Principles of Accounting I Pre-Test Questions
Course
Introduction
Principles of Accounting I introduces students to the fundamental concepts and procedures of financial accounting. The course covers the accounting cycle, including recording, summarizing, and reporting financial transactions in accordance with generally accepted accounting principles (GAAP). Students learn how to prepare and interpret financial statements such as the balance sheet, income statement, and statement of cash flows. Emphasis is placed on understanding the role of accounting in business decision-making, the use of accounting information by various stakeholders, and the ethical considerations in accounting practice.
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) Cost accountants provide a wide variety of services including
A) designing and implementing accounting information systems.
B) auditing reviews.
C) performing general accounting services.
D) analyzing the cost effectiveness of products produced and services provided.
Answer: D
Q2) A person who records,sorts,and files accounting information in accounting records may be referred to as a(n)
A) budgeter.
B) journalist.
C) accounting clerk.
D) scribe.
Answer: C
Q3) ____________________ is the process by which accountants help managers develop a financial plan.
Answer: Budgeting
Q4) The owners of a corporation are called ____________________.
Answer: stockholders shareholders
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Chapter 2: Analyzing Transactions: the Accounting Equation
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Sample Questions
Q1) An example of an expense is
A) investments.
B) supplies consumed.
C) prepaid insurance.
D) withdrawals by the owner.
Answer: B
Q2) An increase in a revenue account may also result in an increase in the accounts receivable account.
A)True
B)False
Answer: True
Q3) The relationship between the three basic accounting elements: ____________________,____________________,and
____________________,can be expressed in the form of a simple equation known as the accounting equation.
Answer: assets, liabilities, owner's equity assets, owner's equity, liabilities liabilities, assets, owner's equity liabilities, owner's equity, assets
owner's equity, assets, liabilities owner's equity, liabilities, assets
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Chapter 3: The Double-Entry Framework
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Sample Questions
Q1) Asset and expense accounts normally have
A) credit balances.
B) large balances.
C) debit balances.
D) negative balances.
Answer: C
Q2) A debit
A) is on the left side.
B) decreases assets.
C) increases liabilities.
D) increases owner's equity.
Answer: A
Q3) An increase or decrease in any asset,liability,owner's equity,revenue,or expense is always accompanied by an offsetting change within the basic accounting elements.
A)True
B)False
Answer: True
Q4) The ____________________ balance is on the side that increases an account. Answer: normal
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Chapter 4: Journalizing and Posting Transactions
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Sample Questions
Q1) If cash is paid for worker salaries,the transaction includes
A) debiting Salaries Expense and crediting Cash.
B) debiting Salaries Expense and crediting Accounts Payable.
C) debiting Salaries Expense and crediting Capital.
D) debiting Cash and crediting Salaries Expense.
Q2) Firms are more likely to use a four-column journal account than T accounts.
A)True B)False
Q3) A separate line in the two-column journal should be used for each account title. A)True B)False
Q4) An account in the chart of accounts is assigned a number at random. A)True B)False
Q5) Purchase invoices received from suppliers provide information about A) cash payments.
B) cash receipts.
C) sales of goods or services.
D) purchases of goods or services.
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Chapter 5: Adjusting Entries and the Work Sheet
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Sample Questions
Q1) Under the modified cash basis of accounting,cash payments for assets with lives longer than one accounting period (buildings,equipment,insurance,etc.)are recorded as assets and adjustments are made each period.
A)True
B)False
Q2) When assets are recorded at original value,they are recorded under the A) historical cost principle.
B) original principle.
C) current principle.
D) value principle.
Q3) The original cost of an asset added to its salvage value represents the depreciable cost of an asset.
A)True
B)False
Q4) The cash basis of accounting and the accrual basis of accounting result in the same measures of net income.
A)True
B)False
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Chapter 6: Financial Statements and the Closing Process
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Q1) When recording closing entries in the general journal,which of the following is written in the Description column?
A) "closing entries"
B) a description of the transaction
C) nothing
D) "zero out accounts"
Q2) A separate explanation of each closing entry is necessary.
A)True
B)False
Q3) ____________________ will be converted into cash or consumed within either one year or the normal operating cycle of the business,whichever is longer.
Q4) A balance sheet that classifies (or groups)items by similarities is called a unified balance sheet.
A)True
B)False
Q5) Revenues and expenses are temporary accounts and are closed at the end of the accounting period.
A)True
B)False
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Chapter 7: Accounting for Cash
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Sample Questions
Q1) The check written to establish the petty cash fund is recorded in the journal by crediting Cash and debiting Petty Cash.
A)True
B)False
Q2) Checks deposited by the depositor that are not paid because the drawer did not have sufficient funds are called ____________________.
Q3) A supply of currency and coins kept in a cash drawer for use in handling sales transactions.
A)outstanding checks
B)cash
C)petty cash voucher
D)automated teller machines
E)change fund
F)internal control
G)credit memos
H)debit memos
Q4) Cash receipts of $719 and a cash count of $715 would indicate a cash overage.
A)True
B)False
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Chapter 8: Payroll Accounting: Employee Earnings and Deductions
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Sample Questions
Q1) Vince Lupino works for Best Supplies Company,which pays its employees time and a half for all hours worked in excess of 40 hours per week.Lupino's rate of pay is $12.00 per hour paid weekly.Federal income tax withheld was $54.00.His wages are subject to Social Security tax withheld at the rate of 6.2% and Medicare tax at the rate of 1.45%.He worked 8 hours of overtime last week (week ended July 16).
Required:
1. Compute the following:
a. Regular pay for the week
b. Overtime pay for the week
c. Total gross wages
d. Social Security withheld
e. Medicare tax withheld
f. Total withholding
g. Net pay
2. Journalize the payroll entry.
Q2) The ____________________ account is credited for the Social Security tax withheld from an employee's earnings.
Q3) ____________________ are compensation for skilled or unskilled labor.
Page 10
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Chapter 9: Payroll Accounting: Employer Taxes and Reports
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Sample Questions
Q1) Social Security,Medicare,FUTA,and SUTA taxes have separate liability accounts.
A)True
B)False
Q2) A system for making federal tax deposits electronically is called the ____________________.
Q3) Which of the following tax programs often has a merit-rating system to encourage employers to provide regular employment for workers?
A) FICA
B) FUTA
C) SUTA
D) workers' compensation insurance
Q4) The payroll register is a key source of information for computing employer payroll taxes.
A)True
B)False
Q5) Employer payroll taxes clearly are an insignificant cost of doing business.
A)True
B)False
Q6) Employer payroll taxes include FUTA,SUTA,and ____________________ taxes.
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Q7) 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) Financial statements are normally prepared at the end of the fiscal year.
A)True
B)False
Q2) A(n)____________________ is a journal with special and general columns.
Q3) A cash balance may be computed
A) daily.
B) weekly.
C) at the end of the accounting period.
D) whenever desired.
Q4) In using a combination journal,posting requires less time; however,the danger of making a posting error is increased.
A)True
B)False
Q5) The ____________________ is a method of accounting that combines aspects of the cash and accrual methods.It uses the cash basis for recording revenues and most expenses.Exceptions are made when cash is paid for assets with useful lives greater than one accounting period.
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Q6) The column in the combination journal where the account number is entered after posting is the ____________________.