Accounting for Decision Making
Mock Exam
Course Introduction
Accounting for Decision Making introduces students to the fundamental concepts and techniques of accounting that support effective decision-making in business environments. This course emphasizes the role of financial and managerial accounting information in planning, controlling, and evaluating organizational activities. Students will explore the use of accounting data for budgeting, performance analysis, cost management, and strategic planning, and develop skills to interpret and communicate accounting information to support sound business decisions. Through case studies and real-world scenarios, learners gain practical experience in applying accounting tools to solve complex business problems.
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) Another name for equity is:
A)Net income
B)Expenses
C)Net assets
D)Revenue
E)Net loss
Answer: C
Q2) An example of a financing activity is:
A)Buying office supplies
B)Obtaining a long-term loan
C)Buying office equipment
D)Selling inventory
E)Buying land
Answer: B
Q3) The International Accounting Standards Board (IASB)has the authority to impose its standards on companies around the world.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Analyzing and Recording Transactions
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221 Verified Questions
221 Flashcards
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Sample Questions
Q1) The balances for the accounts of Lance's Consulting Firm,Inc.for the year ended December 31 are shown below.Each account shown had a normal balance.
\[\begin{array} { l r l r }
\text { Accounts payable } & \$ 6,400 & \text { Wages expense } & \$ 35,000 \\
\text { Accounts receivable } & 7,000 & \text { Rent expense } & 5,000 \\
\text { Cash } & 10,000 & \text { Retained Earnings } & 68,700 \\
\text { Office Supplies } & 1,000 & \text { Land } & 53,000 \\
\text { Building } & 99,000 & \text { Unearned Revenue } & 7,000 \\
\text { Supplies expense } & 15,000 & \text { Dividends } & 20,000 \\
\text { Consulting Revenue } & 150,000 & \text { Common Stock } & 12,900
\end{array}\]
Calculate Total Assets.
Answer: $7,000+10,000+1,000+99,000+53,000 = $170,000
Q2) The right side of a T-account is a(n):
A)Debit
B)Increase
C)Credit
D)Decrease
E)Account balance
Answer: C
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Page 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) If all columns balance upon completion of a work sheet,you can be sure that no errors were made in preparing the work sheet.
A)True
B)False
Answer: False
Q2) If a company failed to make the end-of-period adjustment to remove the amount earned from the Unearned Management Fees account,there would be:
A)An overstatement of net income
B)An overstatement of assets
C)An overstatement of liabilities
D)An overstatement of equity
E)An understatement of liabilities
Answer: C
Q3) The account form of the balance sheet matches the accounting equation.That is,assets are on the left side of the statement and liabilities and equity are on the right side of the statement.
A)True
B)False
Answer: True
Page 5
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Chapter 4: Reporting and Analyzing Merchandising Operations
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196 Verified Questions
196 Flashcards
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Sample Questions
Q1) A company had net sales of $340,500,its cost of goods sold was $257,000 and its net income was $13,750.The company's gross margin ratio equals 24.5%.
A)True
B)False
Q2) The quick assets are defined as:
A)Cash,short-term investments and inventory
B)Cash,short-term investments and current receivables
C)Cash,inventory and current receivables
D)Cash,noncurrent receivables and prepaid expenses
E)Accounts receivable,inventory and prepaid expenses
Q3) Describe the recording process (including costs)for purchasing merchandise inventory using a perpetual inventory system.
Q4) Purchase allowances refer to merchandise a buyer acquires but then returns to the seller.
A)True
B)False
Q5) Describe the difference between wholesalers and retailers.
Page 6
Q6) What is the difference between the periodic and perpetual inventory systems?
Q7) A period's ___________________ becomes the next period's beginning inventory.
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Page 7
Chapter 5: Reporting and Analyzing Inventories
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202 Verified Questions
202 Flashcards
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Sample Questions
Q1) Given the following information,determine the cost of ending inventory at December 31 using the Weighted Average perpetual inventory method.
December 2: 5 units were purchased at $7 per unit.
December 9: 10 units were purchased at $9.40 per unit.
December 11: 12 units were sold at $35 per unit
December 15: 20 units were purchased at $10.15 per unit
December 22: 18 units were sold at $35 per unit
A)$51.75
B)$83.22
C)$41.30
D)$49.75
E)$50.75
Q2) The matching principle requires that the inventory valuation method follow the physical flow of inventory.
A)True
B)False
Q3) Goods in transit are automatically included in a company's inventory account.
A)True
B)False
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Page 8
Chapter 6: Reporting and Analyzing Cash and Internal Controls
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196 Flashcards
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Sample Questions
Q1) A remittance advice is:
A)An explanation for a payment by check
B)A bank statement
C)A voucher
D)An EFT
E)A cancelled check
Q2) For which item does a bank NOT issue a debit memorandum?
A)To notify a depositor of all withdrawals through an ATM
B)To notify a depositor of a deduction to a depositor's account
C)To notify a depositor of a bounced check
D)To notify a depositor of periodic payments arranged in advance,by a depositor
E)To notify a depositor of a deposit to their account
Q3) The internal document that is prepared to notify the appropriate persons that ordered goods have been received and describes the quantities and condition of the goods is the
A)Purchase requisition
B)Purchase order
C)Invoice
D)Receiving report
E)Invoice approval
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Chapter 7: Reporting and Analyzing Receivables
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Sample Questions
Q1) A company allows its customers to use bank credit cards to charge purchases.When customers use the credit cards,the net amount is deposited in the company's checking account.The company also is charged a 2.5% service charge for these credit card sales.Assume that on April 13,the company sold $25,000 worth of merchandise to customers who used credit cards.Prepare the company's journal entry to record the credit card sales for April 13 assuming the company deposited the receipts that same day.
Q2) The accounting principle that requires financial statements (including notes)to report all relevant information about the operations and financial condition of a company is called:
A)Relevance
B)Full disclosure
C)Evaluation
D)Materiality
E)Matching
Q3) What is the maturity date of a 6-month note receivable dated February 5?
Q4) Notes receivable are classified as current liabilities.
A)True
B)False
Q5) Explain how to record the receipt of a note receivable.
Page 10
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Chapter 8: Reporting and Analyzing Long-Term Assets
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208 Verified Questions
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Sample Questions
Q1) Define plant assets and identify the four primary issues in accounting for them.
Q2) Assume HYPERLINK "http://www.sambazon.com/"Sambazon.com sold an acai processing machine for $172,000 cash.If accumulated depreciation on the sale date was $58,311 and a gain of $6,721 was recognized on the sale,what was the original cost of the asset?
A)$223,590
B)$216,869
C)$165,279
D)$65,032
E)$113,689
Q3) Once the estimated depreciation expense for an asset is calculated:
A)It cannot be changed due to the historical cost principle
B)It may be revised based on new information
C)Any changes are accumulated and recognized when the asset is sold
D)The estimate itself cannot be changed; however,new information should be disclosed in financial statement footnotes
E)It cannot be changed due to the consistency principle
Q4) Depreciation measures the actual decline in market value of an asset.
A)True
B)False
Page 11
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Chapter 9: Reporting and Analyzing Current Liabilities
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188 Verified Questions
188 Flashcards
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Sample Questions
Q1) Experience shows that when times interest earned falls below 1.5 to 2.0 and remains at that level or lower for several time periods,the default rate on liabilities increases sharply.
A)True
B)False
Q2) The main purpose of the wage bracket withholding table is to:
A)Compute social security withholding
B)Compute Medicare withholding
C)Compute federal income tax withholding
D)Prepare the W-4
E)Compute gross earnings
Q3) A company's income before interest expense and income taxes is $302,400 and its interest expense is $72,000.Calculate the company's times interest earned ratio.
Q4) To compute the amount of tax withheld from an employee's pay,employers can use a _______________________________________________________ table.
Q5) A single liability can be divided between current and noncurrent liabilities.
A)True
B)False
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Chapter 10: Reporting and Analyzing Long-Term Liabilities
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188 Verified Questions
188 Flashcards
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Sample Questions
Q1) Describe the recording procedures for the issuance,retirement and paying of interest for notes.
Q2) Return on equity _______________ when the expected rate of return from the acquired assets is greater than the rate of interest on the bonds used to finance the asset acquisition.
Q3) On January 1,2010,a company borrowed $50,000 cash by signing a 7% installment note that is to be repaid with 5 annual end-of-year payments,the first of which is due on December 31,2010.
(a)Prepare the company's general journal entry to record the note's issuance.
(b)Assume that the annual payments are to consist of accrued interest plus equal amounts of principal.Prepare the general journal entries to record the first and second installment payments.
Q4) When the bond contract rate of interest is above the market rate of interest for that bond,the bond sells at a _____________.
Q5) _____________________ bonds can be exchanged for a fixed number of shares of the issuing corporation's common stock.
Q6) A company has $200,000 par value,10% bonds outstanding.Prepare the company's journal entry to retire the bonds at the date of maturity.
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Chapter 11: Reporting and Analyzing Equity
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208 Flashcards
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Sample Questions
Q1) What is an extraordinary gain or loss? How is it presented on a complete income statement? Be sure to include examples of extraordinary items.
Q2) The Discount on Common Stock account reflects:
A)The difference between the par value of stock and its issue price when the issue price is below par value.
B)One share's portion of the issued corporation's net assets recorded in its accounts
C)The difference between the par value of the stock and the amount contributed by stockholders when the amount contributed is more than par value
D)An amount of assets defined by state law that stockholders must invest and leave invested in a corporation
E)The amount a corporation must pay in addition to dividends in arrears if and when it exercises its right to retire a share of callable preferred stock
Q3) Common stock always carries a preference for receiving dividends over preferred stock.
A)True
B)False
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Chapter 12: Reporting and Analyzing Cash Flows
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179 Verified Questions
179 Flashcards
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Sample Questions
Q1) When using the indirect method to calculate and report net cash provided or used by operating activities,which of the following is subtracted from net income?
A)Decrease in income taxes payable
B)Depreciation expense
C)Amortization of intangible assets
D)Bad debts expense
E)Decrease in merchandise inventory
Q2) A company had total assets of $1,760,000,total cash flows of $1,320,000 and cash flows from operations of $205,000.The cash flow on total assets ratio is equal to:
A)1.33%
B)8.58%
C)11.65%
D)15.5%
E)75%
Q3) Explain how the cash flows from operating activities section of the statement of cash flows is prepared when using the direct method.
Q4) All cash transactions eventually affect noncash ___________ accounts.
Q5) Explain how to determine cash flows from investing and financing activities.
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Chapter 13: Analyzing and Interpreting Financial Statements
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186 Verified Questions
186 Flashcards
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Sample Questions
Q1) Express the following income statement information in common-size percents (round to nearest whole percent).Comment on the results.
\(\begin{array}{c}
\text { Thorsten Corp.}\\
\text { Comparative Income Statement}\\
\text { For Years Ended December 31,2011 and 2010}\\\begin{array}{|l|r|r|}
\hline&2011&2010\\
\hline\text { Sales } & \$ 1,200,000 & \$ 1,000,000 \\
\hline \text { Cost of goods sold } & \underline{804,000} & \underline{650,000} \\
\hline \text { Gross profit } & \$ 396,000 & \$ 350,000 \\
\hline \text { Selling expenses } & 132,000 & 120,000 \\
\hline \text { Administrative expenses } & 180,000 & 150,000 \\
\hline \text { Net income } & \$ 84,000 & \$ 80,000 \\
\hline
\end{array}\end{array}\)
Q2) Comparative horizontal analysis is used to reveal patterns in data covering successive periods.
A)True
B)False
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Chapter 14: Investments and International Operations
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178 Verified Questions
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Sample Questions
Q1) As a long-term investment,Elmer's Equipment Enterprise purchased 35% of Sticky Supplies Inc.'s 300,000 shares for $350,000 at the beginning of the fiscal year of both companies.On the purchase date,the fair value and book value of Sticky's net assets were equal.During the year,Sticky's earned net income of $430,000 and distributed cash dividends of 0.42 cents per share.The fair value of Sticky's assets at the end of the year totaled $349,450.What is the journal entry,if any to record the net income for the investment in Sticky?
Q2) All companies desire a low return on total assets. A)True B)False
Q3) A controlling investor is referred to as the parent and the investee company is referred to as the subsidiary.
A)True B)False
Q4) Detalo Co.held bonds of Schooner Corp.with a cost of $125,000 and a market value of $127,000.Detalo also held 1,500 shares of Tranco common stock with a cost of $25,000 and a market value of $24,700.These are classified as long-term available-for-sale securities.Prepare the journal entry to record the market value of the investments as of December 31.
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Chapter 15: Reporting and Analyzing Partnerships
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126 Verified Questions
126 Flashcards
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Sample Questions
Q1) Khalid,Dina and James are partners with beginning-year capital balances of $400,000,$320,000 and $160,000,respectively.The partners agreed to share income and loss as follows: Salary of $30,000 to Khalid,$50,000 to Dina and $55,000 to James.An interest allowance of 10% on beginning-of-year capital balances.Any remaining balance is to be divided equally.If partnership net income for the year is $190,000,determine each partner's share and make the appropriate journal entry to close the Income Summary to the capital accounts.
Q2) The BlueFin Partnership agreed to dissolve.The remaining cash balance after liquidating partnership assets and liabilities is $60,000.The final capital account balances are: Smith,$30,000; Nagy,$20,000; and Russ,$10,000.Prepare the journal entry to distribute the remaining cash to the partners.
Q3) When a partner invests in a partnership,his/her capital account is __________ for the invested amount.
Q4) The BlueFin Partnership agrees to dissolve.The cash balance after selling all assets and paying all liabilities is $60,000.The final capital account balances are: Smith,$35,000; Nagy,$29,000; and Russ, ($4,000).Russ is unable to pay the capital deficiency.Prepare the journal entries to record the transactions required to dissolve this partnership.
Q5) Partner return on equity is calculated as ______________________________.
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Chapter 16: Reporting and Preparing Special Journals
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Sample Questions
Q1) Employee paychecks
A) Input devices
B) Information storage
C) Information processor
D) Output devices
E) Source document
Q2) Individual transactions in the sales journal are posted regularly to customers' accounts in the ________________________________________.
Q3) The purchases journal is used to record cash purchases of merchandise.
A)True
B)False
Q4) __________________ processing accumulates source documents for a period of time and then processes them all at once such as daily,weekly or monthly.
Q5) ____________________ is the accounting system component that keeps data in a form accessible to information processors.
Q6) A _______________________________________ is a listing of accounts from the accounts payable ledger with their balances and the sum of all balances.
Q7) What is the segment return on assets ratio? What is it used for?
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