Survey of Accounting Test Bank
Course Introduction
Survey of Accounting provides an overview of fundamental accounting principles and practices, introducing students to both financial and managerial accounting concepts. The course covers essential topics such as the accounting cycle, preparation and analysis of financial statements, budgeting, cost behavior, and internal controls. Designed for non-accounting majors, it emphasizes the interpretation and use of accounting information for decision-making in various business environments. By exploring both the practical applications and the theoretical framework underlying accounting, students gain a broad understanding of how accounting impacts organizations and supports effective management.
Recommended Textbook Survey of Accounting 5th Edition by Thomas P Edmonds
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16 Chapters
1698 Verified Questions
1698 Flashcards
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Page 2
Chapter 1: An Introduction to Accounting
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101 Verified Questions
101 Flashcards
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Sample Questions
Q1) Equity is a source of a business's assets, but liabilities are not.
A)True
B)False
Answer: False
Q2) The four financial statements prepared by a business bear no relationship to each other.
A)True
B)False Answer: False
Q3) Liabilities represent the future obligations of a business entity.
A)True
B)False
Answer: True
Q4) In a market, creditors are resource providers.
A)True
B)False Answer: True
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Page 3
Chapter 2: Accounting for Accruals and Deferrals
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77 Verified Questions
77 Flashcards
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Sample Questions
Q1) Which of the following statements is true in regard to accrual accounting?
A) Revenue is recorded only when cash is received.
B) Expenses are recorded when they are incurred.
C) Revenue is recorded in the period when it is earned.
D) Revenue is recorded in the period when it is earned and expenses are recorded when they are incurred.
Answer: D
Q2) The matching concept refers to the "matching" of:
A) expenses and revenues.
B) expenses and liabilities.
C) assets and equity.
D) assets and liabilities.
Answer: A
Q3) The balance in a revenue account at the beginning of an accounting period will always be
A) zero.
B) last period's ending balance.
C) higher than the previous periods beginning balance.
D) equal to the amount of retained earnings for the previous period.
Answer: A
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Chapter 3: Accounting for Merchandising Businesses
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105 Verified Questions
105 Flashcards
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Sample Questions
Q1) How does the purchase of inventory on account under the perpetual inventory method affect the financial statements?
A) Total assets increase
B) Total liabilities increase
C) Total assets are unaffected
D) Total assets and total liabilities both increase
Answer: D
Q2) A business firm that primarily sells merchandise to other businesses is known as a:
A) Wholesale firm
B) Service firm
C) Retail firm
D) Consulting firm
Answer: A
Q3) Which of the following is considered a product cost?
A) Utility expense for the current month.
B) Salaries paid to employees of a retailer.
C) Transportation cost on goods received from suppliers.
D) Transportation cost on goods shipped to customers.
Answer: C
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Page 5
Chapter 4: Internal Controls, Accounting for Cash, and Ethics
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Sample Questions
Q1) A well-designed system of internal controls will eliminate employee theft and fraud in a company.
A)True
B)False
Q2) At March 31, Cummins Co. had a balance in its cash account of $10,400. At the end of March the company determined that it had outstanding checks of $900, deposits in transit of $600, a bank service charge of $20, and an NSF check from a customer for $200. The true cash balance at March 31 is:
A) $10,100
B) $10,180
C) $10,380
D) $9,880
Q3) Duke Company's unadjusted bank balance at March 31 is $2,300. The bank reconciliation revealed outstanding checks amounting to $500 and deposits in transit of $400. Based on this information, Duke's true cash balance is:
A) $2,200.
B) $2,000.
C) $2,700.
D) $2,400.
Page 6
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Chapter 5: Accounting for Receivables and Inventory Cost Flow
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120 Verified Questions
120 Flashcards
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Sample Questions
Q1) The adjusting entry to recognize uncollectible accounts expense does not affect the net realizable value of receivables.
A)True B)False
Q2) Collection of a credit card receivable is an asset source transaction.
A)True
B)False
Q3) The Griffin Corporation accepted a credit card for a sale of $3,000 on December 16, Year 1. The credit card company charges a fee of 4%. On January 5, Year 2, Griffin received payment from the credit card company. Indicate whether each of the following statements is true or false.
_____ a) Griffin should record $2,880 revenue in Year 1 when the sale is made.
_____ b) Griffin should record a credit card receivable account receivable of $3,000 on December 16, Year 1.
_____ c) The sale has no impact on the statement of cash flows in Year 1.
_____ d) The collection of cash increases total assets in Year 2.
_____ e) The entry on December 16, Year 1, increases total revenues and total expenses on the Year 1 income statement.
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Chapter 6: Accounting for Long-Term Operational Assets
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Sample Questions
Q1) On January 1, Year 2, Ballard Company spent $12,000 on an asset to improve its quality. The asset had been purchased on January 1, Year 1, for $52,000. The asset had a $4,000 salvage value and a 6-year life. Ballard uses straight-line depreciation. What would be the book value of the asset on January 1, Year 5?
A) $24,800.
B) $20,800.
C) $10,400.
D) $24,000.
Q2) The use of estimates and Revision of Estimates are uncommon in financial reporting. A)True B)False
Q3) With an accelerated depreciation method, an asset can be depreciated below its salvage value. A)True
B)False
Q4) Land differs from other property because it is not subject to depreciation. A)True B)False
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8
Chapter 7: Accounting for Liabilities
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126 Verified Questions
126 Flashcards
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Sample Questions
Q1) The Clarion Company provides a one-year warranty on all merchandise it sells. In Year 1, the company recorded sales of $500,000. It estimated that the warranty costs on these sales would amount to $2,000. In July, Year 2, Clarion paid $250 to satisfy a warranty claim. Indicate whether each of the following statements is true or false.
_____ a) Clarion's recognition of the warranty obligation at the end of Year 1 reduced total assets and total equity.
_____ b) Clarion's recognition of the warranty obligation at the end of Year 1 increased Clarion's total liabilities.
_____
c) The July, Year 2 transaction reduced total assets and net income for Year 2.
_____ d) The July, Year 2 transaction reduced Clarion's total liabilities.
_____ e) The recognition of the warranty obligation at the end of Year 1 did not affect Clarion's revenue for the year.
Q2) Monthly remittance of sales tax:
A) Reduces liabilities.
B) Is a claims exchange transaction.
C) Reduces stockholders' equity.
D) All of these answer choices are correct.
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Page 9
Chapter 8: Proprietorships, Partnerships, and Corporations
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Sample Questions
Q1) All corporations are subject to extensive government regulation.
A)True
B)False
Q2) On September 1, Year 1, Orville Corporation has unrestricted Retained Earnings of $600,000, Appropriated Retained Earnings of $400,000, Cash of $850,000, and Accounts Payable of $50,000. What is the maximum amount that can be used for cash dividends?
A) $850,000
B) $600,000
C) $800,000
D) $450,000
Q3) Which of the following statements is a reason why a company would buy treasury stock?
A) Because management believes the market price of stock is undervalued.
B) To have stock available to issue to employees in stock option plans.
C) To avoid a hostile takeover.
D) All of these are reasons a company would buy treasury stock.
Q4) A distribution by a sole proprietorship to the owner is called a withdrawal.
A)True
B)False
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Chapter 9: Financial Statement Analysis
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108 Verified Questions
108 Flashcards
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Sample Questions
Q1) Select the correct statement regarding vertical analysis.
A) Vertical analysis of the income statement involves showing each item as a percentage of sales.
B) Vertical analysis of the balance sheet involves showing each asset as a percentage of total assets.
C) Vertical analysis examines two or more items from the financial statements of one accounting period.
D) All of these answers are correct.
Q2) Earnings before interest and taxes divided by interest expense is the formula for which of these analytical measures?
A) Debt to assets ratio
B) Earnings per share
C) Return on investment
D) Number of times interest is earned
Q3) Which of the following is not included in the computation of the quick ratio?
A) Cash
B) Prepaid expenses
C) Accounts receivable
D) Marketable securities
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Page 11
Chapter 10: An Introduction to Management Accounting
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) During its first year of operations, Silverman Company paid $14,000 for direct materials and $19,000 for production workers' wages. Lease payments and utilities on the production facilities amounted to $17,000 while general, selling, and administrative expenses totaled $8,000. The company produced 5,000 units and sold 3,000 units at a price of $15.00 a unit. What is Silverman's cost of goods sold for the year?
A) $50,000
B) $24,600
C) $30,000
D) $41,000
Q2) All costs incurred prior to delivery of the product to the customer are referred to as upstream costs.
A)True
B)False
Q3) Costs that are not classified as product costs are normally expensed in the period incurred.
A)True
B)False
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Chapter 11: Cost Behavior, Operating Leverage, and Profitability Analysis
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124 Verified Questions
124 Flashcards
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Sample Questions
Q1) Rock Creek Bottling Company pays its production manager a salary of $6,000 per month. Salespersons are paid strictly on commission, at $1.50 for each case of product sold. For Rock Creek Bottling Company, the production manager's salary is an example of:
A) a variable cost.
B) a mixed cost.
C) a fixed cost.
D) none of these
Q2) The magnitude of operating leverage for Forbes Corporation is 1.8 when sales are $200,000 and net income is $24,000. If sales increase by 5%, what is net income expected to be?
A) $25,200
B) $26,160
C) $24,667
D) $43,200
Q3) If managers of a company do not understand the behavior of its costs, they are likely to make poor decisions about the company's operations.
A)True
B)False
Page 13
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Chapter 12: Cost Accumulation, Tracing, and Allocation
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) A factor having a "cause and effect" relationship with a cost object is called a(n):
A) cost driver
B) allocation base
C) direct cost
D) indirect cost
Q2) At the beginning of the year, Barcroft Co. estimated that its total annual fixed overhead costs would amount to $25,000. Further, Barcroft estimated that its volume of production would be 2,000 units of product. Based on these estimates, Barcroft computed a predetermined overhead rate that was used to allocate overhead costs to the products made during the year. As predicted, actual fixed overhead costs did amount to $25,000. However, actual volume of production amounted to 2,200 units of product. Based on this information alone:
A) Products were costed accurately during the year.
B) Products were overcosted during the year.
C) Products were undercosted during the year.
D) The answer cannot be determined from the information provided.
Q3) Once indirect costs are pooled, they must remain pooled for all allocations.
A)True
B)False
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Page 14
Chapter 13: Relevant Information for Special Decisions
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104 Flashcards
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Sample Questions
Q1) Engineering design costs are generally referred to as:
A) Batch-level costs.
B) Facility-level costs.
C) Unit-level costs.
D) Product-level costs.
Q2) Rachel is deciding whether to remain in the home she has lived in for the past ten years, which is located very near her work, or to move into a newer home that is located in the suburbs further from her job. The old house was purchased for $160,000 and has a market value of $220,000. The new home can be purchased for $285,000. Which of the following is not relevant to Rachel's decision?
A) Driving distance to work
B) Cost of the old house
C) Market value of the old house
D) Cost of the new house
Q3) The book value of equipment generally is one of the most important factors to consider in deciding to replace the equipment.
A)True
B)False
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Chapter 14: Planning for Profit and Cost Control
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117 Verified Questions
117 Flashcards
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Sample Questions
Q1) What budget is generally not included in a master budget?
A) Strategic budget
B) Capital budget
C) Operating budget
D) All of the answers are correct.
Q2) Select the correct statement.
A) The four advantages of budgeting include planning, coordination, performance measurement, and reporting.
B) In a participative budgeting system, budget information flows in one direction only, from bottom to top.
C) The three major categories of the master budget are operating budgets, capital budgets, and pro forma financial statements.
D) The accounting department normally coordinates the development of the sales forecast.
Q3) The nature of planning changes with the length of the time period being considered. Generally, the shorter the time period, the more general the plans.
A)True
B)False
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16
Chapter 15: Performance Evaluation
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Sample Questions
Q1) A reporting unit of a decentralized business that controls identifiable revenue and/or expense items is known as a(n):
A) Management center.
B) Performance center.
C) Accounting center.
D) Responsibility center.
Q2) The Ferguson Company estimated that October sales would be 100,000 units with an average selling price of $6.00. Actual sales for October were 105,000 units and average selling price was $5.95. The sales revenue flexible budget variance was:
A) $5,000 favorable.
B) $5,000 unfavorable.
C) $5,250 favorable.
D) $5,250 unfavorable.
Q3) A restaurant that is part of a retail store and managed by the retail manager would most likely be classified as a cost center.
A)True
B)False
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Chapter 16: Planning for Capital Investments
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Sample Questions
Q1) Depreciation on a capital investment (such as equipment) has the effect of decreasing the amount of income taxes that the company owning the asset must pay.
A)True
B)False
Q2) A series of equal cash flows at fixed intervals is termed a(n):
A) net cash flow.
B) lump sum.
C) annuity.
D) return on investment.
Q3) Which method for evaluating capital investment proposals deducts the present value of cash outflows from the present value of cash inflows?
A) Payback method
B) Internal rate of return
C) Net present value
D) Unadjusted rate of return
Q4) A dollar to be received in the future is subject to the effects of risk and inflation.
A)True
B)False
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Page 18