Principles of Accounting Exam Practice Tests
Course Introduction
Principles of Accounting provides an introduction to the fundamentals of financial and managerial accounting. This course covers essential topics such as the accounting cycle, preparation and analysis of financial statements, and the basic principles underlying the reporting and interpretation of financial information. Students will learn how to record transactions, manage accounts, and apply generally accepted accounting principles (GAAP) to ensure accuracy and reliability in financial reporting. By the end of the course, students will have a solid understanding of accounting concepts and their relevance to effective business decision-making.
Recommended Textbook
Survey of Accounting 7th Edition by Carl Warren
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15 Chapters
1730 Verified Questions
1730 Flashcards
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Page 2
Chapter 1: The Role of Accounting in Business
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) A limited liability company combines attributes of a partnership and a corporation.
A)True
B)False
Answer: True
Q2) is an example of internal stakeholders.
A)Managers
B)Creditors
C)Stockholders
D)Suppliers
Answer: A
Q3) Expressing financial data as if a business will continue operating for an indefinite period time refers to which concept?
A)Business entity concept
B)Going concern concept
C)Objectivity concept
D)Adequate disclosure concept
Answer: B
Q4) Fill in the missing amounts of the following balance sheet:
Answer: a.$4,500 b.$9,000 c.$9,850 d.$32,550
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Chapter 2: Basic Accounting Concepts
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91 Verified Questions
91 Flashcards
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Sample Questions
Q1) For EFG Co.,the transaction "payment of dividends" would:
A)increase total assets.
B)decrease total assets.
C)have no effect on total assets.
D)increase stockholders' equity.
Answer: B
Q2) Sunlight,Inc.had the following assets and liabilities as of September 30,2016:
A)$0
B)$33,100
C)$88,100
D)Cannot be determined with this information
Answer: B
Q3) Which of the following is not an element of the financial accounting system?
A)Rules for determining what,when and the amount that should be recorded
B)A framework for preparing financial statements
C)A set of rules for the stock exchange
D)Controls to determine whether errors occur during recording
Answer: C
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4
Chapter 3: Accrual Accounting Concepts
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115 Verified Questions
115 Flashcards
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Sample Questions
Q1) On April 1,Tenity,Inc.paid $3,300 for an insurance premium on a three-year insurance policy.At the end of December,Tenity's fiscal year-end,what should be the balance in the prepaid insurance account?
A)$1,100
B)$2,475
C)$3,300
D)$2,200
Answer: B
Q2) Refer to Coke's Statement of Cash Flows.What amount of depreciation and amortization did Coke record in 2008?
Answer: Coke recorded depreciation and amortization expense of $1,228,000,000 for the year ended December 31,2008.
Q3) Under the accrual basis of accounting,net cash flows from operating activities on the statement of cash flows will normally be the same as net income.
A)True
B)False
Answer: False
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Chapter 4: Accounting for Merchandising Businesses
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145 Verified Questions
145 Flashcards
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Sample Questions
Q1) Which of the following accounts will not be found in the Cost of Merchandise Sold section on the income statement?
A)Purchases
B)Transportation In
C)Sales Returns and Allowances
D)Merchandise Inventory
Q2) Gold Co.sold merchandise to Bronze Co.on account,$23,000,terms 2/15,net 45.The cost of the merchandise sold is $18,500.Gold Co.issued a credit memorandum for $2,500 for merchandise returned that originally cost $1,900.Bronze Co.paid the invoice within the discount period.What is the amount of net income earned by Gold Co.on the transactions?
Q3) Net sales is equal to sales plus cost of merchandise sold.
A)True
B)False
Q4) Expenses that cannot be traced directly to operations are identified as:
A)other income.
B)operating expenses.
C)cost of goods sold.
D)other expenses.
Q5) Based on the following data,determine the cost of merchandise sold for October.
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Chapter 5: Sarbanes-Oxley, internal Control, and Cash
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112 Verified Questions
112 Flashcards
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Sample Questions
Q1) Internal control is enhanced by combining the control of a transaction with the record-keeping function.
A)True
B)False
Q2) Discuss what would be included under personnel policies.
Q3) The Sarbanes-Oxley Act of 2002 requires companies to maintain strong and effective internal controls over recording transactions and preparing financial statements.
A)True
B)False
Q4) The bank section begins with the cash balance according to the bank statement and ends with the adjusted balance.
A)True
B)False
Q5) The ratio of cash to monthly cash expenses is computed as .
A)monthly cash expenses divided by cash
B)current assets divided by monthly cash expenses
C)cash divided by cash equivalents
D)cash and cash equivalents divided by monthly cash expenses
Q6) List the advantages of Electronic Funds Transfers.
Page 7
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Chapter 6: Receivables and Inventories
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105 Verified Questions
105 Flashcards
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Sample Questions
Q1) A written promise to pay a sum of money on demand or at a definite time is called a(n):
A)letter of credit.
B)deferred note.
C)credit memorandum.
D)promissory note.
Q2) Under the direct write-off method,an attempt is made to match Bad Debt Expense to sales revenues in the same accounting period.
A)True
B)False
Q3) After the accounts are adjusted at the end of the fiscal year,Accounts Receivable has a balance of $430,000 and Allowance for Doubtful Accounts has a balance of $30,000.What is the net realizable value of the receivables?
A)$30,000
B)$460,000
C)$430,000
D)$400,000
Q4) Other than accounts receivable and notes receivable,name other receivables that might be included on the balance sheet.
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Chapter 7: Fixed Assets and Intangible Assets
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90 Verified Questions
90 Flashcards
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Sample Questions
Q1) The straight-line method of depreciation is appropriate if usage of the asset varies considerably from year to year.
A)True
B)False
Q2) Cook Co.incurred the following costs related to the office building used in operating its sports supply company:
(a) Replaced a broken window.
(b) Replaced the roof that had been on the building for 23 years.
(c) Serviced all the air conditioners before summer started.
(d) Replaced the air conditioners with refrigerated air conditioners in the customer service areas.
(e) Added a warehouse to the back of the building.
(f) Repainted the interior walls.
(g) Installed window shutters on all windows.
Classify each of the costs as a capital expenditure or a revenue expenditure.
Q3) A company acquired mineral rights for $7,500,000.The mineral deposit is estimated at 600,000 tons and during the year 100,000 tons were extracted and sold.
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Chapter 8: Liabilities and Stockholders Equity
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133 Verified Questions
133 Flashcards
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Sample Questions
Q1) If bonds are issued at a premium,the stated interest rate is:
A)higher than the market rate of interest.
B)lower than the market rate of interest.
C)too low to attract investors.
D)adjusted to a higher rate of interest.
Q2) Most employers are required to withhold a portion of the earnings of each employee for FICA tax.
A)True
B)False
Q3) If 20,000 shares are authorized,14,000 shares are issued,and 500 shares are held as treasury stock,a cash dividend of $1 per share would amount to $13,500.
A)True
B)False
Q4) The excess of issue price over par of common stock is termed as:
A)discount.
B)income.
C)deficit.
D)premium.
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Chapter 9: Financial Statement Analysis
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69 Verified Questions
69 Flashcards
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Sample Questions
Q1) If a company has issued only one class of stock,the earnings per share is determined by dividing net income by the number of shares outstanding.
A)True
B)False
Q2) Current position analysis indicates a company's ability to liquidate current liabilities.
A)True
B)False
Q3) The comparison of the financial data of a single company for two or more years is called horizontal analysis.
A)True
B)False
Q4) Profitability refers to the ability of the business to:
A)earn a reasonable amount of income.
B)provide owners with dividends.
C)pay its current and noncurrent liabilities.
D)manage its accounts receivable and inventory.
Q5) The following data are taken from the financial statements:
Q6) The following items are reported on a company's balance sheet:
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Chapter 10: Accounting Systems for Manufacturing Businesses
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119 Verified Questions
119 Flashcards
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Sample Questions
Q1) Materials inventory consists of the costs of direct and indirect materials that have not yet entered the manufacturing process.
A)True
B)False
Q2) As product costs are incurred in the manufacturing process,they are accounted for as assets and reported on the balance sheet as inventory.
A)True
B)False
Q3) Which of the following costs is included in the cost of manufacturing a product?
A)Administrative cost
B)Period cost
C)Factory overhead cost
D)Opportunity cost
Q4) The summary of the time tickets at the end of each month is the basis for recording the direct and indirect labor costs incurred in production.
A)True
B)False
Q5) KCT Printing Company uses a job order cost system.
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Chapter 11: Cost Behavior and Cost-Volume-Profit Analysis
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140 Verified Questions
140 Flashcards
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Sample Questions
Q1) Knowing how costs behave to change in the level of activity is useful to management for all the following reasons except for:
A)predicting customer demand.
B)predicting profits as sales and production volumes change.
C)estimating costs.
D)changing an existing product production.
Q2) For the past year,LaPrade Company had fixed costs of $70,000,a unit variable costs of $32,and a unit selling price of $40.For the coming year,no changes are expected in revenues and costs except that property taxes are expected to increase by $10,000.Determine the break-even sales (in units)for (a)the past year and (b)the coming year.
Q3) Costs that remain constant on a per-unit level as the level of activity changes are called:
A)fixed costs.
B)mixed costs.
C)opportunity costs.
D)variable costs.
Q4) The fixed cost per unit varies with changes in the level of activity.
A)True
B)False
Page 13
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Chapter 12: Differential Analysis and Product Pricing
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102 Flashcards
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Sample Questions
Q1) Hill Co.can further process Product O to produce Product P.Product O is currently selling for $65 per pound and costs $42 per pound to produce.Product P would sell for $82 per pound and would require an additional cost of $13 per pound to produce.The differential revenue of producing Product P is $82 per pound.
A)True
B)False
Q2) Target costing is arrived at by:
A)taking the selling price and subtracting desired profit.
B)taking the selling price and adding desired profit.
C)taking the selling price and subtracting the budget standard cost.
D)taking the budget standard cost and reducing it by 10%.
Q3) Brickman's Pharmacy sells a variety of products.The business is divided into four segments or departments for reporting purposes.The departments and their operating results are shown below:
Q4) Tidewater Company uses the product cost concept of applying the cost-plus approach to product pricing.The cost and expenses of producing and selling 50,000 units of Product K are as follows:
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Chapter 13: Budgeting and Standard Cost Systems
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169 Verified Questions
169 Flashcards
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Sample Questions
Q1) A favorable cost variance occurs when actual cost is less than budgeted cost at actual volumes.
A)True
B)False
Q2) Refer to the information provided for Cape Corporation.The amount of direct material C purchased during the year is:
A)$789,600.
B)$768,000.
C)$746,400.
D)$650,400.
Q3) The first budget to be prepared is usually the sales budget.
A)True
B)False
Q4) Normally standard costs should be revised when labor rates change to incorporate new union contracts.
A)True
B)False
Q5) Currently attainable standards allow for unreasonable production difficulties. A)True
B)False
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Chapter 14: Performance Evaluation for Decentralized Operations
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137 Verified Questions
137 Flashcards
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Sample Questions
Q1) The profit margin,a component of the rate of return on investment,focuses on the profitability by indicating the rate of profit earned on each sales dollar.
A)True B)False
Q2) The following data are taken from the management accounting reports of Dancer Co.:
A)division A's manager is given the bonus.
B)division B's manager is given the bonus.
C)division C's manager is given the bonus.
D)the managers of Divisions B and C divide the bonus.
Q3) If income from operations for a division is $6,000,invested assets are $25,000,and sales are $30,000,the investment turnover would be 1.2.
A)True B)False
Q4) Since transfer prices will affect a division's financial performance,it is used by decentralized segments of a business.
A)True B)False
16
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Chapter 15: Capital Investment Analysis
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103 Flashcards
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Sample Questions
Q1) When evaluating a proposal by use of the net present value method,if there is an excess of the present value of future cash inflows over the amount to be invested,the rate of return on the proposal is less than the rate used in the analysis.
A)True
B)False
Q2) If the average rate of return on an asset exceeds the minimum rate of return for investments,the asset should be purchased.
A)True
B)False
Q3) When evaluating two competing proposals with unequal lives,management should give greater consideration to the investment with the longer life because the asset will be useful to the company for a longer period of time.
A)True
B)False
Q4) Sommers Company is evaluating a project requiring a capital expenditure of $300,000.The project has an estimated life of 5 years and no salvage value.The estimated net income and net cash flow from the project are as follows:
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