Principles of Accounting I Exam Questions
Course Introduction
Principles of Accounting I introduces students to the fundamental concepts and techniques of financial accounting. The course covers the accounting cycle, including the recording, summarizing, and reporting of financial transactions for service and merchandising businesses. Topics include the preparation and analysis of financial statements, understanding assets, liabilities, and equity, and an introduction to generally accepted accounting principles (GAAP). Through practical exercises and real-world examples, students gain foundational skills in double-entry bookkeeping and learn the importance of ethical practices and decision-making in the accounting profession.
Recommended Textbook College Accounting Chapters 1 9 22nd Edition by James A. Heintz
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Page 2
Chapter 1: Introduction to Accounting
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Sample Questions
Q1) Which of the following does NOT use nonprofit accounting guidelines and procedures?
A) proprietorships
B) hospitals
C) educational institutions
D) churches
Answer: A
Q2) Stockholders may have very little influence on business decisions.
A)True
B)False
Answer: True
Q3) A business that makes a product to sell is called a(n)____________________ business.
Answer: manufacturing
Q4) A partnership is owned by stockholders or shareholders and is managed by them.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Analyzing Transactions: the Accounting Equation
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Q1) A business entity is an individual,association,or organization with control over economic resources and which engages in economic activities.
A)True
B)False
Answer: True
Q2) ____________________ represent the decrease in assets (or increase in liabilities)as a result of efforts made to produce revenues.
Answer: Expenses
Q3) The ____________________ reports the investments and withdrawals by the owner,the profits and losses generated through operations,and how they have affected the capital account.
Answer: statement of owner's equity
Q4) A(n)____________________ is a reduction in owner's equity as a result of the owner taking cash or other assets out of the business for personal use.
Answer: withdrawal
Q5) ____________________ is the amount by which business assets exceed the business liabilities.
Answer: Owner's equity
4
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Chapter 3: The Double-Entry Framework
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Sample Questions
Q1) A purchase of an asset on account
A) increases cash.
B) decreases owner's equity.
C) increases assets.
D) decreases expenses.
Answer: C
Q2) Liability,owner's capital,and revenue accounts normally have
A) debit balances.
B) large balances.
C) negative balances.
D) credit balances.
Answer: D
Q3) A credit increases liabilities and owner's equity.
A)True
B)False
Answer: True
Q4) Prepaid Insurance is an asset account.
A)True
B)False
Answer: True
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Chapter 4: Journalizing and Posting Transactions
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Sample Questions
Q1) When the trial balance indicates that the ledger is in balance,you can assume there are no errors in the ledger.
A)True
B)False
Q2) Journal entries requiring more than one debit and/or one credit are called ____________________.
Q3) The purpose of a journal is to provide a chronological record of all transactions completed by the business.
A)True
B)False
Q4) For EVERY transaction,the accountant enters the
A) year,month,and day.
B) month and day.
C) day.
D) year and day.
Q5) The accounts in the chart of accounts are arranged in A) alphabetical order.
B) numerical order.
C) chronological order.
D) the order they are created.
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Chapter 5: Adjusting Entries and the Work Sheet
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Sample Questions
Q1) The work sheet columns that show the amounts that will be reported in the statement of owner's equity and balance sheet.
A)Adjusted Trial Balance columns
B)Adjusting entries
C)Balance Sheet columns
D)book value
E)contra-asset
F)depreciable cost
G)depreciation
H)fiscal year
I)historical cost principle
J)Income Statement columns
K)market value
L)matching principle
M)plant assets
N)salvage value
O)straight-line method
P)undepreciated cost
Q)useful life
R)work sheet
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Chapter 6: Financial Statements and the Closing Process
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Q1) The account to which the drawing account is closed is called
A) Revenue.
B) Income Summary.
C) Owner's Capital.
D) Cash.
Q2) ____________________ will be converted into cash or consumed within either one year or the normal operating cycle of the business,whichever is longer.
Q3) Adjusting entries are recorded and posted after closing entries.
A)True
B)False
Q4) ____________________ are due within either one year or the normal operating cycle of the business,whichever is longer,and are to be paid out of current assets.
Q5) The end-of-period work sheet is completed after adjusting entries have been recorded and posted.
A)True
B)False
Q6) ____________________ accounts do not accumulate information across accounting periods but are closed.
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Chapter 7: Accounting for Cash
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Q1) A petty cash fund of $200 has $27 in cash,$170 in petty cash vouchers,and $3 in miscellaneous receipts not included with the petty cash vouchers.The debit to the Cash Short and Over would be
A) $173.
B) $170.
C) $27.
D) $0.
Q2) The difference between the balance in the cash account on the depositor's books and the bank's books is usually due to errors.
A)True
B)False
Q3) In reconciling the bank statement,the outstanding checks are added to the balance shown on the bank statement.
A)True
B)False
Q4) The term "cash" has several different meanings.
A)True
B)False
Q5) ____________________ are items that the bank adds to a depositor's account.
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Chapter 8: Payroll Accounting: Employee Earnings and Deductions
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Sample Questions
Q1) A business that sells payroll record-keeping services.
A)direct deposit
B)electronic system
C)employee
D)employee earnings record
E)Fair Labor Standards Act (FLSA)
F)FICA taxes
G)gross pay
H)independent contractor
I)manual system
J)net pay
K)payroll processing center
L)payroll register
M)salary
N)wage-bracket method
O)wages
P)withhol ding allowance
Q2) Separate accounts are kept for each type of earnings deduction.
A)True
B)False
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Chapter 9: Payroll Accounting: Employer Taxes and Reports
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Q1) Employees usually pay the entire cost of workers' compensation insurance.
A)True
B)False
Q2) Taxes levied on employers at the same rates and on the same earnings bases as the employee FICA taxes.
A)Electronic Federal Tax Payment System (EFTPS)
B)employer FICA taxes
C)Employer Identification Number (EIN)
D)Form W-2
E)Form W-3
F)Form 940
G)Form 941
H)FUTA (Federal Unemployment Tax Act) tax
I)merit-rating system
J)self-employment income
K)self-employment tax
L)SUTA (state unemployment tax) tax
M)workers' compensation insurance
Q3) Employer payroll taxes include FUTA,SUTA,and ____________________ taxes.
Q4) Employers report payroll taxes withheld each quarter using
Chapter 10: Module Accounting For A Professional Service
Business The Combination Journal
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Sample Questions
Q1) To record the purchase of assets on account under the modified cash accounting method,
A) no entry is required.
B) debit the asset and credit Accounts Payable.
C) debit the asset and credit Cash.
D) debit Accounts Receivable and credit Accounts Payable.
Q2) To record wages earned but not paid under the modified cash accounting method,
A) debit Wages Payable and credit Wages Expense.
B) debit Cash and credit Wages Expense.
C) debit Wages Expense and credit Wages Payable.
D) no entry is required.
Q3) Once the total of a special column has been posted,what is written under the total of the column in the journal?
A) a check mark
B) the account number
C) the abbreviation "CJ"
D) the date
Q4) The ____________________ column in the combination journal is used to credit accounts that are used infrequently.
Q5) ____________________ are meant for frequently used accounts.
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