Financial Accounting Exam
Bank
Course Introduction
Financial Accounting is an introductory course that explores the fundamental principles and practices involved in preparing, analyzing, and interpreting financial statements. The course covers key concepts such as the accounting cycle, recording financial transactions, accruals, deferrals, and the preparation of income statements, balance sheets, and cash flow statements. Students will learn how financial information is used by internal and external stakeholders to make informed business decisions. Emphasis is placed on understanding Generally Accepted Accounting Principles (GAAP), ethical considerations, and the regulatory environment within which financial reporting occurs.
Recommended Textbook
Financial Accounting 3rd Edition by Robert Kemp
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12 Chapters
1837 Verified Questions
1837 Flashcards
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Page 2
Chapter 1: Business, Accounting, and You
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) The ________ issues pronouncements that are guidelines for accounting practice.
A)GAAP
B)SEC
C)FASB
D)IRS Answer: C
Q2) Amounts owed to the business' owners as a result of an initial investment are called liabilities.
A)True
B)False Answer: False
Q3) Which of the following types of organizations would produce goods?
A)Merchandising business
B)Service business
C)Both merchandising and manufacturing businesses produce goods.
D)Manufacturing business
Answer: D
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Page 3
Chapter 2: Analyzing and Recording Business Transactions
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146 Verified Questions
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Sample Questions
Q1) On the trial balance,which account balances should be listed in the debit column?
A)Assets,Revenues,and Dividends
B)Liabilities,Revenues,and Common Stock
C)Assets,Dividends,and Expenses
D)Liabilities,Revenues,and Dividends
Answer: C
Q2) Motor Work,Inc.'s trial balance contains the following balances:
Cash $367 Accounts Payable $267 Revenue $632
Accounts Receivable $429 Expenses $103
What is the amount of total debits for this trial balance?
A)$899
B)$735
C)$1798
D)$796
Answer: A
Q3) Items of value that a company owns are called Stockholders' Equity.
A)True
B)False
Answer: False
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Chapter 3: Adjusting and Closing Entries
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Sample Questions
Q1) The adjusting entry to record $785 of revenues that have been earned but not yet recorded would be to:
A)debit Cash,$785;credit Service Revenue,$785.
B)debit Unearned Revenue,$785;credit Service Revenue,$785.
C)debit Service Revenue,$785;credit Accounts Receivable,$785.
D)debit Accounts Receivable,$785;credit Service Revenue,$785.
Answer: D
Q2) Recording Accounts Receivable would be an example of a(n):
A)deferred expense.
B)deferred revenue.
C)accrued expense.
D)accrued revenue.
Answer: D
Q3) Using the adjusted trial balance,the first financial statement to prepare is the Income Statement.
A)True
B)False
Answer: True
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5
Chapter 4: Accounting for a Merchandising Business
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Sample Questions
Q1) If a company has $115,000 net sales,$65,000 in gross profit,and $12,000 in net income,the net income percentage would be approximately 57%.
A)True
B)False
Q2) Physical inventory counts must be done:
A)when using the periodic system of inventory.
B)when using bar code scan technology.
C)when using the perpetual system of inventory.
D)regardless of inventory system.
Q3) An entry that has more than one debit and/or credit is called a:
A)double entry.
B)compound entry.
C)multiple-step entry.
D)special entry.
Q4) Wages Payable,Income Taxes Payable and Accounts Payable are:
A)long-term liabilities.
B)long-term assets.
C)short-term liabilities.
D)short-term assets.
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Chapter 5: Inventory
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152 Flashcards
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Sample Questions
Q1) A method of valuing inventory based on the assumption that the newest goods will be sold first is called the:
A)LIFO method.
B)average cost method.
C)specific cost method.
D)FIFO method.
Q2) If the replacement cost of inventory is less than its historical cost,the company will write down the inventory by:
A)debiting Cost of Goods Sold and crediting Inventory.
B)debiting Inventory and crediting Cost of Goods Sold.
C)making a note in the financial statements only.
D)debit Inventory for replacement cost,credit Inventory for historical cost.
Q3) Shrinkage refers to the loss of inventory due to theft,damage or other similar occurrences.
A)True
B)False
Q4) Beginning inventory plus net purchases equals cost of goods sold.
A)True
B)False
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Chapter 6: The Challenges of Accounting: Standards, internal
Control, audits, fraud, and Ethics
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Sample Questions
Q1) An organization's employees are usually responsible for fraud that is committed by a business organization.
A)True
B)False
Q2) For accounting information to be useful it must be all of the following EXCEPT:
A)reliable.
B)understandable.
C)economical.
D)relevant.
Q3) Which of the following would NOT be considered part of the control environment?
A)Having integrity and ethical values
B)Assessing chances of fraud
C)Having competent workers
D)Having a leadership philosophy
Q4) Currently,most European countries are using International Financial Reporting Standards.
A)True
B)False
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Chapter 7: Cash and Receivables
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Sample Questions
Q1) The entity that signs the note and promises to pay the required amount is referred to as:
A)maker of a note
B)payee of a note
C)debtor
D)both A and C
Q2) Accounts Receivable turnover measures the ability to collect cash from a company's credit customers.
A)True
B)False
Q3) A petty cash fund may be established for minor expenditures,such as postage.
A)True
B)False
Q4) A $525 collection on a note from a customer was reflected on Ronaldo Co's bank statement.When doing the bank reconciliation,Ronaldo Co.should:
A)add $525 to the bank balance.
B)subtract $525 from the bank balance.
C)add $525 to their book balance.
D)subtract $525 from their book balance.
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Chapter 8: Long-Term and Other Assets
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Sample Questions
Q1) Cost divided by the total amount of the natural resource to be removed yields:
A)depletion expense for the period.
B)depletion rate per unit for the period.
C)accumulated rate for the period.
D)depreciation rate per unit for the period.
Q2) The depreciation method often used for income tax purposes is the:
A)expense method.
B)units-of-production method.
C)double-declining balance method.
D)straight-line method.
Q3) Leo's Lawncare purchased equipment on January 1.The cost was $15,000,and the equipment had a residual value of $4,000.The equipment was given a useful life of 7 years.After the end of two years,it was determined that the equipment would be obsolete in 3 more years and the residual value would still be $4,000.What will be the depreciation under the straight-line method to the nearest dollar be for the third year?
A)$1,571
B)$2,619
C)$3,142
D)$7,857
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Page 10
Chapter 9: Current Liabilities and Long-Term Debt
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Sample Questions
Q1) Evergreen Roofing had cash sales for the month totaling $33,500.Evergreen offers a 1-year warranty on its roofing services.If Evergreen estimates warranty claims will equal 3% of sales,the journal entry to record the estimated warranty expense for the month is:
A)debit warranty expense $1,005;credit Cash $1,005.
B)debit estimated warranty expense $1,005;credit warranty payable $1,005.
C)debit warranty expense $1,005;credit Sales Revenue $1,005.
D)debit warranty expense $1,005;credit Estimated Warranty Payable $1,005.
Q2) Which of the following would be a required payroll tax for both the employee and the employer?
A)Federal income tax
B)FICA
C)FUTA
D)SUTA
Q3) The tax rate on the HI (Medicare)portion of FICA is:
A)7)65%.
B)1)45%.
C)6)20%.
D)0)80%.
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Chapter 10: Corporations: Paid-In Capital and Retained Earnings
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160 Flashcards
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Sample Questions
Q1) What is the return on equity if sales are $279,800,net income is $48,600 and average common Stockholders' Equity is $185,400?
A)14.8%
B)66.3%
C)26.2%
D)17.4%
Q2) Return on equity shows the relationship between net income and ending Stockholders' Equity.
A)True
B)False
Q3) On the date of record:
A)debit Dividends and credit Retained Earnings.
B)debit Dividends Payable and credit Cash.
C)no entry is required.
D)debit Retained Earnings and credit Dividends Payable.
Q4) Dennis owns 2% of the total shares in a company;if the company issues a dividend he will receive 2% of the dividend.
A)True
B)False
12
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Chapter 11: The Statement of Cash Flows
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Sample Questions
Q1) Robbins Company distributed a 5% common stock dividend,this will be reported in the financing activity section of the cash flow statement.
A)True
B)False
Q2) A comparative Balance Sheet details why the ending cash balance increased or decreased.
A)True B)False
Q3) Enterprise Industries' Accounts Receivable decreased by $30,000 and its Accounts Payable decreased by $16,000.What is the net effect on cash from operations under the indirect method?
A)+$46,000
B)-$46,000
C)-$14,000
D)+$14,000
Q4) Days -sales-in-inventory is calculated by dividing cost of goods sold by 365. A)True
B)False
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13
Chapter 12: Financial Statement Analysis
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Sample Questions
Q1) Predictions about a company's future earnings can best be inferred from the:
A)earnings per share data.
B)discontinued operations section.
C)continuing operations section.
D)extraordinary items section.
Q2) Financial analysis is the process of using a company's financial information to evaluate whether or not the company is creating value.
A)True
B)False
Q3) The ratio that measures the efficiency of all of a company's assets used is the:
A)Accounts Receivable turnover ratio.
B)total asset turnover ratio.
C)inventory turnover ratio.
D)fixed asset turnover ratio.
Q4) A common-size comparative statement shows:
A)dollars and percents.
B)dollars only.
C)percents only.
D)dollar increases and decreases.
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