Accounting and Financial Reporting
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Course Introduction
Accounting and Financial Reporting provides students with a comprehensive understanding of the principles and practices underlying financial accounting and the preparation of financial statements. The course explores the conceptual framework of accounting, the recording and processing of business transactions, and the presentation and interpretation of financial statements according to relevant standards and regulations. Students will learn to analyze and report financial information effectively, enabling stakeholders to make informed economic decisions. Emphasis is placed on accuracy, transparency, and ethical considerations in financial reporting for diverse organizational structures.
Recommended Textbook
Financial Accounting Information for Decisions 6th Edition by John Wild
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16 Chapters
3236 Verified Questions
3236 Flashcards
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Page 2
Chapter 1: Introducing Accounting in Business
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261 Verified Questions
261 Flashcards
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Sample Questions
Q1) Marian Mosely is the owner of Mosely Accounting Services.Which accounting assumption requires Marian to keep her personal financial information separate from the financial information of Mosely Accounting Services?
A)Monetary unit assumption
B)Going-concern assumption
C)Cost assumption
D)Business entity assumption
E)None of these.Since Marian is a sole proprietor,she is not required to separate her personal financial information from the financial information of Mosely Accounting Services
Answer: D
Q2) The International Accounting Standards Board (IASB)issues International Financial Reporting Standards (IFRS)that identify preferred accounting practices.
A)True
B)False
Answer: True
Q3) A ____________________ is a non-corporate business that is owned by only one person.
Answer: Sole proprietorship
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Page 3
Chapter 2: Analyzing and Recording Transactions
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221 Flashcards
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Sample Questions
Q1) On November 30,a company had an Accounts Receivable balance of $5,100.During the month of December,total credits to Accounts Receivable were $76,000 from customer payments.The December 31 Accounts Receivable balance was $43,000.What was the amount of credit sales during December?
A)$8,100
B)$27,900
C)$70,900
D)$76,000
E)$113,900
Answer: E
Q2) Common Stock normally has a debit balance.
A)True
B)False
Answer: False
Q3) Explain the difference between a ledger and a chart of accounts.
Answer: A ledger is a record containing all of the accounts of a business and their balances.The chart of accounts is a list of all of the accounts in the ledger that includes an identification number for the accounts.
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4
Chapter 3: Adjusting Accounts and Preparing Financial Statements
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268 Verified Questions
268 Flashcards
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Sample Questions
Q1) ABC Co.leased a portion of its store to another company for eight months beginning on October 1,2011 at a monthly rate of $800.This other company paid the entire $6,400 cash on October 1,which ABC Co.recorded as unearned revenue.The journal entry made by ABC Co.at year-end on December 31,2011 would include:
A)A debit to Rent Earned for $2,400
B)A credit to Unearned Rent for $2,400
C)A debit to Cash for $6,400
D)A credit to Rent Earned for $2,400
E)A debit to Unearned Rent for $4,000
Answer: D
Q2) Unearned revenue is reported on the financial statements as:
A)A revenue on the balance sheet
B)A liability on the balance sheet
C)An unearned revenue on the income statement
D)An asset on the balance sheet
E)An operating activity on the statement of cash flows
Answer: B
Q3) The current portion of long-term debt is classified with the _________________________.
Answer: Current Liabilities
Page 5
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Chapter 4: Reporting and Analyzing Merchandising Operations
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196 Flashcards
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Sample Questions
Q1) Gross profit is the same as gross margin.
A)True
B)False
Q2) The seller is responsible for paying shipping charges and bears the risk of damage or loss in transit if goods are shipped FOB destination.
A)True
B)False
Q3) On July 22,a company purchased merchandise inventory at a cost of $5,250 with credit terms 2/10,net 60.If the company borrows money at 12% to pay for the purchase on the last day of the discount period and pays the loan off on the last day of the credit period,what would be the net savings for the company?
A)$99.50
B)$-20.43
C)$84.57
D)$20.43
E)$-84.57
Q4) What is gross margin ratio? How is it used as an indicator of profitability?
Q5) ________________________ refers to products that a company owns and intends to sell.
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Chapter 5: Reporting and Analyzing Inventories
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Sample Questions
Q1) An understatement of ending inventory will cause an understatement of assets and equity on the balance sheet.
A)True
B)False
Q2) Goods on consignment:
A)Are goods shipped by the owner to the consignee who sells the goods for the owner
B)Are reported in the consignee's books as inventory
C)Are goods shipped to the consignor who sells the goods for the owner
D)Are not reported in the consignor's inventory since they do not have possession of the inventory
E)Are always paid for by the consignee when they take possession of the goods
Q3) According to IRS requirements,companies are allowed to use FIFO for financial reporting and LIFO for tax reporting.
A)True
B)False
Q4) What is the effect of an error in the ending inventory balance on the income statement?
Q5) A major goal in accounting for inventory is ______________ costs against sales.
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Chapter 6: Reporting and Analyzing Cash and Internal Controls
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196 Flashcards
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Sample Questions
Q1) Which of the following statements is true regarding the documents in a voucher system?
A)All voucher systems are the same
B)Recording a purchase is initiated by an invoice approval
C)A well designed voucher system will allow department managers to place orders directly with suppliers for control purposes
D)A voucher system is most commonly used in very small companies to make up for the lack of other internal controls
E)A well designed voucher system will eliminate all fraud and error
Q2) The payee is the person who signs a check and authorizes payment.
A)True
B)False
Q3) An internal control system refers to the policies and procedures companies use to protect assets,ensure reliable accounting,promote efficient operations and urge adherence to company policies.
A)True
B)False
Q4) The _________________________ is also called the check authorization.
Q5) What is the purpose of the days' sales uncollected ratio?
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Chapter 7: Reporting and Analyzing Receivables
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Sample Questions
Q1) When the maker of a note is unable or refuses to pay at maturity,the note is said to be ___________________.
Q2) If a credit card sale is made,the seller can either debit Cash or debit Accounts receivable when the sale occurs.
A)True
B)False
Q3) A company borrowed $5,000 by signing a 3-month promissory note at 10%.The total interest on the note is $500.
A)True
B)False
Q4) Companies follow both the matching principle and the materiality principle when applying the direct write-off method.
A)True
B)False
Q5) Companies can report a credit card expense as a discount deducted from sales or as a selling expense.
A)True
B)False
Q6) What is the maturity date of a 6-month note receivable dated February 5?
Page 9
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Chapter 8: Reporting and Analyzing Long-Term Assets
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Sample Questions
Q1) .A company purchased a delivery van for $23,000 with a salvage value of $3,000 on September 1,2010.It has an estimated useful life of 5 years.Using the straight-line method,how much depreciation expense should the company recognize on December 31,2010?
A)$1,000
B)$1,333
C)$1,533
D)$4,000
E)$4,600
Q2) A company purchased mining property for $1,560,000.The property was estimated to contain 13,000,000 tons of ore.In the current year,the company removed and sold 247,000 tons of ore.Calculate the depletion expense for the current year.
Q3) A company purchased mining property containing 7,350,000 tons of ore for $1,837,500.In 2009 it mined and sold 857,000 tons of ore and in 2010 it mined and sold 943,000 tons of ore.Calculate the depletion expense for 2009 and 2010.What was the book value of the property at the end of 2010?
Q4) How is the cost principle applied to plant assets,acquisitions,including lump-sum purchases?
Q5) _____________ are the federal income tax rules for depreciating assets.
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Chapter 9: Reporting and Analyzing Current Liabilities
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Sample Questions
Q1) Coke had income before interest expense and income taxes of $5,698 million and interest expense of $199 million.Calculate Coke's times interest earned ratio.
Q2) Companies with many employees often use a special ____________________ account to pay employees.
Q3) The amount of federal income tax withheld is based on the employee's annual earnings rate plus the number of withholding allowances claimed by the employee.
A)True
B)False
Q4) On December 1,Martin Company signed a $5,000 3-month 6% note payable,with the principle plus interest due on March 1 of the following year.What amount of interest expense is accrued at December 31 on the note?
A)$0
B)$25
C)$50
D)$75
E)$300
Q5) ______________ are amounts owed to suppliers for products or services purchased on credit.
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Chapter 10: Reporting and Analyzing Long-Term Liabilities
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Sample Questions
Q1) On January 1,2010,Lane issues $700,000 of 7%,15-year bonds at a price of 106 3/4.The interest payments are made on June 30 and December 31.Lane elects a fiscal year ending September 30.What is the amount that would be recorded as cash paid in the December 31,2010 journal entry?
A)$24,500
B)$22,925
C)$12,250
D)$11,462
E)$13,458
Q2) A basic present value concept is that cash received in the future is worth more value than the same amount of cash received today.
A)True
B)False
Q3) On August 1,2010,a company issues bonds with a par value of $600,000.The bonds mature in 10 years and pay 6% annual interest,payable each February 1 and August 1.The bonds sold at $592,000.The company uses the straight-line method of amortizing bond discounts.The company's year-end is December 31.Prepare the general journal entry to record the interest accrued at December 31,2010.
Q4) What is an annuity?
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Chapter 11: Reporting and Analyzing Equity
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Sample Questions
Q1) Preferred stock on which the right to receive dividends is forfeited for any year that the dividends are not declared is referred to as:
A)Participating preferred stock
B)Callable preferred stock
C)Cumulative preferred stock
D)Convertible preferred stock
E)Noncumulative preferred stock
Q2) A company's stock is selling for $35 per share at year-end.This current year it paid shareholders a $2.45 per share cash dividend,reported earnings per share of $12.00 and had 750,000 common shares outstanding at year-end.Calculate the company's dividend yield.
Q3) How is the retirement of stock recorded?
Q4) A debit balance in retained earnings is often referred to as a retained earnings deficit.
A)True
B)False
Q5) What are the rights generally granted to common stockholders?
Q6) No-par stock to which the directors assign a value per share is called
Page 13
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Chapter 12: Reporting and Analyzing Cash Flows
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Sample Questions
Q1) When preparing the operating section of the statement of cash flows using the indirect method,non-operating gains are added back to net income.
A)True
B)False
Q2) When preparing the operating section of the statement of cash flows using the indirect method,non-cash operating expenses are added back to net income.
A)True
B)False
Q3) Cash paid out for merchandise is considered to be an operating activity.
A)True
B)False
Q4) When analyzing the changes on a spreadsheet used to prepare a statement of cash flows,the cash flows from financing activities generally affect:
A)Net income,current assets and current liabilities
B)Noncurrent assets
C)Noncurrent liabilities and equity accounts
D)Both noncurrent assets and noncurrent liabilities
E)Equity accounts only
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Chapter 13: Analyzing and Interpreting Financial Statements
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Sample Questions
Q1) A company had a market price of $37.50 per share,earnings per share of $1.25 and dividends per share of $0.40.Its price-earnings ratio is equal to:
A)3.1
B)30.0
C)93.8
D)32.0
E)3.3
Q2) One purpose of financial statement analysis for internal users is to provide information helpful in improving the company's efficiency and effectiveness in providing products and services.
A)True
B)False
Q3) Profitability is the ability to generate positive market expectations.
A)True
B)False
Q4) The measurement of key relationships between financial statement items is known as _____________________________.
Q5) Explain the form and content of a complete income statement.
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Q6) What are the standards for financial analysis comparison? Give examples of each.
Chapter 14: Investments and International Operations
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Sample Questions
Q1) The price of one currency stated in terms of another currency is called a(n):
A)Foreign exchange rate
B)Currency transaction
C)Historical exchange rate
D)International conversion rate
E)Currency rate
Q2) A company purchased $60,000 of 5% bonds on May 1.The bonds pay interest on February 1 and August 1.The amount of interest accrued on December 31 (the company's year-end)would be:
A)$250
B)$500
C)$1,250
D)$2,500
E)$3,000
Q3) A company had net income of $76,000 in 2009 and $88,000 in 2010.Its net sales were $640,000 in 2009 and $611,000 in 2010.Its average total assets in 2009 were $670,000 and $712,000 in 2010.Calculate the profit margin,total asset turnover and return on total assets for both years.Comment on the results.
Q4) Return on total assets is computed by dividing ___________ by __________.
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Chapter 15: Reporting and Analyzing Partnerships
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Sample Questions
Q1) Brown and Rubix are partners.Brown's capital balance in the partnership is $73,000 and Rubix's capital balance is $62,000.Brown and Rubix have agreed to share equally in income or loss.Brown and Rubix agree to accept Cabela with a 20% interest.Cabela will invest $41,500 in the partnership.The bonus that is granted to Brown and Rubix equals:
A)$3,100 each
B)$6,200 each
C)$35,300 in total
D)$41,500 in total
E)$0,because Brown and Rubix actually grant a bonus to Cabela
Q2) Partners in a partnership are taxed on _______________________,not on their withdrawals.
Q3) Marquis and Bose agree to accept Sherman into their partnership.Sherman will contribute $25,000 in cash.Prepare the journal entry to record this transaction.
Q4) Conley and Liu allow Lepley to purchase a 25% interest in their partnership for $50,000 cash.Conley and Liu both have capital balances of $55,000 each and have agreed to share income and loss equally.Prepare the journal entry to record the admission of Lepley to the partnership.
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Page 17
Chapter 16: Reporting and Preparing Special Journals
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Sample Questions
Q1) When a company uses special journals,the general journal is used for selected transactions and events including:
A)Recording adjusting transactions
B)Posting transactions to special journals
C)Accumulating debits and credits
D)Collecting detailed listings of amounts
E)Recording cash receipts
Q2) Subsidiary ledgers are not needed in perpetual inventory systems because the accounting system captures sufficient details to support analyses that decision makers need.
A)True
B)False
Q3) Posting debits from the Sales journal to Accounts Receivable twice - once to the general ledger account Accounts Receivable and once to the customer's subsidiary account - violates the accounting equation of debits equal credits.
A)True
B)False
Q4) A __________________ is an all-purpose journal that can record any transaction.
Q5) Explain how the amounts in the subsidiary ledgers are tested for accuracy.
Page 18
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