Accounting Concepts and Applications
Question Bank
Course Introduction
This course provides an introduction to fundamental accounting concepts, principles, and procedures, focusing on the preparation, interpretation, and use of financial information in decision-making. Students will explore topics such as the accounting cycle, financial statement preparation, asset and liability measurement, and internal controls. Through practical applications and case studies, students will develop the skills necessary to analyze financial reports, understand the impact of transactions on business performance, and apply accounting information to real-world business scenarios. This foundation is essential for further study in accounting and finance, as well as for making informed business decisions.
Recommended Textbook
Survey of Accounting 7th Edition by Carl Warren
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15 Chapters
1730 Verified Questions
1730 Flashcards
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Page 2
Chapter 1: The Role of Accounting in Business
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100 Verified Questions
100 Flashcards
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Sample Questions
Q1) Rights to payments from customers are:
A)liabilities.
B)prepaid expenses.
C)accounts receivable.
D)accounts payable.
Answer: C
Q2) Who has the first preference to assets in case a business fails?
A)Stockholders
B)Long-term creditors
C)Customers
D)Employees
Answer: B
Q3) The debt created by a business when it makes a purchase on account is referred to as an:
A)account payable.
B)account receivable.
C)asset.
D)expense payable.
Answer: A
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Page 3
Chapter 2: Basic Accounting Concepts
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Sample Questions
Q1) It is possible for a transaction to change the makeup of assets,but to not affect assets in total.
A)True
B)False
Answer: True
Q2) An increase in Stockholders' Equity from revenues earned will also result in an increase in:
A)liabilities.
B)assets.
C)expenses.
D)cash flow from financing activities.
Answer: B
Q3) If assets have a balance of $80,000 and stockholders' equity has a balance of $60,000,then liabilities must have a balance of:
A)$140,000.
B)$60,000.
C)$80,000.
D)$20,000.
Answer: D
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Page 4
Chapter 3: Accrual Accounting Concepts
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115 Flashcards
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Sample Questions
Q1) Which of the following is an example of an intangible asset?
A)Goodwill
B)Patents
C)Copyrights
D)All of these Answer: D
Q2) Speedy Company's weekly payroll of $250 is paid on Fridays (five-day work week).Assume that the last day of the month falls on Thursday.Which of the following is the required month-end adjusting entry?
A)Increase Salaries Expense $200 and increase Salaries Payable $200
B)Increase Salaries Expense $50 and increase Salaries Payable $50
C)Increase Salaries Payable $200 and increase Cash $200
D)Increase Salaries Expense $250 and increase Cash $250
Answer: A
Q3) The matching concept requires expenses to be recorded in the same period that the related revenue is recorded.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Accounting for Merchandising Businesses
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Sample Questions
Q1) It is usual for the credit period to begin with the date the merchandise is received by the buyer.
A)True
B)False
Q2) For a merchandising firm,the inventory sold is shown on the income statement as:
A)cost of merchandise sold.
B)purchases.
C)purchases returns and allowances.
D)net purchases.
Q3) In recording the cost of merchandise sold for cash using a perpetual inventory system,the effect on the accounts is:
A)increase Cost of Merchandise Sold; increase Cash.
B)increase Cost of Merchandise Sold; decrease Merchandise Inventory.
C)increase Merchandise Inventory; decrease Cost of Merchandise Sold.
D)increase Accounts Receivable; decrease Merchandise Inventory.
Q4) The effect of a sales return and allowance is a reduction in sales revenue and a decrease in cash or accounts receivable.
A)True
B)False
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Chapter 5: Sarbanes-Oxley, internal Control, and Cash
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112 Verified Questions
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Sample Questions
Q1) A voucher is the notification accompanying the check issued to a creditor that indicates the specific invoice being paid.
A)True
B)False
Q2) A credit memorandum received with a bank statement means the company's bank account has been increased.
A)True
B)False
Q3) Denominator in the ratio of cash to monthly cash expense is calculated as .
A)total revenues divided by 12
B)net cash flows from investing activities divided by 12
C)earnings before taxes divided by 12
D)net cash flows from operations divided by 12
Q4) Money market funds,commercial paper,and U.S.Treasury Bills are examples of cash equivalents.
A)True
B)False
Q5) Money orders are considered cash.
A)True
B)False
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Chapter 6: Receivables and Inventories
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105 Flashcards
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Sample Questions
Q1) When an account is written off under the allowance method:
A)accounts receivable decreases.
B)bad debt expense is increased.
C)accounts receivable remains unchanged.
D)accounts receivable increases.
Q2) During deflationary periods,the use of the LIFO method of costing inventory will result in a greater amount of net income than would result from the use of the FIFO method of inventory costing.
A)True
B)False
Q3) Average cost is a method of inventory valuation.
A)True
B)False
Q4) A note receivable due in 90 days is listed on the balance sheet under:
A)long-term liabilities.
B)fixed assets.
C)current liabilities.
D)current assets.
Q5) Other than accounts receivable and notes receivable,name other receivables that might be included on the balance sheet.
8
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Chapter 7: Fixed Assets and Intangible Assets
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Sample Questions
Q1) Which of the following is true of fixed asset turnover?
A)It measures the efficiency with which a company uses its fixed assets to generate sales.
B)It measures the proportion of fixed assets to total assets.
C)It uses net purchases as a denominator in its calculation.
D)It measures the profits generated by the fixed and current assets of the company.
Q2) All amounts paid to get an asset in place and ready for use are referred to as:
A)deferred expenditures.
B)revenue expenditures.
C)residual value.
D)cost of an asset.
Q3) Companies usually compute depletion by using the double-declining-balance method.
A)True
B)False
Q4) Amortization refers to systematic periodic transfer of the cost of a fixed asset to an expense account.
A)True
B)False
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Chapter 8: Liabilities and Stockholders Equity
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Sample Questions
Q1) Cash dividends are not paid on shares of treasury stock.
A)True
B)False
Q2) The par value of common stock is rarely equal to its market value on the date the stock is issued.
A)True
B)False
Q3) Most employers are required to withhold a portion of the earnings of each employee for FICA tax.
A)True
B)False
Q4) Liabilities due beyond one year are classified as .
A)current liabilities
B)long-term liabilities
C)contingent liabilities
D)fixed liabilities
Q5) Federal unemployment compensation tax is a tax that is paid only by employers. A)True
B)False
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Chapter 9: Financial Statement Analysis
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Sample Questions
Q1) Statements in which all items are expressed as percentages with no dollar amounts are called common-sized statements.
A)True
B)False
Q2) The balance sheet and income statement for the year ended 2016 indicate the following:
A)2.6
B)3.6
C)0.7
D)2.9
Q3) The independent auditor's report does which of the following?
A)Describes that the common-sized statements are covered by the audit.
B)Gives the auditor's opinion regarding the fairness of the financial statements.
C)Summarizes what the auditor did.
D)States that the financial statements are effective.
Q4) The following items are reported on a company's balance sheet:
Q5) The relationship of 120 to 100 can be expressed as 1.2,1.2:1,or 120%.
A)True
B)False
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Chapter 10: Accounting Systems for Manufacturing Businesses
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Sample Questions
Q1) Which of the following is a period cost?
A)Power
B)Depreciation on factory equipment
C)Sales commissions
D)Wages of an assembly worker
Q2) Which of the following statements is true of lead time?
A)Total lead time can be divided into acceptable and non-acceptable lead time.
B)Lead time is a measure of time that elapses between the sale of a product and delivery to the customer.
C)Reducing nonvalue-added lead time reduces costs and improves the speed of production.
D)Reducing nonacceptable lead time improves the speed of production,but will not affect product cost.
Q3) Which of the following items would be classified as a part of prime cost?
A)Direct labor cost
B)Factory overhead cost
C)Selling cost
D)Administrative cost
Q4) KCT Printing Company uses a job order cost system.
Page 12
Q5) Use the correct number to designate each item below:
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Chapter 11: Cost Behavior and Cost-Volume-Profit Analysis
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140 Flashcards
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Sample Questions
Q1) The relative distribution of sales among the various products sold by a business is termed as:
A)business's basket of goods.
B)contribution margin mix.
C)sales mix.
D)product portfolio.
Q2) Rental charges of $60,000 per year plus $2 for each machine hour over 15,000 hours is an example of a fixed cost.
A)True
B)False
Q3) When a business sells more than one product at varying selling prices,the business's break-even point can be determined as long as the number of products does not exceed:
A)two.
B)three.
C)fifteen.
D)there is no limit.
Q4) The fixed cost per unit varies with changes in the level of activity.
A)True
B)False
Page 13
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Chapter 12: Differential Analysis and Product Pricing
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Sample Questions
Q1) A business is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $15 per unit.The unit cost for the business to make the part is $20,including fixed costs,and $12,not including fixed costs.If 30,000 units of the part are normally purchased during the year but could be manufactured using unused capacity,what would be the amount of differential cost increase or decrease from making the part rather than purchasing it?
A)$150,000 increase
B)$ 90,000 decrease
C)$150,000 decrease
D)$ 90,000 increase
Q2) Manufacturers must conform to the Robinson-Patman Act,which prohibits price discrimination within the United States unless differences in prices can be justified by different costs.
A)True
B)False
Q3) The product cost concept includes all manufacturing costs in the cost amount to which the markup is added to determine product price.
A)True
B)False
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Page 14
Chapter 13: Budgeting and Standard Cost Systems
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Sample Questions
Q1) An unfavorable cost variance occurs when budgeted cost at actual volumes exceeds actual cost.
A)True
B)False
Q2) Refer to the information provided for Octofic Cans Inc.Budgeted production for tin cans during the month is:
A)108,000 units.
B)83,000 units.
C)112,000 units.
D)120,000 units.
Q3) Which of the following are the principal components of a master budget?
A)Production budget
B)Sales budget
C)Capital expenditures budget
D)All of these
Q4) Which of the following will not affect direct materials quantity variance?
A)Malfunctioning equipment
B)Purchasing of inferior raw materials
C)Material requiring rework
D)Spoilage of materials
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Chapter 14: Performance Evaluation for Decentralized Operations
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Sample Questions
Q1) The profit margin,a component of the rate of return on investment,focuses on the profitability by indicating the rate of profit earned on each sales dollar.
A)True
B)False
Q2) In a profit center,the manager has responsibility and authority for making decisions that affect:
A)only costs.
B)only assets.
C)both costs and assets.
D)both costs and revenues.
Q3) Which one of the following is not a measure that management can use in evaluating and controlling investment center performance?
A)Rate of return on investment
B)Negotiated price
C)Residual income
D)Income from operations
Q4) The sales,income from operations,and invested assets for each division of Garner Company are as follows:
Page 16
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Chapter 15: Capital Investment Analysis
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Sample Questions
Q1) An anticipated purchase of equipment for $1,000,000,with a useful life of 8 years and no residual value,is expected to yield the following annual net incomes and net cash flows:
A)5 years
B)4 years
C)6 years
D)3 years
Q2) The excess of cash flowing in from revenues over the cash flowing out for expenses is termed net discounted cash flow.
A)True
B)False
Q3) When evaluating a proposal by use of the cash payback method,if net cash flows exceed the capital investment within the time deemed acceptable by management,the proposal should be accepted.
A)True
B)False
Q4) Internal rate of return is often called the payback rate of return.
A)True
B)False
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