Introductory Accounting Mock Exam
Course Introduction
Introductory Accounting provides students with a foundational understanding of accounting principles and practices. The course covers essential topics such as the accounting cycle, preparation of financial statements, recording and classifying transactions, and the use of accounting information in decision-making. Students will learn how to analyze business transactions, apply debits and credits, and understand the importance of accuracy and integrity in financial reporting. By the end of the course, students will be equipped to interpret basic financial statements and appreciate the role accounting plays in various organizational settings.
Recommended Textbook
Financial Accounting 7th Edition by Libby Libby
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14 Chapters
1652 Verified Questions
1652 Flashcards
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Page 2
Chapter 1: Financial Statements and Business Decisions
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124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/58122
Sample Questions
Q1) Which of the following transactions increases both cash and net income?
A)Cash receipts from a bank loan.
B)Cash receipts from sale of stock.
C)Cash receipts from customers for services provided.
D)Cash receipts from a bond issue.
Answer: C
Q2) Which of the following items is reported as an expense on the income statement?
A)Dividends declared
B)Cost of goods sold
C)Dividends paid
D)Accounts payable
Answer: B
Q3) Which of the following would not be reported in the operating activities section of a cash flow statement?
A)Cash paid for dividends to stockholders.
B)Cash paid for interest expense.
C)Cash paid for employee wages.
D)Cash received from customers.
Answer: A
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Page 3
Chapter 2: Investing and Financing Decisions and the Balance Sheet
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120 Verified Questions
120 Flashcards
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Sample Questions
Q1) Which of the following happens when equipment is purchased using cash?
A)Total assets decrease.
B)Current assets don't change.
C)Current assets increase.
D)Stockholders' equity doesn't change.
Answer: D
Q2) The current assets section of a balance sheet includes both inventory and accounts receivable.
A)True
B)False
Answer: True
Q3) The accounting equation doesn't have to be in balance after the recording of each transaction.
A)True
B)False
Answer: False
Q4) Describe both the investing activities and financing activities section of the cash flow statement.Provide some examples of each activity.
Answer: Answers will vary
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Chapter 3: Operating Decisions and the Income Statement
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119 Verified Questions
119 Flashcards
Source URL: https://quizplus.com/quiz/58120
Sample Questions
Q1) Unearned revenues are reported as liabilities on the balance sheet.
A)True
B)False
Answer: True
Q2) Smith Corporation has provided the following information:
Cash sales totaled $125,000.
Credit sales totaled $279,000.
Cash collections from customers for services yet to be provided totaled $38,000. An $11,000 gain from the sale of plant and equipment occurred.
Interest income totaled $7,700.
How much were Smith's operating revenues?
A)$404,000
B)$411,700
C)$442,000
D)$460,700
Answer: A
Q3) Describe the difference between operating expenses and losses from the sale of plant and equipment while providing examples of each.
Answer: Answers will vary
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Page 5
Chapter 4: Adjustments,Financial Statements,and the
Quality of Earnings
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) On November 1,2011,Bug Busters collected $6,000 in advance for three months of service to be provided beginning on that date.Bug credited unearned rent revenue for $6,000.Prepare the adjusting entry required on December 31,2011 (assuming that no adjusting entries have been made during the year).
Q2) Which of the following statements does not correctly describe the relationship between the income statement and the ending retained earnings balance?
A)Net income increases the ending balance of retained earnings.
B)A net loss decreases the ending retained earnings balance.
C)A net loss does not affect the ending retained earnings balance.
D)Net income and net loss both affect the ending retained earnings balance.
Q3) The adjusting entry to record an accrued expense results in a decrease in both assets and stockholders' equity.
A)True
B)False
Q4) Income statement accounts often are called temporary accounts because their balances are closed out at the end of the accounting year.
A)True
B)False
Page 6
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Chapter 5: Communicating and Interpreting Accounting Information
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) Huron has provided the following year-end balances:
Cash,$25,000
Patents,$7,900
Accounts receivable,$9,300
Property,plant,and equipment,$98,700
Prepaid insurance,$3,600
Accumulated depreciation,$10,000
Inventory,$37,000
Trademarks,$12,600
Goodwill,$11,000
How much are Huron's net noncurrent assets?
A)$122,300.
B)$120,200.
C)$123,800.
D)$112,300.
Q2) Which of the following would not be a component of income from operations?
A)Gross profit
B)Selling and administrative expenses
C)Dividend income
D)Research and development expense
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Chapter 6: Reporting and Interpreting Sales Revenue, Receivables,
and Cash
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123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/181909
Sample Questions
Q1) Which of the following statements is correct?
A)The journal entry to record bad debt expense requires a debit to bad debt expense and a credit to accounts receivable.
B)The journal entry to record bad debt expense requires a debit to bad debt expense and a credit to allowance for doubtful accounts.
C)The journal entry to record the write-off of an uncollectible account receivable requires a debit to bad debt expense and a credit to accounts receivable.
D)The journal entry to record the write-off of an uncollectible account receivable requires a debit to bad debt expense and a credit to allowance for doubtful accounts.
Q2) If the accounts receivable turnover ratio increases,the number of days it takes to collect the receivables also increases.
A)True
B)False
Q3) The gross profit percentage decreases when operating expenses increase.
A)True
B)False
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Page 8
Chapter 7: Reporting and Interpreting Cost of Goods Sold and Inventory
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127 Verified Questions
127 Flashcards
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Sample Questions
Q1) Which of the following statements is incorrect?
A)A year-end purchase of inventory increases the LIFO cost of goods sold when prices are increasing and a periodic inventory system is used.
B)A year-end purchase of inventory increases the FIFO ending inventory when prices are increasing and a periodic inventory system is used.
C)The choice of an inventory costing method is dependent on the actual flow of goods when inventory is sold.
D)A year-end purchase of inventory doesn't affect the weighted-average ending inventory when prices are increasing and a periodic inventory system is used.
Q2) An increase in inventory is deducted from net income when determining operating activities cash flows.
A)True
B)False
Q3) The lower-of-cost-or-market (LCM)rule is used because of the conservatism constraint,which allows a departure from the historical cost principle.
A)True
B)False
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Page 9
Chapter 8: Reporting and Interpreting Property, Plant, and Equipment; Natural Resources; and Intangibles
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125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/58115
Sample Questions
Q1) The Wilson Company has provided the following information: Net sales,$100,000; Net operating income,$40,000; Net income,$20,000; Average total assets,$120,000; Average net fixed assets; $80,000. What is Wilson's fixed asset turnover ratio?
A)0.83
B)1.25
C)0.25
D)0.50.
Q2) If a second-hand machine is purchased for productive use in a business,all renovation and repair costs on the used machine incurred by the purchaser prior to its productive use should be reported as an expense on the income statement.
A)True
B)False
Q3) Depreciation is the process of estimating a long-lived asset's current market value.
A)True
B)False
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Chapter 9: Reporting and Interpreting Liabilities
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117 Verified Questions
117 Flashcards
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Sample Questions
Q1) Darwin Corporation's attorney has provided the following summaries of three lawsuits against Darwin: lawsuit A: The loss is probable and the loss can be reasonably estimated. lawsuit B: The loss is reasonably possible and the loss can't be reasonably estimated. lawsuit C: The loss is reasonably possible and the loss can be reasonably estimated. Which of the following statements is incorrect?
A)A disclosure note is required for lawsuit A.
B)A disclosure note is required for lawsuit C.
C)A disclosure note is not required for lawsuit B.
D)Lawsuit A is reported on the balance sheet as a liability.
Q2) The accounts payable turnover ratio is difficult to manipulate. A)True
B)False
Q3) Purchasing inventory on account increases the accounts payable turnover ratio. A)True B)False
Q4) Why are present value concepts and applications so important when companies purchase equipment financed by the seller?
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Chapter 10: Reporting and Interpreting Bonds
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101 Verified Questions
101 Flashcards
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Sample Questions
Q1) A bond's interest payments are determined by multiplying the bond's principal amount by the stated interest rate.
A)True
B)False
Q2) The journal entry to record the interest cash payment for a bond issued at a discount results in an increase in the book value of the bond liability.
A)True
B)False
Q3) A company prepared the following journal entry: Bonds payable Premium on bonds payable
\( \quad \)\( \quad \)Gain on bond retirement
\( \quad \)\( \quad \)Cash Which of the following statements is incorrect?
A)The book value of the bonds was less than the cash payment.
B)The increase in stockholders' equity equals the gain on the bond retirement.
C)The decrease in assets is less than the decrease in liabilities.
D)The net cash flow from financing activities decreases by the cash payment.
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12
Chapter 11: Reporting and Interpreting Owners Equity
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101 Verified Questions
101 Flashcards
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Sample Questions
Q1) Which of the following correctly describes the affect of declaring and distributing a common stock dividend?
A)Total stockholders' equity decreases.
B)Total stockholders' equity remains the same.
C)The number of shares outstanding increases while the par value of each share decreases.
D)The number of shares outstanding decreases while the par value of each share increases.
Q2) Which of the following statements doesn't correctly describe preferred stock?
A)Preferred shareholders have a preference with respect to dividend payments.
B)Preferred shareholders have a preference with respect to assets in the event of liquidation.
C)Preferred shareholders have voting rights on a per share basis.
D)Preferred stock typically has a fixed dividend rate.
Q3) The declaration of a common stock dividend by a corporation's board of directors creates a liability on the declaration date.
A)True
B)False
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13
Chapter 12: Reporting and Interpreting Investments in Other Corporations
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110 Verified Questions
110 Flashcards
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Sample Questions
Q1) Which of the following is the primary justification for reporting the acquisition of a controlling interest on a consolidated basis?
A)The companies are legally and in economic substance separate.
B)The companies are legally and in economic substance one entity.
C)The companies are legally one entity but they are separate in economic substance.
D)The companies are legally separate but they are one entity in economic substance.
Q2) Held-to-maturity bond investments have to be reported on the balance sheet at fair value.
A)True
B)False
Q3) When an investment accounted for under the equity method is sold,the gain or loss reported on the income statement is the difference between the selling price and its original cost.
A)True
B)False
Q4) Discuss how the equity method prevents managers of the investor corporation from manipulating income related to dividends from the investee.
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Chapter 13: Statement of Cash Flows
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120 Verified Questions
120 Flashcards
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Sample Questions
Q1) When a company purchases equipment using common stock,the equipment purchase is reported as a financing activity.
A)True
B)False
Q2) During 2010,Tommy's Toys reported the following:
Long-term debt repayments,$503 million; interest paid,$143 million; proceeds from exercise of stock options,$27 million,and issue of common stock in exchange for land costing $10 million.How much is the 2010 net cash flow from financing activities?
A)$476 million net cash outflow.
B)$530 million net cash outflow.
C)$673 million net cash outflow.
D)$76 million net cash outflow.
Q3) Under the indirect method,an increase in accounts receivable during the year will be added to net income.
A)True
B)False
Q4) Describe the three cash flow classifications that are reported within a statement of cash flows.
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15
Chapter 14: Analyzing Financial Statements
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119 Verified Questions
119 Flashcards
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Sample Questions
Q1) Which of the following ratios are not affected by issuing long-term bonds payable in exchange for cash?
A)Debt-to-equity
B)Current
C)Cash Ratio
D)Quality of income
Q2) The base amount in preparing a common-size income statement is usually which of the following?
A)Income from operations
B)Gross profit
C)Net income
D)Net sales
Q3) Which ratio reflects the stock market's assessment of a company's future performance?
A)Price/earnings ratio
B)Dividend yield ratio
C)Fixed asset turnover ratio
D)Cash coverage ratio
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