Course Introduction
Principles of Accounting Test Bank
Principles of Accounting introduces students to the fundamental concepts and practices of financial and managerial accounting. The course covers the accounting cycle, preparation and analysis of financial statements, and the role of accounting information in decision-making processes. Students will develop an understanding of the principles underlying the recording of transactions, asset and liability management, and interpretation of financial data. Emphasis is placed on ethical practices and the application of accounting standards in various organizational contexts, laying a strong foundation for advanced study in accounting and related business disciplines.
Recommended Textbook
Financial Accounting 4th Edition by Robert Kemp
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12 Chapters
1893 Verified Questions
1893 Flashcards
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Page 2
Chapter 1: Business, Accounting, and You
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159 Verified Questions
159 Flashcards
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Sample Questions
Q1) A limited liability company (LLC)is a legal entity like a corporation, but the income is taxed like a sole proprietorship or partnership.
A)True
B)False
Answer: True
Q2) Cash and Accounts Receivable are both a part of:
A)Assets.
B)Retained Earnings.
C)Liabilities.
D)Common Stock.
Answer: A
Q3) According to the textbook, in order for an organization to be called a business it must:
A)exchange a product with a customer.
B)make money.
C)be a corporation.
D)provide a service.
Answer: A
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Chapter 2: Analyzing and Recording Business Transactions
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152 Verified Questions
152 Flashcards
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Sample Questions
Q1) Accounts starting with the number 4 would represent:
A)assets.
B)liabilities.
C)revenues.
D)expenses.
Answer: C
Q2) A T-account has a $426 debit balance. This account is most likely:
A)Income Taxes Payable.
B)Common Stock.
C)Cash.
D)Magazine Sales.
Answer: C
Q3) Shaman, Inc. purchased $325 of office supplies on account and treated the supplies as a prepaid expense. The journal entry would require a:
A)debit to Office Supplies Expense and a credit to Cash.
B)debit to Office Supplies and a credit to Cash.
C)debit to Office Supplies and a credit to Accounts Payable.
D)debit to Office Supplies Expense and a credit to Office Supplies.
Answer: C
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Page 4
Chapter 3: Adjusting and Closing Entries
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Sample Questions
Q1) Unearned Ticket Revenue must be adjusted to show how much of the deferred revenue has been earned during the period.
A)True
B)False
Answer: True
Q2) The unadjusted trial balance lists Supplies with a $1,078 balance. After taking an inventory of supplies, it was found that $590 were on hand. The adjustment to Supplies Expense is a:
A)$590 debit.
B)$590 credit.
C)$488 debit.
D)$488 credit.
Answer: C
Q3) Expense accounts are closed by crediting them and debiting Retained Earnings.
A)True
B)False
Answer: True
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5
Chapter 4: Accounting for a Merchandising Business
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158 Verified Questions
158 Flashcards
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Sample Questions
Q1) Archer Manufacturing had sales for the week of $3,145, of which $2,500 was on credit and $645 in cash sales. The cost of the merchandise sold was $1,716. The journal entries would include a:
A)debit to Cost of Goods Sold for $1,716; credit to Inventory for $1,716.
B)debit to Cash for $3,145, credit to Sales for $3,145.
C)debit to Cash for $3,145 and a credit to Cost of Goods Sold for $3,145.
D)debit to Cost of Goods Sold for $1,716; credit to Sales of $1,716.
Q2) When a company sells goods to customers FOB destination, the company's delivery expense account is credited for the cost of shipment.
A)True
B)False
Q3) Simmons, Inc. received an invoice from Wilson Company for $3,500 with terms of 3/10, n/45 on March 8. If Simmons pays the bill on March 15, they will credit inventory under a perpetual inventory system for:
A)$0.
B)$350.
C)$105.
D)$3,500.
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Chapter 5: Inventory
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155 Flashcards
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Sample Questions
Q1) The sum of ending inventory and cost of goods available for sale equals cost of goods sold.
A)True
B)False
Q2) The inventory system whereby the merchandise inventory account balance is merely a record of the most recent physical inventory count is called the:
A)periodic system.
B)perpetual system.
C)LIFO system.
D)FIFO system.
Q3) Other than the cost of purchasing the inventory, another large cost of inventory would be storage of the inventory.
A)True
B)False
Q4) Cost of goods sold is shown on the:
A)Balance Sheet as an asset.
B)Income Statement before gross profit.
C)Statement of Retained Earnings.
D)Income Statement after gross profit.
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Chapter 6: The Challenges of Accounting: Standards, Internal
Control, Audits, Fraud, and Ethics
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Sample Questions
Q1) A distracted employee who fails to properly follow procedures is an example of:
A)the control environment.
B)control activities.
C)monitoring.
D)internal control limitations.
Q2) An employee who pockets cash received from a customer without recording the transaction is an example of a(n):
A)disbursement scheme.
B)expense scheme.
C)cash register scheme.
D)check tampering scheme.
Q3) Internal control is a comprehensive system that helps an organization do all of the following EXCEPT:
A)safeguard assets.
B)safeguard liabilities.
C)operate efficiently and effectively.
D)ensure compliance with applicable laws and regulations.
Q4) The Sarbanes-Oxley Act requires a company's stockholders to be more responsible.
A)True
B)False
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Chapter 7: Cash and Receivables
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Sample Questions
Q1) Cash consists of anything that a bank will take as a deposit.
A)True
B)False
Q2) Marla is a customer of Smiths, Inc. Her current balance due is $2,430. It has been determined that she defaulted on her account. If the company uses the direct write-off method, what entry is necessary to write off the $2,430?
A)No entry will be necessary.
B)Debit Accounts Receivable/Marla; credit Bad Debt Expense.
C)Debit Bad Debt Expense; credit Accounts Receivable/Marla.
D)Debit Bad Debt Expense; credit Allowance for Doubtful Accounts.
Q3) Leo Company has a petty cash fund of $300. At the end of the month, $42 remains in the fund along with $260. in various receipts. The journal entry to replenish the fund would be:
A)debit Petty Cash for $258 and credit Cash for $258.
B)debit various expenses, $256; debit Cash Short for $2 and credit Cash for $258.
C)debit various expenses, $260; credit Cash Over for $2 and credit Cash for $258.
D)debit various expenses, $260 and credit Cash for $260.
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Chapter 8: Long-Term and Other Assets
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Sample Questions
Q1) A truck costing $70,000 has accumulated depreciation of $51,000. The truck is scrapped for $0. The journal entry to record this transaction is to:
A)debit Truck for $51,000, debit Loss on Disposal for $19,000 and credit Accumulated Depreciation - Truck for $70,000.
B)debit Accumulated Depreciation - Truck for $51,000, and credit Truck for $51,000.
C)debit Accumulated Depreciation - Truck for $51,000, debit Loss on Disposal $19,000, and credit Truck for $70,000.
D)debit Truck for $70,000, credit Accumulated Depreciation - Truck for $51,000 and credit Gain on Disposal for $19,000.
Q2) Costs of testing machinery or equipment before they are used would be included in the price of the machinery or the equipment.
A)True
B)False
Q3) The fixed asset turnover is the ratio of sales to average fixed assets.
A)True
B)False
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Page 10
Chapter 9: Current Liabilities and Long-Term Debt
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Sample Questions
Q1) During the month, Southeast Plumbing paid $600 to settle warranty claims. Southeast uses an estimated warranty account. The journal entry to record the payment would have been:
A)debit Estimated warranty payable, $600; credit Cash, $600.
B)debit Warranty expense, $600; credit Estimated Warranty payable, $600.
C)debit Estimated warranty payable, $600; credit Warranty expense, $600.
D)debit Warranty expense, $600; credit Cash, $600.
Q2) A 12-month, 8% note dated August 1, 2016 for $5,000 would have accrued interest payable on December 31, 2016 of $166.67.
A)True
B)False
Q3) The lower the number of withholdings claimed on a W-4, the:
A)higher the gross pay.
B)higher the net pay.
C)lower the gross pay.
D)lower the net pay.
Q4) Estimated liabilities are generally classified as long-term liabilities.
A)True
B)False
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Chapter 10: Corporations: Paid-In Capital and Retained Earnings
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165 Flashcards
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Sample Questions
Q1) Maintaining their proportionate share in the ownership of a corporation when new stock is available to be purchased is an example of which stockholder right?
A)Vote
B)Dividends
C)Liquidation
D)Preemption
Q2) Outstanding stock of a corporation represents 100% of its ownership.
A)True
B)False
Q3) Anderson Industries purchased 600 shares of the company's issued common stock, paying $14 per share. To record the purchase, the journal entry will be:
A)Debit to Common Stock $8,400, credit to Cash $8,400
B)Debit to Treasury Stock $8,400, credit to Common Stock $8,400
C)Debit to Treasury Stock $8,400, credit to Cash $8,400
D)No journal entry is needed.
Q4) The issue price of the stock usually is equal to the par value of the stock.
A)True
B)False
Page 12
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Chapter 11: The Statement of Cash Flows
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Sample Questions
Q1) Operating expenses (other than depreciation)for the year were $533,000. Accrued expenses decreased by $50,000. Cash payments for operating expenses to be reported on the cash flow statement using the direct method would be:
A)$50,000.
B)$483,000.
C)$533,000.
D)$583,000.
Q2) Enterprise Industries' Accounts Receivable decreased by $27,000 and its Accounts Payable decreased by $17,000. What is the net effect on cash from operations under the indirect method?
A)+$44,000
B)-$44,000
C)-$10,000
D)+$10,000
Q3) Under the direct method, paying and collecting interest on loans are:
A)financing and investing activities.
B)operating and financing activities.
C)operating and investing activities.
D)operating activities.
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Chapter 12: Financial Statement Analysis
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162 Flashcards
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Sample Questions
Q1) Which of the following statements is TRUE regarding the results of financial statement analysis?
A)They can be found in the management discussion and analysis section of the financial statements.
B)They are most meaningful when compared to competitors in diverse industries.
C)They identify whether or not fraud has taken place.
D)They have limited value without a point of reference.
Q2) A business model deals with how a business makes customers want to buy their product.
A)True
B)False
Q3) A company has $56,000 in cash; $16,000 in Accounts Receivable; $26,000 in short-term investments and $101,000 in merchandise inventory. The company also has $56,000 in current liabilities. The company's quick ratio is: (Round your final answer to two decimal places.)
A)3.55.
B)1.75.
C)1.29.
D)1.00.
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Page 14