Business Accounting Exam Practice Tests
Course Introduction
Business Accounting is a foundational course that introduces students to the principles and practices of financial and managerial accounting. The course covers essential topics such as the accounting cycle, preparation and analysis of financial statements, basic cost concepts, and internal controls. Students will learn how financial information is recorded, summarized, and interpreted to support effective decision-making in businesses. Through case studies and practical exercises, the course also emphasizes the application of accounting standards, ethical considerations, and the use of accounting software in modern business environments. This course provides the necessary skills for understanding the financial health of organizations and supports further study in related business disciplines.
Recommended Textbook
Financial Accounting 7th Edition by Libby Libby
Available Study Resources on Quizplus 14 Chapters
1652 Verified Questions
1652 Flashcards
Source URL: https://quizplus.com/study-set/2919
Page 2
Chapter 1: Financial Statements and Business Decisions
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/58122
Sample Questions
Q1) Which of the following best describes liabilities and stockholders' equity?
A)They are the sources of financing an entity's assets.
B)They are the economic resources used by a business entity.
C)They are reported on the income statement.
D)They both increase when assets increase.
Answer: A
Q2) Business managers utilize managerial accounting reports to plan and manage the daily operations.
A)True
B)False
Answer: True
Q3) During the fiscal year ended 2010,a company had revenues of $400,000,expenses of $280,000,and an income tax rate of 30 percent.What was the company's 2010 net income?
A)$120,000
B)$36,000
C)$84,000
D)$400,000
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Investing and Financing Decisions and the Balance Sheet
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/181736
Sample Questions
Q1) Which of the following reflects the impact of a transaction where $200,000 cash was invested by stockholders in exchange for stock?
A)Assets and liabilities each increased $200,000.
B)Assets and revenues each increased $200,000.
C)Stockholders' equity and revenues each increased $200,000.
D)Stockholders' equity and assets each increased $200,000.
Answer: D
Q2) Which of the following describes the impact of paying a current liability using cash on the balance sheet?
A)Current assets will decrease.
B)Current liabilities will increase.
C)Stockholders' equity will decrease.
D)Total assets will remain the same.
Answer: A
Q3) Which of the following events will cause retained earnings to increase?
A)Dividends declared by the Board of Directors.
B)Net income reported for the period.
C)Net loss reported for the period.
D)Issuance of stock in exchange for cash.
Answer: B
Page 4
To view all questions and flashcards with answers, click on the resource link above.
Chapter 3: Operating Decisions and the Income Statement
Available Study Resources on Quizplus for this Chatper
119 Verified Questions
119 Flashcards
Source URL: https://quizplus.com/quiz/58120
Sample Questions
Q1) Which of the following costs is most likely to be the largest expense reported on the income statement of a merchandiser such as Wal-Mart?
A)Salaries expense
B)Cost of goods sold
C)Advertising expense
D)Income tax expense
Answer: B
Q2) Which of the following statements is false when Mama June Pizza Company paid $47,000 cash on accounts owed to suppliers?
A)The cash account was credited for $47,000.
B)Accounts payable was debited for $47,000.
C)Supplies expense was increased by $47,000.
D)Operating income was not changed by the payment to the suppliers.
Answer: C
Q3) Expense accounts have debit balances because they result in decreases in net income,retained earnings and stockholders' equity.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Adjustments,Financial Statements,and the Quality of Earnings
Available Study Resources on Quizplus for this Chatper
135 Verified Questions
135 Flashcards
Source URL: https://quizplus.com/quiz/58119
Sample Questions
Q1) The adjusting entry to record an accrued expense results in a decrease in both assets and stockholders' equity.
A)True B)False
Q2) Morgan Company purchased supplies inventory for $2,000.Due to an error in posting to the general ledger,the inventory account was debited for only $200 while accounts payable was credited for $2,000.During which phase of the accounting cycle would this error be first discovered?
A)Recording the transaction in the general journal.
B)Preparation of the financial statements.
C)Preparation of the trial balance.
D)Preparation of the income statement.
Q3) The net profit margin ratio is a measure of how much profit was created per sales dollar.
A)True B)False
Q4) Describe the adjusted trial balance.
Q5) An accrued expense has been both incurred and paid for using cash. A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Communicating and Interpreting Accounting Information
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/58118
Sample Questions
Q1) Which of the following describes the conservatism constraint?
A)A business should avoid overstating assets and revenues and avoid understating expenses and liabilities.
B)The benefits of accounting for and reporting information should outweigh the costs.
C)If the dollar amounts involved are large enough to influence a user's decisions the data is considered to be relevant.
D)The conservatism constraint produces a higher net income and stockholders' equity.
Q2) Which of the following statements is correct?
A)Income from operations increases when common stock is sold for more than par value.
B)The accrual of research and development costs does not affect the net profit margin ratio.
C)The payment of an accrued liability decreases asset turnover.
D)The declaration and payment of a cash dividend increases the return on assets ratio.
Q3) Describe relevance and reliability as they pertain to financial reporting.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Reporting and Interpreting Sales Revenue, Receivables,
and Cash
Available Study Resources on Quizplus for this Chatper
123 Verified Questions
123 Flashcards
Source URL: https://quizplus.com/quiz/181909
Sample Questions
Q1) Which of the following transactions will result in a decrease in the receivable turnover ratio?
A)The journal entry to record bad debt expense.
B)Writing off an uncollectible account receivable.
C)Selling inventory on account.
D)Collecting an account receivable.
Q2) Merchandise was sold on credit for $10,000,terms 2/10,n/30.Which of the following journal entry descriptions correctly describes the cash collection?
A)Cash is debited for $10,000 and accounts receivable is credited for $10,000 if the collection is within the discount period.
B)Cash is debited for $10,000, accounts receivable is credited for $9,800 and sales discounts is credited for $200 if the collection is within the discount period.
C)Cash is debited for $10,000, accounts receivable is credited for $9,800, and sales discounts is credited for $200 if the collection is after the discount period.
D)Cash is debited for $10,000, accounts receivable is credited for $10,000 if the collection is after the discount period.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Reporting and Interpreting Cost of Goods Sold and Inventory
Available Study Resources on Quizplus for this Chatper
127 Verified Questions
127 Flashcards
Source URL: https://quizplus.com/quiz/58116
Sample Questions
Q1) Freeman Company uses the periodic inventory system and applied LIFO inventory costing.At the end of the annual accounting period,December 31,2009,the accounting records in inventory showed \[\begin{array} { l c c } \underline { \text { Transactions } } & \underline { \text { Units } } & \underline { \text { Unit Cost } } \\
\hline \text { Beginning inventory, Jan. 1, 2009 } & 300 & \$ 20 \\
\text { Purchase, Feb. 1 } & 500 & 21 \\
\text { Sale, March } 15 \text { (sold at \$20 each) } & ( 400 ) & \\
\text { Purchase, May 15 } & 400 & 22 \\
\text { Sale, July } 31 \text { (sold at \$25 each) } & ( 500 ) & \end{array}\] Calculate the following: (round to the nearest dollar.)
1.Cost of goods available for sale
2.Ending inventory
3.Cost of goods sold
Q2) The average days to sell inventory decreases as inventory turnover increases. A)True B)False
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Reporting and Interpreting Property, Plant, and Equipment; Natural Resources; and Intangibles
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/58115
Sample Questions
Q1) When determining cash flow from operations using the direct method,depreciation and amortization expense are deducted from net income.
A)True
B)False
Q2) Salvia Company recently purchased a truck.The price negotiated with the dealer was $40,000.Salvia also paid sales tax of $2,000 on the purchase,shipping and preparation costs of $3,000,and insurance for the first year of operation of $4,000.At what amount should the truck be recorded on the balance sheet prior to recording depreciation expense?
A)$40,000
B)$42,000
C)$43,000
D)$45,000
Q3) Depreciation is the process of estimating a long-lived asset's current market value.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
10
Chapter 9: Reporting and Interpreting Liabilities
Available Study Resources on Quizplus for this Chatper
117 Verified Questions
117 Flashcards
Source URL: https://quizplus.com/quiz/58114
Sample Questions
Q1) the following four questions.
A.What is a contingent liability?
B.When must a contingent liability be recorded through a journal entry?
C.When should a contingent liability be disclosed in the footnotes to the financial statements?
D.When is disclosure of a contingent liability not required?
Q2) Rae Company purchased a new vehicle by paying $10,000 cash on the purchase date and agreeing to pay $3,000 every three months during the next five years; the first payment is due three months after the purchase date.Rae's incremental borrowing rate is 12%.At what amount would the vehicle be reported at on the balance sheet as of the purchase date?
A)$44,633
B)$50,000
C)$54,633
D)$60,000
Q3) Income taxes payable is an example of an accrued liability.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Reporting and Interpreting Bonds
Available Study Resources on Quizplus for this Chatper
101 Verified Questions
101 Flashcards
Source URL: https://quizplus.com/quiz/58113
Sample Questions
Q1) On November 1,2009,Davis Company issued $30,000,ten-year,7% bonds for $29,100.The bonds were dated November 1,2009,and interest is payable each November 1 and May 1.How much is the book value of the bonds after the November 1,2010 interest payment was recorded,assuming the straight-line method of amortization is utilized?
A)$29,010
B)$29,100
C)$29,190
D)$29,280
Q2) Interest expense decreases over time when a bond is initially issued at a premium and the effective-interest method is used.
A)True
B)False
Q3) If a company repurchases bonds with a $1,000,000 maturity value for $1,020,000 when their book value is $950,000,a loss of $20,000 will be reported.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Reporting and Interpreting Owners Equity
Available Study Resources on Quizplus for this Chatper
101 Verified Questions
101 Flashcards
Source URL: https://quizplus.com/quiz/58112
Sample Questions
Q1) Assume the following capital structure:
Preferred stock,6%,$50 par value,1,000 shares issued and outstanding with dividends in arrears for three prior years (2007 - 2009).
Common stock,$100 par value,2,000 shares issued and outstanding.
Total dividends declared and paid in 2010 were $50,000.How much of the 2010 dividend will be paid to the preferred stockholders assuming the preferred stock is cumulative?
A)$12,000
B)$3,000
C)$47,000
D)$38,000
Q2) A company purchased 1,000 shares of treasury stock for $38,000 cash; the treasury stock was initially issued for $24,000 and had a $9,000 par value.Which of the following statements incorrectly describes the effect of treasury stock purchase?
A)Net income is unchanged.
B)Earnings per share increases.
C)Total assets remain the same.
D)Stockholders' equity decreases.
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: Reporting and Interpreting Investments in Other Corporations
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/181733
Sample Questions
Q1) On January 2,2010,Parent Company purchased 100% of Sub Company's stock for $900,000 cash.At this date,the book value of Sub Company's net assets (i.e.,assets less liabilities)was $800,000 which included property,plant and equipment that have a book value of $400,000 and a market value of $440,000.
Requirements:
A.Prepare the journal entry that would appear on the books of each company at the acquisition date.
B.How much goodwill should Parent Company recognize on the consolidated financial statements at the date of acquisition?
Q2) The sale of a stock from the available-for-sale portfolio creates a gain or loss on the income statement based on the difference between the stock's original cost and its selling price.
A)True
B)False
Q3) If a bond is bought at a premium,the amortized book value of the bond investment will decrease as the bond matures.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Statement of Cash Flows
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/58110
Sample Questions
Q1) Which of the following transactions increases the quality of income ratio?
A)The accrual of revenue.
B)The accrual of an expense.
C)The cash payment of an account payable.
D)The payment of a cash dividend.
Q2) Bold Company's 2010 income statement reported total sales revenue of $250,000.During 2010,accounts receivable decreased by $20,000 and accounts payable increased $10,000.How much cash was collected from customers during 2010?
A)$230,000
B)$270,000
C)$250,000
D)$280,000
Q3) The statement of cash flows explains how the cash balance changed during a particular period of time.
A)True
B)False
Q4) The quality of income ratio decreases when cash is used to pay accounts payable.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Analyzing Financial Statements
Available Study Resources on Quizplus for this Chatper
119 Verified Questions
119 Flashcards
Source URL: https://quizplus.com/quiz/58109
Sample Questions
Q1) Which of the following ratios increases when a company switches from FIFO to LIFO during a period of increasing prices?
A)Current
B)Inventory turnover
C)Profit margin
D)Debt-to-equity
Q2) The quick ratio decreases when the adjusting entry to record bad debt expense is recorded.
A)True
B)False
Q3) A high price earnings ratio usually indicates the market is optimistic about the company's future earnings potential.
A)True
B)False
Q4) Finding comparable companies in order to compare performance is important because ratios in isolation are difficult to evaluate.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 16