Introductory Accounting Exam Questions
Course Introduction
Introductory Accounting provides a comprehensive overview of the fundamental concepts and principles of accounting. The course focuses on the accounting cycle, including recording, summarizing, and reporting financial transactions for various types of organizations. Students will learn how to prepare and interpret basic financial statements, understand the regulatory environment affecting accounting, and develop skills in analyzing financial information for decision-making purposes. Emphasis is placed on ethical considerations, accuracy, and the practical application of accounting methods in real-world business settings.
Recommended Textbook
Financial Accounting 1st Canadian Edition by Jeffrey Waybright
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12 Chapters
1471 Verified Questions
1471 Flashcards
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Chapter 1: Business, Accounting, and You
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Sample Questions
Q1) The Flower Company's beginning retained earnings are $31,000; sales are $46,800; expenses are $43,500 and dividends paid are $2,800. Calculate the ending retained earnings.
Answer: 11ea4bf1_a91f_8cb5_a578_899d1f1525a9_TB2774_00
Q2) Part 1.
A business sells $1,000 of product on account. Identify the effect on the accounting equation.
Part 2
A business buys $1,000 of product on account. Identify the effect on the accounting equation.
Answer: Part 1
Increase assets ( accounts receivable) and increase shareholders' equity (revenue)
Part 2
Increase liabilities ( accounts payable) and decrease shareholders' equity (expenses)
Q3) The statement of financial position is reported as a specific date.
A)True
B)False
Answer: True
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3
Chapter 2: Analyzing and Recording Business Transactions
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Sample Questions
Q1) Obligations owed by a company to banks, for instance, are called __________.
Answer: notes payable
Q2) The retained earnings accounts of dividends, revenues, and expenses have normal balances of __________, __________, and __________, respectively.
Answer: debit, credit, and debit
Q3) Which of the following is an expense account?
A) Prepaid insurance
B) Advertising
C) Accounts payable
D) Cash
E) Notes payable
Answer: B
Q4) On the trial balance, which should have their balances listed in the credit column?
Answer: Liabilities, retained earnings, and revenues.
Q5) A listing of all accounts in numerical order is called a chart of accounts.
A)True
B)False
Answer: True
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Page 4
Chapter 3: Adjusting and Closing Entries
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Sample Questions
Q1) A worksheet has five sets of double columns for debits and credits.
A)True
B)False
Answer: True
Q2) The unadjusted trial balance shows Accumulated Depreciation-Computer with a credit balance of $190. After determining depreciation expense is $45, the adjusted trial balance in the accumulated depreciation account for the computer will be a
Answer: $235 credit
Calculation:
190 - 45 = 235
Q3) Using the adjusted trial balance, the first financial statement to prepare is the income statement.
A)True
B)False
Answer: True
Q4) Unearned subscriptions revenue would be an example of a(n) __________.
Answer: deferred revenue
Q5) The account to which dividends are closed is called __________.
Answer: retained earnings
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Chapter 4: Ethics, Internal Control, and Cash
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Sample Questions
Q1) In a bank reconciliation, the bank balance and the book balance must be adjusted to be reconciled.
A)True
B)False
Q2) Honesty, fairness, and integrity are all a part of:
A) ethical law.
B) ethical behavior.
C) accounting law.
D) GAAP.
E) IFRS principles.
Q3) Ethics is defined as principles of right and wrong.
A)True
B)False
Q4) One of the biggest factors in implementing SOX was:
A) reviewing the financial reports.
B) establishing internal control procedures.
C) disclosing deficiencies in internal controls.
D) the cost of implementing the system.
E) government approval.
Q5) __________ embezzlement is a form of fraud committed against an organization.
Page 6
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Chapter 5: Accounting for a Merchandising Business
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Sample Questions
Q1) Journalize the following transactions for Bill Co. using the periodic inventory system. Nov. 1 Bill Co. purchased $1,900 worth of merchandise from Littles on terms 2/10 n/30, FOB shipping point.
Nov. 5 Bill Co. paid $300 shipping charges. for the Nov 1 purchase.
Nov. 8 Bill Co. sold $4,900 of merchandise, costing $3,150 on account to Jill, terms 3/10, n/30 FOB shipping point.
Nov. 12 Bill Co. pays $450 of shipping costs and in turn invoices Jill.
Q2) Calculate Net Sales with the following information: Sales of $400,000, Sales Returns and Allowances of $45,000, and Sales Discounts of $38,000
Q3) What is the term used to indicate that the seller pays all of the shipping and freight costs?
Q4) Inventory for a merchandising business is classified as a(n):
A) liability.
B) revenue.
C) part of shareholder's equity.
D) asset.
E) expense.
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Chapter 6: Inventory
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Sample Questions
Q1) Under the average cost method, the flow of goods through the accounting records will:
A) be the opposite of the physical flow of goods through the business.
B) closely match the physical flow of goods through the business.
C) exactly match the physical flow of goods through the business.
D) have no relationship to the physical flow of goods through the business.
E) sometimes match the physical flow of goods through the business.
Q2) What accounting principle would be followed when underestimating inventory?
Q3) If a company experiences a loss of inventory for fire, there is no way to estimate the inventory.
A)True
B)False
Q4) What is the method used to estimate the cost of ending inventory?
Q5) Inventory is often the largest:
A) expense on the income statement.
B) long-term asset on the balance sheet.
C) current asset on the balance sheet.
D) part of general selling expenses.
E) property, plant, and equipment on the balance sheet.
Q6) What does a manufacturer's goods available for sell represent?
Page 8
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Chapter 7: Sales and Receivables
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Sample Questions
Q1) When counting the days of a note, remember to count the day the note was issued. A)True B)False
Q2) Isaiah Company converted a $4,000 account receivable from Mark to a 75-day, 8% note receivable. The maturity value (assume a 360-day year) that will be due from Mark in 75 days (round to nearest dollar) is:
A) $4,000.
B) $4,067.
C) $4,320.
D) $4,077.
E) some other number.
Q3) Rory Company exchanged an accounts receivable of $5,300 for an 8-month, 6% note on November 1, 2012.
Record the journal entries on December 31 to record accrued interest and on July 1 to record paying off of the note with interest.
Q4) Accounts receivable are reported at "current market value" in the current assets section of the balance sheet.
A)True B)False
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Chapter 8: Long-Term Assets
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Sample Questions
Q1) Ryan Corporation made a basket purchase of three items. Item A was appraised at $35,000; item B was appraised at $55,000 and item C was appraised at $60,000. The purchase price was $125,000. At what percentage of purchase price should item C be recorded? At what amount should item C be recorded at (rounded to the nearest dollar)?
Q2) The cost of long-term assets must be allocated to an expense as the asset is used up.
A)True
B)False
Q3) On September 9, Ariana Company paid $15,300 to purchase a front end loader for its Tractor #2.
What is the journal entry to record this?
Q4) It is determined that a computer's depreciation expense for the year is $3,500. What is the journal entry to record this?
Q5) What needs to be recorded before the disposal of the asset can be recorded?
Q6) What would a manufacturer obtain to identify its merchandise and to bar other manufacturers from using the same identification?
Q7) What is a repair that extends the useful life of an asset?
Q8) How often should goodwill be tested for impairment under IFRS?
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Chapter 9: Current Liabilities and Long-Term Debt
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Sample Questions
Q1) Tim Hortons is a public company and prepares its financial statements in accordance to IFRS. The company has a contingent liability estimated at $232,000. The likelihood of the obligation occurring is remote or < 5%. What is the appropriate accounting treatment for the company?
Q2) Journalize the following bond issues:
June 12 Issued $500,000 at 98.
June 18 Issued $250,000 at 106.
June 22 Issued $350,000 at 100.
Q3) On June 30, Hanson Company purchased a building for $600,000. The company made a cash payment of $200,000 and signed a twenty-year, 8% mortgage note payable for the remainder. Payments of $40,000 are made every June 30 and December 31. The building has a useful life of twenty years and a residual value of $100,000. Hanson uses the straight-line depreciation method and prepares its adjusting entries on an annual basis. Journalize the June 30 transactions, any annual adjusting entries for December 31, and the mortgage payment on December 31.
Q4) Is a high debt ratio a bad thing? Explain.
Q5) A past transaction or event must have occurred for a __________ to exist.
Q6) If the market rate of interest is greater than the bond's stated rate of interest, the bond will be issued at __________.
Page 11
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Chapter 10: Corporations: Share Capital and Retained Earnings
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Sample Questions
Q1) Preferred shares are considered a voting "class" of shares. A)True
B)False
Q2) If you own 500 shares (2% of a corporation's stock) and the corporation issues 15,000 new shares, how many of the new shares can you purchase under preemptive right?
A) 500
B) 300
C) 800
D) 0
E) 100
Q3) What is the normal balance of the treasury shares account?
Q4) ABC Company declares a 2-for-1 stock split of its common shares. The company has 100,000 common shares authorized and 40,000 common shares issued and outstanding. How many shares are authorized and outstanding after the split?
Q5) What is the minimum number of voting class shares that a company must have?
Q6) What journal entry is recorded on the date of payment?
Page 12
Q7) A stock dividend increases the shareholder's percentage of stock held. A)True B)False
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Chapter 11: The Cash Flow Statement
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Sample Questions
Q1) Under the direct method, paying and collecting interest on loans are __________ activities.
Q2) Which financial statement represents a point in time?
Q3) The operating section of a cash flow statement using the indirect method is prepared differently from the operating section of a cash flow statement using the direct method.
A)True
B)False
Q4) Current assets on the balance sheet would be affected by and be part of operating activities.
A)True
B)False
Q5) Casey Company reported net income of $35,000; depreciation expenses of $20,000; an increase in accounts payable of $2,000; and an increase in current notes receivable of $3,000. Net cash flows from operating activities under the indirect method is
Q6) What is the purpose of the cash flow statement?
Q7) Isaiah Corporation's Accounts Receivable increased by $35,000 and its Accounts Payable decreased by $18,000. What is the net effect on cash from operations under the indirect method?
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Chapter 12: Financial Statement Analysis
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Sample Questions
Q1) Predictions about a company's future earnings can best be inferred from the:
A) cumulative effect of changes in accounting principles section.
B) discontinued operations section.
C) continuing operations section.
D) extraordinary items section.
E) earnings per share.
Q2) What is Jane's rate of return on total assets if average total assets are $100,000; net income is $2,000; interest expense if $1,600; and income tax is $2,000?
Q3) Kacee's sales were $13,444 in 2010 and $12,898 in 2009. The percentage change in Kacee's sales from 2009 to 2010 was __________.
Q4) Other income (such as rental income) and other expenses (such as interest expense) are listed immediately after:
A) gross profit.
B) operating expenses.
C) operating income.
D) income tax expense.
E) profit.
Q5) Which ratio measures the earnings of a company on each sales dollar?
Q6) What may an income statement include after continuing operations?
Page 14
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