Accounting I Exam Practice Tests
Course Introduction
Accounting I introduces students to the fundamental principles and concepts of accounting, focusing on the recording, classification, and summarization of financial transactions. This course covers the accounting cycle, preparation of financial statements, and the use of Generally Accepted Accounting Principles (GAAP). Students will learn about assets, liabilities, equity, revenues, and expenses, as well as how to analyze, interpret, and use financial information for effective decision-making in a business environment. The course also emphasizes ethical practices and the role of accounting in the broader context of business operations.
Recommended Textbook
Financial Accounting Information for Decisions 7th Edition by John J Wild
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17 Chapters
3226 Verified Questions
3226 Flashcards
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Page 2
Chapter 1: Introducing Financial Accounting
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253 Verified Questions
253 Flashcards
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Sample Questions
Q1) Owner financing refers to resources contributed by creditors or lenders.
A)True
B)False
Answer: False
Q2) __________________________ is the recording of transactions or events and is just one part of accounting.
Answer: Recordkeeping (or bookkeeping)
Q3) Teasdale Printing Services purchases printing equipment on credit for $8,000.How would Teasdale record this transaction?
A)Cash decreases by $8,000 and Printing Equipment increases by $8,000.
B)Cash decreases by $8,000 and Accounts Payable increases by $8,000.
C)Cash decreases by $8,000 and Accounts Payable decreases by $8,000.
D)Printing Equipment increases by $8,000 and Accounts Payable increases by $8,000.
E)Accounts Receivable increases by $8,000 and Accounts Payable increases by $8,000.
Answer: D
Q4) Della's Donuts has revenues of $83,000 and expenses of $64,000.Calculate its net income.
Answer: Net income = $83,000 - $64,000 = $19,000.
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Page 3
Chapter 2: Accounting System and Financial Statements
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226 Verified Questions
226 Flashcards
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Sample Questions
Q1) ___________________ is a promise of payment from customers to sellers.
Answer: Accounts receivable
Q2) Wisconsin Rentals purchased office supplies on credit.The journal entry made by Wisconsin Rentals to record this transaction will include a:
A)Debit to Accounts Payable.
B)Debit to Accounts Receivable.
C)Credit to Cash.
D)Credit to Accounts Payable.
E)Credit to Retained Earnings.
Answer: D
Q3) A general journal is:
A)A ledger in which amounts are posted from a balance column account.
B)Not required if T-accounts are used.
C)A complete record of each transaction in the place from which transaction amounts are posted to the ledger accounts.
D)Not necessary in electronic accounting systems.
E)A book of final entry because financial statements are prepared from it.
Answer: C
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4
Chapter 3: Adjusting Accounts for Financial Statements
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241 Flashcards
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Sample Questions
Q1) Describe the types of entries required in later periods that result from accruals.
Answer: Accrued revenues in one period result in cash received in later periods.Accrued expenses in one period result in cash payments made in later periods.When the cash for these items is received or paid,journal entries must be made to recognize receipt,payment,and the removal of the accrued revenues or accrued expenses from the accounts.
Q2) The broad principle that requires expenses to be reported in the same period as the revenues that were earned as a result of those expenses is the:
A)Recognition principle
B)Cost principle
C)Cash basis of accounting
D)Matching principle
E)Time period principle
Answer: D
Q3) __________________ expenses are those costs that are incurred in a period but are both unpaid and unrecorded.
Answer: Accrued
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5
Chapter 4: Reporting and Analyzing Merchandising Operations
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Sample Questions
Q1) Which of the following statements is true regarding the closing process of a merchandiser?
A)Sales Discounts,Sales Returns and Allowances,and Cost of Goods sold should all be credited during closing.
B)Sales Discounts,Sales Returns and Allowances,and Cost of Goods sold should all be debited during closing.
C)Sales Discounts and Sales Returns and Allowances should be debited; Cost of Goods Sold should be credited during closing.
D)Sales Discounts and Sales Returns and Allowances should be credited; Cost of Goods Sold should be debited during closing.
E)Sales Discounts and Sales Returns and Allowances are not closed.Cost of Goods Sold should be credited during closing.
Q2) A buyer did not take advantage of a supplier's credit terms of 2/10,n/30,but instead paid the invoice in full at the end of 30 days.By not taking the discount,the buyer lost the equivalent of 18% annual interest on the amount of the purchase.
A)True
B)False
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Page 6
Chapter 5: Reporting and Analyzing Inventories
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Sample Questions
Q1) Given the following information,determine the cost of ending inventory at November 30 using the weighted average perpetual inventory method.
November 3: 15 units were purchased at $8 per unit.
November 11: 18 units were purchased at $9.50 per unit.
November 15: 15 units were sold at $45 per unit.
November 18: 30 units were purchased at $10.75 per unit.
November 30: 20 units were sold at $55 per unit.
Q2) Monthly or quarterly statements are called interim statements because they are prepared between the traditional annual statement dates. A)True B)False
Q3) The ______________________ method of assigning costs to inventory and cost of goods sold assumes that the most recent purchases are sold first.
Q4) The dollar value assigned to goods purchased will differ under the different inventory valuation methods of specific identification,FIFO,LIFO,and weighted average. A)True B)False
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Chapter 6: Reporting and Analyzing Cash and Internal Controls
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Sample Questions
Q1) If the Cash Over and Short account has a debit balance at the end of the period,the amount is reported as miscellaneous revenue.
A)True
B)False
Q2) Money orders,cashier's checks,and certified checks are examples of cash equivalents.
A)True
B)False
Q3) The accountant for Hanover Inc.prepared the bank reconciliation when the September 30 bank statement was received in the mail.A debit memorandum enclosed with the bank statement listed a NSF check in the amount of $900 received from Robert Moody,a customer.This transaction was not recorded by Hanover prior to receiving the bank statement.How would the company record the required adjusting entry for this item?
A)Debit Cash for $900 and credit Accounts Receivable-Robert Moody for $900.
B)Debit Accounts Receivable-Robert Moody for $900 and credit Cash for $900.
C)Debit Cash for $900 and credit Accounts Payable-Robert Moody for $900.
D)Debit NSF Check Expense for $900 and credit Cash for $900.
E)Debit NSF Check-Robert Moody for $900 and credit Cash for $900.
Q4) Discuss how the principles of internal control apply to cash receipts.
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Chapter 7: Reporting and Analyzing Receivables
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Sample Questions
Q1) When a company holds a large number of notes receivable,it sometimes sets up a controlling account and a subsidiary ledger for notes.
A)True
B)False
Q2) If a credit card sale is made,the seller will debit either Cash or Accounts Receivable when the sale occurs depending on the seller's arrangements with the credit card provider.
A)True
B)False
Q3) The maturity date of a note receivable:
A)Is the day of the credit sale.
B)Is the day the note was signed.
C)Is the day the note is due to be paid.
D)Is the date of the first payment.
E)Is the last day of the month.
Q4) The party who borrows money and signs a promissory note is referred to as the payee.
A)True
B)False
Q5) Explain the options a company has when converting its receivables to cash.
Page 9
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Chapter 8: Reporting and Analyzing Long-Term Assets
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207 Verified Questions
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Sample Questions
Q1) Goodwill is the amount by which a company's value exceeds the value of its individual assets and liabilities.
A)True
B)False
Q2) _______________________ are expenditures that extend an asset's useful life beyond its original estimate.
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) Salvage value is an estimate of an asset's value at the end of its benefit period.
A)True B)False
Q5) What are the general accounting procedures for recording asset disposals?
Q6) Why is the useful life of a plant asset so difficult to predict?
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Chapter 9: Reporting and Analyzing Current Liabilities
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Sample Questions
Q1) If a company had net income of $1,486,875,a times interest earned ratio of 4.0,a tax rate of 35%,and operating income of $3,050,000,what is the company's interest expense for the year?
A)$1,067,500
B)$725,329
C)$371,719
D)$762,500
E)$1,564,000
Q2) A table that shows the amount of federal income tax to be withheld from an employee's pay is the:
A)Form 941.
B)Tax table.
C)Wage bracket withholding table.
D)W-2.
E)W-4.
Q3) A company had income before interest expense and income taxes of $176,000 and its interest expense is $55,000.Calculate the company's times interest earned ratio.
Q4) Identify and explain the types of employer payroll taxes.
Q5) Describe how to account for and report on contingent liabilities.
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Chapter 10: Reporting and Analyzing Long-Term Liabilities
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192 Flashcards
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Sample Questions
Q1) What methods can a company use to retire its bonds?
Q2) The par value of a bond is also known as its ________________________.
Q3) Two common ways of retiring bonds before maturity are to (1) exercise a call option or (2) purchase them on the open market.
A)True
B)False
Q4) The debt to equity ratio helps assess the risks of a company's financing structure.
A)True
B)False
Q5) A company borrowed $300,000 cash from the bank by signing a five-year,8% installment note.The present value factor for an annuity at 8% for five years is 3.9927.Each annuity payment equals $75,137.How much cash did the company receive from the bank on the day they borrowed this money?
A)$75,137
B)$94,013
C)$300,000
D)$375,685
E)$1,197,810
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Chapter 11: Reporting and Analyzing Equity
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Sample Questions
Q1) How is the retirement of stock recorded?
Q2) _______________________ generally consist of a company's cumulative net income less any net losses and dividends declared since its inception.
Q3) _______________________ are responsible for and have final authority for managing a corporation's activities.
Q4) A company has $2,400,000 in stockholders' equity,that includes 500 shares of $50 par value noncallable preferred stock outstanding and 250,000 shares of common stock outstanding.Calculate the book value per (1) preferred share and (2) common share.
Q5) If a company discovers a mistake in 2013 that was made in 2012,the company records the adjustment in the year ________.
Q6) A company had stockholders' equity on January 1 as follows: Common Stock,$10 par value,1,000,000 shares authorized,250,000 shares issued; Contributed Capital in Excess of Par Value,Common Stock,$750,000 and Retained Earnings of $2,700,000.On May 20,$1,500,000 worth of retained earnings was appropriated for a plant expansion to be constructed next year.Prepare the journal entry to record the appropriation.
Q7) Identify and describe the two main components of stockholders' equity.
Q8) What is a stock split? How is a stock split different from a stock dividend?
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Chapter 12: Reporting and Analyzing Cash Flows
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171 Flashcards
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Sample Questions
Q1) Use the following information to calculate the net cash provided or used by financing activities for the Brooks Corporation:
(a) Net income,$10,000.
(b) Sold common stock for $4,000 cash.
(c) Paid cash dividend of $3,000.
(d) Paid bond payable,$8,000.
(e) Purchased equipment for $12,000 cash.
Q2) When analyzing the changes on a spreadsheet used to prepare a statement of cash flows,the cash flows from operating activities generally affect:
A)Net income,current assets,and current liabilities.
B)Noncurrent assets.
C)Noncurrent liability and the equity accounts.
D)Both noncurrent assets and noncurrent liabilities.
E)Equity accounts only.
Q3) Under IFRS,interest revenue may be classified as an operating or investing activity,assuming that this classification is applied consistently across all periods.
A)True
B)False
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14
Chapter 13: Analyzing and Interpreting Financial Statements
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Sample Questions
Q1) Liquidity refers to the availability of resources to meet short-term cash requirements. A)True
B)False
Q2) Total asset turnover reflects a company's ability to use its assets to generate sales and is an important indication of operating efficiency.
A)True
B)False
Q3) A company's sales in 2012 were $280,000 and its sales in 2013 were $341,600.Using 2012 as the base year,what is the sales trend percent for 2013?
Q4) Describe the purpose of vertical financial statement analysis and how it is applied.
Q5) A company has a current ratio of 1.92,total liabilities of $193,849,long-term notes payable of $85,791,and a quick ratio of 0.96.What are total current assets for the company?
Q6) The four building blocks of financial analysis are (1) ____________________, (2) __________________________, (3) ____________________ and (4)
Q7) Identify and explain the four building blocks of financial statement analysis.
Page 15
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Chapter 14: Applying Present and Future Values
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Sample Questions
Q1) What interest rate is required to accumulate $6,802.50 in four years from an investment of $5,000?
A)5%
B)8%
C)10%
D)12%
E)15%
Q2) From the perspective of a depositor,a savings account is a liability with interest.
A)True
B)False
Q3) At an annual interest rate of 8% compounded annually,$5,300 will accumulate to a total of $7,210.65 in five years.
A)True
B)False
Q4) You hope to retire in 10 years.Regrettably you are only just now beginning to save money for this purpose.You expect to save $6,000 a year at an annual rate of 8%.How much will you have accumulated when you retire?
Q5) Explain the concept of the future value of an annuity.
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Chapter 15: Investments and International Operations
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Sample
Questions
Q1) Long-term investments in available-for-sale securities are reported using their _______ on the balance sheet.
Q2) Multinational corporations can be U.S.companies with operations in other countries.
A)True
B)False
Q3) When using the equity method of accounting for investments in equity securities,the receipt of cash dividends is recorded as revenue.
A)True
B)False
Q4) Short-term investments in held-to-maturity debt securities are accounted for using the:
A)Market value method with market adjustment to income.
B)Market value method with market adjustment to equity.
C)Cost method with amortization.
D)Cost method without amortization.
E)Equity method.
Q5) What is comprehensive income and how is it usually reported in the financial statements?
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Chapter 16: Accounting for Partnerships
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Sample Questions
Q1) 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.
Q2) 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.
Q3) If partners devote their time and services to their partnership,their salaries are expenses on the income statement.
A)True
B)False
Q4) When a partner invests in a partnership,his/her capital account is __________ for the invested amount.
Q5) A _____________________ is an unincorporated association of two or more people to pursue a business for profit as co-owners.
Q6) Partner return on equity is calculated as ______________________________.
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Chapter 17: Accounting With Special Journals
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Sample Questions
Q1) Segment information is often useful to investors for evaluating a company's profitability,risk,and growth.
A)True
B)False
Q2) With online systems,all information storage should be off-line to protect the data.
A)True
B)False
Q3) A ____________________ is a part of a company that is separately identified by its products or services or by the geographic market it serves.
Q4) Enterprise resource planning software packages include the programs that manage a company's vital operations.
A)True
B)False
Q5) The __________________ principle requires that an accounting information system must be able to adapt to changes in the company,business environment,and needs of decision makers.
Q6) A __________________ is an all-purpose journal that can record any transaction.
Q7) Describe the posting process for special journals.
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