Accounting Principles II
Study Guide Questions
Course Introduction
Accounting Principles II builds upon the foundational concepts introduced in Accounting Principles I, focusing on the application of accounting techniques for partnerships, corporations, and the management of assets and liabilities. The course covers key topics such as inventory systems, long-term assets, liabilities, stockholders' equity, cash flow statements, and financial statement analysis. Through real-world scenarios and case studies, students gain a deeper understanding of how accounting information is used for decision-making, financial reporting, and strategic planning in a business environment.
Recommended Textbook
Horngren's Accounting Volume 2 10th Canadian Edition by Tracie L. Miller Nobles
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7 Chapters
1392 Verified Questions
1392 Flashcards
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Page 2
Chapter 1: Partnerships
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202 Verified Questions
202 Flashcards
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Sample Questions
Q1) The Partnership of Raymond,Chabot and Grant divides profits in the ratio of 4:5:3.There is no provision for dividing losses.During 2014,the business experienced a loss of $40,000.Grant's share of the loss is:
A) $(13,333)
B) $(10,000)
C) $(16,000)
D) $(16,667)
Answer: B
Q2) Often partners hire an independent firm to appraise their assets and liabilities at current market value.
A)True
B)False
Answer: True
Q3) Gains and losses on the sale of noncash assets in a partnership liquidation are shared by the partners on the basis of their profit-and-loss-sharing ratio.
A)True
B)False
Answer: True
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3
Chapter 2: Corporations: Share Capital and the Balance Sheet
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180 Verified Questions
180 Flashcards
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Sample Questions
Q1) A corporation may issue:
A) common shares and preferred shares
B) preferred shares but not common shares
C) common shares but not preferred shares
D) either common shares or preferred shares but not both
Answer: A
Q2) Pratt Corporation's balance sheet for 2017 reveals total shareholders' equity of $2,500,000.There are 10,000 shares of cumulative,$10 preferred shares outstanding and 50,000 common shares outstanding.To date,dividends in arrears for the preferred shares amount to $25,000.The liquidation value of the preferred shares is $105 per share.Book value per share of common shares is:
A) $28.75
B) $29.50
C) $28.50
D) $29.00
Answer: C
Q3) Corporations pay the same taxes as partnerships and proprietorships.
A)True
B)False
Answer: False
Page 4
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Chapter 3: Corporations: Retained Earnings and the
Income Statement
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205 Verified Questions
205 Flashcards
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Sample Questions
Q1) Net income for GRK Ltd.for 2017 is $426,800.GRK issued 17,000 common shares and 2,000 shares of $2,non-cumulative preferred shares on January 1 of 2017.On October 1 of 2017,GRK Ltd issued 5,000 common shares.No other share transactions occurred in 2017.What is earnings per share for 2017?
A) $24.14
B) $23.39
C) $24.37
D) $23.65
Answer: B
Q2) The declaration of a 2-for-1 stock split appears on which financial statement?
A) income statement
B) balance sheet
C) statement of retained earnings
D) does not appear on any financial statement
Answer: D
Q3) Stock dividends require the use of the company's cash when the shareholders cash them in.
A)True
B)False
Answer: False
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Chapter 4: Long-Term Liabilities
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186 Verified Questions
186 Flashcards
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Sample Questions
Q1) Refer to Table 15-4.Assuming the bonds were issued on May 1,2017,at 89 when the market interest rate was 8%,and the company uses the effective interest method of amortization,the semiannual interest payment on November 1,2017,would include a:
A) debit to Interest Expense for $96,000
B) credit to Discount on Bonds Payable for $10,800
C) debit to Premium on Bonds Payable for $213,600
D) credit to Interest Payable for $106,800
Q2) Using the effective-interest method of amortization,interest expense is calculated based on the:
A) market rate times the carrying value of the bonds
B) market rate times the face value of the bonds
C) stated rate times the carrying value of the bonds
D) stated rate times the face value of the bonds
Q3) The lower the interest rate the lower the present value of a sum to be received in the future.
A)True
B)False
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Chapter 5: Investments and International Operations
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191 Verified Questions
191 Flashcards
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Sample Questions
Q1) Refer to Table 16-2.Big Corporation sells 50% of its shares of Little Corporation for $77,000 on January 3,2019.This would result in a:
A) gain on sale of investment of $90,000
B) loss on sale of investment of $6,500
C) gain on sale of investment of $4,000
D) gain on sale of investment of $6,500
Q2) Refer to Table 16-4.Assume that Parson Products Inc.fails to make the necessary six-month amortization entry on December 31,2017.What is the effect of that error on the December 31,2017,financial statements?
A) Interest revenue is overstated by $930.
B) Investment in bonds is understated by $558.
C) Interest revenue is overstated by $558.
D) Investment in bonds is overstated by $1,116.
Q3) Refer to Table 16-2.At December 31,2018,the balance in Big Corporation's investment in Little Corporation's long-term account should be:
A) $95,000
B) $134,000
C) $167,000
D) $209,000
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Page 7
Chapter 6: The Cash Flow Statement
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207 Verified Questions
207 Flashcards
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Sample Questions
Q1) The cash flow statement is divided into operating,investing,and financing activities.
A)True
B)False
Q2) The most important long-run source of cash inflow
Q3) An example of the proper dating for the cash flow statement is:
A) December 31, 2015
B) For the Year Ended December 31, 2015
C) As at December 31, 2015
D) No dating is required.
Q4) Which of the following would appear on the direct method cash flow statement?
A) loss on sale of equipment
B) amortization of patents
C) amortization on equipment
D) cash payments for salaries
Q5) Cash payments to suppliers equals purchases plus the:
A) decrease in accounts payable
B) increase in accounts payable
C) increase in merchandise inventory
D) decrease in merchandise inventory
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Chapter 7: Financial Statement Analysis
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214 Verified Questions
214 Flashcards
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Sample Questions
Q1) Inventory turnover is computed by dividing net credit sales by average inventory.
A)True
B)False
Q2) While the numbers in the financial statements under Accounting Standards for Private Enterprises ASPE_and International Financial Reporting standards IFRS_will usually differ,the procedures for analyzing the relationships among the reported numbers remains unchanged.
A)True
B)False
Q3) Cost of goods sold for 2017 was $450,000 while net sales amounted to $800,000.On January 1,2017,inventory was $200,000 while on December 31,2017,inventory was $250,000.Inventory turnover for 2017 was:
A) 3.76
B) 2.00
C) 2.12
D) 2.25
Q4) The ability to meet current payments as they become due
Q5) The ability to generate enough cash to pay long-term debts as they mature
Q6) Ratio of net credit sales to average net accounts receivable
Page 9
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