in the national monetary unit.
A)True
B)False
Answer: True
Q3) Why is the separate-entity assumption so important for statement of financial position reporting?
Answer: The separate-entity assumption is important for statement of financial position reporting because a business should present only its own assets and liabilities on the statement.A business is a separate accounting entity from its owners.Therefore,the owners' assets and liabilities would appear on their own (personal)financial statement.
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Operating Decisions and the Accounting System
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/77159
Sample Questions
Q1) Explain why a $500 revenue collected in advance for service would be recorded as a debit to cash and a credit to a liability account.
Answer: A debit is recorded to cash because a receipt of cash increases this asset account.A corresponding credit to a liability account (unearned revenue)is appropriate because the customer is "owed" services in the future.If the services are not performed,the customer would get a refund.
Q2) Which of the following liability accounts is likely to be satisfied with other than payment of cash?
A)Wages payable
B)Deferred subscriptions revenue
C)Accounts Payable
D)Income taxes payable
Answer: B
Q3) Utilities expense and wages payable are both elements of the income statement.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Adjustments,financial Statements,and the Quality of Earnings
Available Study Resources on Quizplus for this Chatper
127 Verified Questions
127 Flashcards
Source URL: https://quizplus.com/quiz/77158
Sample Questions
Q1) A trial balance prepared after the closing entries have been posted would exclude which one of the following accounts?
A)Inventory.
B)Trade receivables.
C)Accumulated depreciation.
D)Service revenue.
Q2) The trial balance,prepared immediately after all transactions of the period have been recorded and posted,should show all account balances that are in the ledger (T-accounts).
A)True
B)False
Q3) Each adjusting entry affects at least one income statement account and at least one statement of financial position account.
A)True
B)False
Q4) Is the adjusted trial balance a financial statement? Explain why or why not.
Q5) The journal contains information that has been posted from the ledger.
A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Communicating and Interpreting Accounting Information
Available Study Resources on Quizplus for this Chatper
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/77157
Sample Questions
Q1) A transaction that does not cause an inflow or outflow of cash should be reported on the statement of cash flows only if it is an adjustment to convert accrual profit to the cash basis.
A)True
B)False
Q2) When using the indirect method,a loss on the sale of equipment should be added to profit to derive cash flows from operating activities.
A)True
B)False
Q3) Which of the following statements about the quality of earnings ratio is true?
A)When sales are growing,receivables and inventory normally increase faster than trade payable so the ratio increases.
B)Seasonal variations in sales have no impact on the quality of income ratio.
C)Failure to accrue appropriate expenses will inflate profit and reduce the quality of income ratio.
D)Failure to accrue appropriate expenses will inflate net profit and increase the quality of income ratio.
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: Reporting and Interpreting Sales Revenue, receivables,
and Cash
Available Study Resources on Quizplus for this Chatper
135 Verified Questions
135 Flashcards
Source URL: https://quizplus.com/quiz/77156
Sample Questions
Q1) Which of the following would appear in the current asset section of a classified statement of financial position?
A)Intangible assets.
B)Bonds payable.
C)Prepaid expenses.
D)Accumulated depreciation.
Q2) Shareholders are most interested in evaluating
A)liquidity and solvency.
B)profitability and solvency.
C)liquidity and profitability.
D)marketability and solvency.
Q3) The dollar amount of current liabilities is:
A)$170,000
B)$196,000
C)$40,000
D)$30,000
Q4) Trade receivables is classified as a noncurrent asset.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Reporting and Interpreting Cost of Goods Sold and Inventory
Available Study Resources on Quizplus for this Chatper
161 Verified Questions
161 Flashcards
Source URL: https://quizplus.com/quiz/77155
Sample Questions
Q1) Which of the following is required for effective control of cash?
A)one person handle the receipts and disbursements of cash.
B)cheques be prenumbered.
C)cash be deposited monthly in a bank.
D)a reconciliation of the bank balance with the cash balance be prepared twice a year.
Q2) SRM Company uses the allowance method to record its bad debt expense.When the account of a particular customer is deemed to be uncollectible and is written off,which of the following will be included in the journal entry?
A)debit to bad debt expense.
B)credit to bad debt expense.
C)debit to allowance for doubtful accounts.
D)debit to trade receivables.
Q3) The revenue recognition principle dictates that revenue should be recognized in the accounting records
A)when it is earned.
B)when expenses are incurred.
C)in the period that income taxes are paid.
D)when cash is received.
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Reporting and Interpreting Property, plant, and Equipment; Intangibles; and Natural Resources
Available Study Resources on Quizplus for this Chatper
142 Verified Questions
142 Flashcards
Source URL: https://quizplus.com/quiz/77154
Sample Questions
Q1) An understatement error in the ending inventory causes an overstatement of both profit and current assets in that year.
A)True
B)False
Q2) If beginning inventory is understated by $1,300 and ending inventory is understated by $700,pretax profit for the period will be which of the following?
A)Understated by $600.
B)Understated by $2,000.
C)Overstated by $600.
D)Overstated by $2,000.
Q3) Purchases,returns and allowances should be added to the cost of purchases on the income statement,assuming the periodic inventory system is used.
A)True
B)False
Q4) Telly Company reported profit in 20A of $22,000 and in 20B of $32,000.Later it was discovered that the 20A ending inventory was overstated by $5,000.Compute the amount of profit (disregard income tax)for 20A and 20B. 20A $____________________ 20B $__________________
Page 10
To view all questions and flashcards with answers, click on the resource link above.
Chapter 9: Reporting and Interpreting Liabilities
Available Study Resources on Quizplus for this Chatper
152 Verified Questions
152 Flashcards
Source URL: https://quizplus.com/quiz/77153
Sample Questions
Q1) Which of the following is a false statement?
A)Companies can change the method of depreciating assets from one year to the next.
B)Companies can affect the book value at the end of an asset's life by choosing one method of depreciation over another.
C)Companies can use one method of depreciation for some of their operational assets but then use a different method for another group or type of operational assets.
D)Companies cannot change their estimate of the salvage value of a long-term asset.
Q2) Tangible operational assets differ from intangible operational assets in that tangible assets have physical substance whereas intangible assets have no physical substance.
A)True
B)False
Q3) A change in the estimated useful life of a tangible operational asset may be required due to economic or technological changes.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Reporting and Interpreting Bond Securities
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/77164
Sample Questions
Q1) Cress Company is involved in a lawsuit.Note disclosure of the contingent liability which could arise does NOT have to be presented if the probability of Cress owing money as a result of the lawsuit is which of the following?
A)Reasonably possible and the amount cannot be reasonably estimated.
B)Probable and the amount cannot be reasonably estimated.
C)Remote and the amount cannot be reasonably estimated.
D)Reasonably possible and the amount can be reasonably estimated.
Q2) Gross wages of $5,000 accrued but not paid to employees at the end of 20B should be recorded by the employer in a journal entry that includes which of the following?
A)A debit of $5,000 to Wages payable.
B)A credit of $5,000 to Cash.
C)A debit of $5,000 to Wages expense.
D)A debit of $5,000 to Cash.
Q3) If a company uses cash to pay off a current liability,the amount of working capital will decrease.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Reporting and Interpreting Stockholders Equity
Available Study Resources on Quizplus for this Chatper
161 Verified Questions
161 Flashcards
Source URL: https://quizplus.com/quiz/77163
Sample Questions
Q1) Whether a bond will sell at a discount or premium depends solely on its conversion privileges.
A)True
B)False
Q2) If a bond payable is sold (issued)at a premium,the amount of the carrying value (the long-term liability)reported on the subsequent statements of financial position does which of the following?
A)Remains constant.
B)Decreases each year.
C)Increases each year.
D)Changes from year to year depending upon the market rate of interest each year.
Q3) One thousand bonds with a face value of $1,000 each,are sold at 104.The entry to record the issue is
A)Choice A
B)Choice B
C)Choice C
D)Choice D
To view all questions and flashcards with answers, click on the resource link above.
13
Chapter 12: Statement of Cash Flows
Available Study Resources on Quizplus for this Chatper
136 Verified Questions
136 Flashcards
Source URL: https://quizplus.com/quiz/77162
Sample Questions
Q1) By expressing profit on a per share basis,differences in the size of companies become more important.
A)True
B)False
Q2) Which of the following is false about the dividend yield ratio?
A)Dividend yield ratio = Dividends per share/Market price per share
B)Measures the profit generated by each share for the shareholder based on the market price of the shares.
C)A low dividend yield is neither bad nor good by itself.
D)Dividend yield ratio = Market price per share/Dividends per share.
Q3) Which of the following statements about stock option plans is false?
A)Offering stock options to a company's managers reduces the likelihood they will not always act in the best interest of the investors.
B)Stock option plans are often a major part of an executive's compensation plan.
C)Stock options usually have a grant price equal to the market price of the share when the options are first offered to the executives.
D)The holder of a stock option has an interest in a company's performance but not in the same manner as a shareholder.
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: Analyzing Financial Statements
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/77161
Sample Questions
Q1) Calculate P Co's dividend payout for 2012 and 2011 respectively.
A)38.6% and 34.5%
B)39.3% and 33.8%
C)1.3% and 1.3%
D)3.5% and 3.6%
Q2) May Company's return on equity was 21% and the financial leverage ratio was 13% (positive).What was the return on assets?
A)8%
B)13%
C)21%
D)34%
Q3) Liquidity refers to the ability of a company to meet its currently maturing obligations,and solvency refers to the ability of a company to meet its long-term obligations on a continuing basis.
A)True
B)False
Q4) The debt to equity ratio is a test of liquidity of the company.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 15