Introductory Accounting Exam Preparation Guide
Course Introduction
Introductory Accounting provides students with a foundational understanding of financial and managerial accounting concepts and practices. This course covers the basic principles of accounting, including the accounting cycle, preparation and analysis of financial statements, recording business transactions, and understanding assets, liabilities, and equity. Through practical exercises, case studies, and real-world examples, students learn how to interpret financial information, use accounting tools for decision-making, and appreciate the role of accounting in business operations. This course is designed for students with little or no prior background in accounting and serves as a stepping stone for more advanced accounting studies.
Recommended Textbook
Cornerstones of Financial Accounting 1st Canadian Edition by Jay Rich
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12 Chapters
2327 Verified Questions
2327 Flashcards
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Chapter 1: Accounting and the Financial Statements
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249 Verified Questions
249 Flashcards
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Sample Questions
Q1) What is the term for a person who lends funds to a business entity and expects repayment with interest?
A) creditor
B) owner
C) proprietor
D) shareholder
Answer: A
Q2) Which financial statement(s)does net income appear on?
A) a balance sheet only
B) an income statement only
C) a balance sheet, income statement, and statement of cash flows using the indirect method
D) an income statement, statement of cash flows using the indirect method, and statement of retained earnings
Answer: D
Q3) The majority of business in Canada is conducted by corporations.
A)True
B)False
Answer: True
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Page 3
Chapter 2: The Accounting Information System
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246 Flashcards
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Sample Questions
Q1) The concept that assumes that assets are recorded at the amount to acquire them is called the ____________________ principle.
Answer: historical cost
Q2) A customer has called complaining that he paid for a service call last week and is still waiting for a serviceman to come out and repair his air conditioning unit.You are now curious as to how much work your service team has been paid for but has not yet completed.You notice the bookkeeper has left the company's general journal and general ledger open on the desk so that he can do the monthly posting when he returns from lunch.Using those two items,how can you satisfy your curiosity?
Answer: First,find the beginning of the period's balance in the unearned revenue account in the general ledger.Then look through the general journal for debits and credits to the unearned revenue account.Debits represent work that has been completed while credits represent work that has been paid for in advance.Your curiosity can be satisfied using the following equation: beginning balance + credits to the account - debits to the account.
Q3) ____________________ is the quality of accounting information that makes it dependable in representing the events that it purports to represent.
Answer: Reliability
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4
Chapter 3: Accrual Accounting
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208 Verified Questions
208 Flashcards
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Sample Questions
Q1) Match Incorporated recorded salary expense of $120,000.However,additional salaries of $9,000 had been earned but not paid or recorded at December 31.After the adjustments are recorded and posted at December 31,what will be the balances in the salaries expense and salaries payable accounts?
A) salaries expense: $120,000; salaries payable: $0
B) salaries expense: $120,000; salaries payable: $9,000
C) salaries expense: $129,000; salaries payable: $0
D) salaries expense: $129,000; salaries payable: $9,000
Answer: D
Q2) The names of the four major types of adjusting entries are ____________________,____________________,____________________ ,and ____________________.
Answer: accrued revenues,accrued expenses,deferred revenue,deferred expense accrued expenses,deferred revenue,deferred expense,accrued revenues deferred revenue,deferred expense,accrued revenues,accrued expenses deferred expense,accrued revenues,accrued expenses,deferred revenue
Q3) rent revenue
A)temporary account
B)permanent account
Answer: A
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Chapter 2: Internal Control and Cash
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205 Verified Questions
205 Flashcards
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Sample Questions
Q1) Refer to Figure A.What is the company's adjusted cash balance at October 31?
A) $32,500
B) $32,800
C) $34,600
D) $34,900
Q2) A company's bank statement balance shows that there is $4,230 in the chequing account at the end of the month.Comparing the company's records with the bank statement reveals several additional items,such as outstanding cheques of $2,880,deposits in transit of $1,280,an NSF cheque of $160,and a bank service charge of $40.Calculate the adjusted cash balance for this chequing account.
Q3) When a bank pays interest on a company's chequing account balance,the bank will likely issue a credit memo.
A)True
B)False
Q4) A debit memo may be issued in the monthly bank statement for the bank to notify a company that a service charge has been assessed on the company's account.
A)True
B)False
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Page 6
Chapter 5: Revenue and Receivables
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162 Verified Questions
162 Flashcards
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Sample Questions
Q1) Refer to the figure A2Z Events.What amount will the company show on its year-end balance sheet for the net realizable value of its accounts receivable?
A) $285,000
B) $340,000
C) $355,000
D) $410,000
Q2) What are the criteria the IFRS uses to determine if revenue is realized or realizable and earned?
Q3) Refer to the figure Accelerated Solutions.What is the balance of accounts receivable at December 31,Year 1?
A) $340,000
B) $690,000
C) $700,000
D) $710,000
Q4) Refer to Atlantis Tropicals.If the aging approach is used to estimate bad debts,how much is the net realizable value of the accounts receivable at December 31,Year 1?
Q5) Refer to Aardvark Resale.Determine the balance of accounts receivable at December 31,Year 1.
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Chapter 6: Cost of Goods Sold and Inventory
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234 Flashcards
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Sample Questions
Q1) A purchases account is not needed under a periodic inventory system.
A)True
B)False
Q2) During periods of stable purchase prices,FIFO produces the highest ending inventory relative to the other inventory costing methods.
A)True
B)False
Q3) If a company understates its inventory,what will be the effects on cost of goods sold and net income for the current year?
A) Cost of goods sold will be understated; net income will be overstated.
B) Cost of goods sold will be overstated; net income will be understated.
C) Cost of goods sold and net income will both be understated.
D) Cost of goods sold and net income will both be overstated.
Q4) Prices are declining; income taxes are higher with this method.
A)added to inventory cost
B)subtracted from inventory cost
C)not an inventory cost
Q5) Cost of goods sold is equal to beginning inventory plus the net cost of purchases minus _____.
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Chapter 7: Property plant and Equipment Intangibles and Natural Resources
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183 Verified Questions
183 Flashcards
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Sample Questions
Q1) This method minimizes taxable income
A)straight-line method
B)units-of-production method
C)double-declining-balance method
D)rapid/accelerated method
Q2) Refer to Fabulous Creations.Explain the impact on net income and cash flows of using straight-line depreciation for financial reporting and accelerated depreciation methods for income tax purposes.
Q3) How should intangible assets be disclosed on the balance sheet?
A) as a reduction shareholders' equity
B) at cost in the current assets section
C) at the estimated market value at the balance sheet date
D) as the net of the costs already amortized
Q4) What is the relationship between the book value of a plant asset,the market value of the plant asset,and the salvage value of a plant asset? Explain.
Q5) The cash purchase was made on March 8 with terms of 2/10,net 30.
A)This item should be included as part of the cost of the equipment.
B)This item should be considered a revenue expenditure.
Q6) Distinguish between capital and revenue expenditures.
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Chapter 8: Current Liabilities
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Sample Questions
Q1) A company has $8,000 in cash,$9,250 in accounts receivable,and $19,500 in inventory.If current liabilities are $14,350,what is its quick ratio?
A) 1.2
B) 2.0
C) 2.6
D) 5.0
Q2) The proceeds from advance ticket sales for a concert to be held next month should be recorded as a current liability.
A)True
B)False
Q3) Refer to the figure Gatineau Truck Centre.When the company journal entry is recorded for the payment of wages and related liabilities,what is the impact on the accounting equation?
A) Assets and liabilities both decrease.
B) Assets, liabilities, and shareholders' equity all decrease.
C) Assets and shareholders' equity decrease while liabilities increase.
D) Assets and liabilities both increase.
Q4) ____________________ refers to the ability of a company to meet its short-term obligations.
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Chapter 9: Long-Term Liabilities
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159 Flashcards
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Sample Questions
Q1) Refer to Kids R Kids Company.The interest coverage (accrual basis)ratio at December 31,Year 2,is:
Q2) Keller Company issued $1,000,000,8%,seven-year bonds with interest payable semiannually when the yield rate was 8%.How much were the bonds issued at?
A) $887,037
B) $1,000,000
C) $1,112,963
D) $1,700,000
Q3) A company issued $1,000,000 of 10% notes that resulted in interest expense of $100,000 per year.What is the company's net cash outflow if the effective tax rate is 40%?
A) $40,000
B) $60,000
C) $100,000
D) $160,000
Q4) Refer to Korn Business Solutions.Does the note disclosure show evidence of the two types of leases?
Q5) Discount on bonds payable is shown on the balance sheet as a(n)____________________.
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Chapter 11: The Statement of Cash Flows
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206 Flashcards
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Sample Questions
Q1) If the balance of prepaid insurance was the same on January 1,Year 1,and December 31,Year 2,then the insurance expense must have been ____________________ the cash payments made for insurance during the year.
Q2) Refer to Mary Kay Cosmetics.What amount was paid to retire bonds payable during Year 2?
Q3) Some companies use a spreadsheet approach as a tool to aid in preparing the statement of cash flows.
A)True
B)False
Q4) Refer to the figure Used Car Dealer.Assuming there was no change in inventory during the period,how much cash was paid for merchandise purchases during Year 2?
A) $515,000
B) $605,000
C) $610,000
D) $655,000
Q5) Refer to Mary Kay Cosmetics.What is the amount paid for operating expenses during Year 2?
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Chapter 12: Investments
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Sample Questions
Q1) When a company has excess cash not needed for operations in the short-term,they may make strategic investments to earn investment income which is greater than that earned in a regular bank account.
A)True
B)False
Q2) The equity method of accounting is used if the investor owns between 20-50% of another company and the investor is able to exert influence over the other company.
A)True
B)False
Q3) Tusk Company acquired all of the assets of Tinsel Company for $1,000,000.With the approval of Tinsel's shareholders and creditors,Tinsel transferred all of its assets and liabilities to Tusk Company and distributed the cash to Tinsel's shareholders.On the acquisition date,Tinsel's shareholders' equity was $500,000.Tusk Company determined that Tinsel's liabilities of $500,000 are correctly valued,but its identifiable assets are worth $300,000 more than their book value of $1,000,000.
Determine the amount of goodwill to be recognized by Tusk Company as a result of its acquisition of Tinsel Company.
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Page 13
Chapter 13: Financial Statement Analysis
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225 Verified Questions
225 Flashcards
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Sample Questions
Q1) Who uses financial statements to aid in the decision to become an owner of the company?
A) potential supplier
B) tax authority
C) customer
D) potential investor
Q2) total liabilities
A)times interest earned ratio
B)operating cash flow ratio
C)debt-to-equity ratio
D)return on equity
Q3) length of time required to sell inventory to customers
A)accounts receivable turnover ratio
B)cash ratio
C)gross profit percentage
D)inventory turnover ratio
E)net profit margin percentage
F)operating margin percentage
G)quick ratio
H)total payout ratio
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