Principles of Accounting Test Bank
Course Introduction
Principles of Accounting introduces students to the foundational concepts and methods used in accounting for financial transactions. The course covers essential topics such as the accounting cycle, preparation and analysis of financial statements, and the application of generally accepted accounting principles (GAAP). Students will learn how to record business transactions, manage accounts, and interpret financial information to make informed business decisions. Emphasis is placed on understanding the role of accounting in decision-making processes for individuals, businesses, and other organizations.
Recommended Textbook
Financial Accounting 4th Canadian Edition by Robert; Libby
Available Study Resources on Quizplus
13 Chapters
1686 Verified Questions
1686 Flashcards
Source URL: https://quizplus.com/study-set/3872 Page 2
Chapter 1: Financial Statements and Business Decisions
Available Study Resources on Quizplus for this Chatper
119 Verified Questions
119 Flashcards
Source URL: https://quizplus.com/quiz/77165
Sample Questions
Q1) Lloyd Company ends the first year of operations with $2.2 million in retained earnings when no dividends were paid out.Since the company began operations on January 1<sup>st</sup>,20B of the current year ending December 31<sup>st</sup>,20B calculate the amount of beginning retained earnings and explain your answer.
Answer: The beginning balance of retained earnings is zero because a new business would not have generated income from prior operations.Retained earnings represents the profit generated through operations not distributed in the form of a dividend.A company just beginning operations could not have any profit so there would always be a zero beginning balance for new companies.
Q2) Accounting is a system that collects and processes financial information about an organization and reports that information to decision makers. A)True
B)False Answer: True
Q3) Accounting is based on man-made rules that sometimes undergo change.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Investing and Financing Decisions and the Accounting System
Available Study Resources on Quizplus for this Chatper
100 Verified Questions
100 Flashcards
Source URL: https://quizplus.com/quiz/77160
Sample Questions
Q1) Liabilities are categorized as current liabilities and non-current liabilities. A)True
B)False Answer: True
Q2) The trade payables account has a beginning balance of $1,000 and we purchased $3,000 of inventory on credit during the month.The ending balance was $800.How much did we pay our creditors during the month?
A)$2,800
B)$3,000
C)$3,200
D)$4,800 Answer: C
Q3) The objective of transaction analysis is to determine the economic effects of each transaction in terms of the accounting model.
A)True
B)False Answer: True
To view all questions and flashcards with answers, click on the resource link above.
Page 4
Chapter 3: Operating Decisions and the Accounting System
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/77159
Sample Questions
Q1) The statement of changes in equity is dependent on the results of A)the statement of financial position.
B)the income statement.
C)a company's share capital.
D)the statement of cash flows.
Answer: B
Q2) The operating cycle is the time it takes for a company to purchase goods,pay for the goods,sell them to customers,and collect the cash from the customers.
A)True
B)False
Answer: True
Q3) When a growing company finds it needs to buy more inventory before cash has been collected from customers,they often use short term credit such as trade or notes payable to finance the inventory purchases.
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
127 Verified Questions
127 Flashcards
Source URL: https://quizplus.com/quiz/77158
Sample Questions
Q1) On March 1,20A,the premium on a two-year insurance policy on equipment was paid amounting to $1,800.At the end of 20A (end of the accounting period),the financial statements for 20A,would report which of the following?
A)Insurance expense,$0; Prepaid insurance $1,800.
B)Insurance expense,$750; Prepaid insurance $1,050.
C)Insurance expense,$900; Prepaid insurance $900.
D)Insurance expense,$1,800; Prepaid insurance $0.
Q2) The purpose of the post-closing trial balance is to
A)prove the equality of the permanent account balances that are carried forward into the next accounting period.
B)prove the equality of the temporary account balances that are carried forward into the next accounting period.
C)list all the statement of financial position accounts in alphabetical order for easy reference.
D)prove that no mistakes were made.
Q3) Is the adjusted trial balance a financial statement? Explain why or why not.
Q4) The unadjusted trial balance does not reflect adjusting entries.
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
108 Verified Questions
108 Flashcards
Source URL: https://quizplus.com/quiz/77157
Sample Questions
Q1) Which of the following would not be a cash flow from investing activities?
A)Purchase of long-term investments.
B)Sale of a patent.
C)Collection of principal of a note receivable.
D)Collection of interest revenue on a long-term note.
Q2) The capital acquisitions ratio (Cash Flow from Operating Activities ¸ Cash Paid for Property,Plant,and Equipment)reflects the portion of purchases of property,plant,and equipment financed from operating activities without the need for outside debt or equity financing or the sale of other investments or other long-term assets.
A)True
B)False
Q3) Investing activities include cash proceeds from the sale of property,plant,and equipment,and short- and long-term investments.
A)True
B)False
Q4) Cash payments associated with interest relate to operating activities.
A)True
B)False
7
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
135 Verified Questions
135 Flashcards
Source URL: https://quizplus.com/quiz/77156
Sample Questions
Q1) The qualitative characteristic of relevance indicates that information is accurate,unbiased,and verifiable.
A)True B)False
Q2) Analysts play a major role in making financial statements and other information available to average investors through their stock recommendations and profit forecasts.
A)True
B)False
Q3) The dollar amount of net property,plant and equipment is:
A)$180,000
B)$80,000
C)$210,000
D)$350,000
Q4) Trade receivables is classified as a noncurrent asset.
A)True B)False
Q5) Earnings per share is the final section reported on the income statement. A)True B)False
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
161 Verified Questions
161 Flashcards
Source URL: https://quizplus.com/quiz/77155
Sample Questions
Q1) The December 31,2011 statement of financial position of Shylark Limited had Trade Receivables of $450,000 and a credit balance in Allowance for Doubtful Accounts of $45,000.During 2012 the following transactions occurred: service revenue billed on account,$1,500,000; collections from customers,$1,300,000; accounts written off $37,000; previously written off accounts of $4,000 were collected.
Required:
(a)Record the 2012 transactions.
(b)If the company uses the percentage of receivables basis to estimate bad debts expense and determines that uncollectible accounts are expected to be 5% of accounts receivable,what is the adjusting entry at December 31,2012?
Q2) A customer purchased $2,000 of goods on credit from Holiday Party Supply on May 1.The customer received the bill on May 15 and mailed a $2,000 cheque on May 28.Holiday received the cheque on May 30.In recording this transaction,Holiday should credit Sales Revenue for $2,000 on which of the following dates?
A)May 1.
B)May 15.
C)May 28.
D)May 30.
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; Intangibles; and Natural Resources
Available Study Resources on Quizplus for this Chatper
142 Verified Questions
142 Flashcards
Source URL: https://quizplus.com/quiz/77154
Sample Questions
Q1) Which of the following costs would not be part of product inventory costs for a manufacturer such as Harley Davidson?
A)Costs to store finished motorcycles until they are sold.
B)Kickstands purchased for use in manufacturing the motorcycles.
C)The factory manager's salary and benefits.
D)The wages and benefits of an employee in the welding department.
Q2) When a perpetual inventory system is used,the purchases returns and allowances account will not be part of the general ledger accounts.
A)True
B)False
Q3) When a company uses the periodic inventory system in accounting for its merchandise inventory,which of the following is true?
A)Purchases are recorded in the cost of goods sold account.
B)The inventory account is updated after each sale.
C)Cost of goods sold is computed at the end of the accounting periods rather than at each sale.
D)The inventory account is updated throughout the year as purchases are made.
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Reporting and Interpreting Liabilities
Available Study Resources on Quizplus for this Chatper
152 Verified Questions
152 Flashcards
Source URL: https://quizplus.com/quiz/77153
Sample Questions
Q1) Which of the following is a false statement?
A)Companies can change the method of depreciating assets from one year to the next.
B)Companies can affect the book value at the end of an asset's life by choosing one method of depreciation over another.
C)Companies can use one method of depreciation for some of their operational assets but then use a different method for another group or type of operational assets.
D)Companies cannot change their estimate of the salvage value of a long-term asset.
Q2) Expenditures made after the asset is in use are always capital expenditures.
A)True
B)False
Q3) A corporation may choose to list its operational assets in the current assets section of the statement of financial position.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Reporting and Interpreting Bond Securities
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/77164
Sample Questions
Q1) The Canada Pension Plan contribution is a matching contribution with a portion paid by both the employer and the employee.
A)True
B)False
Q2) Which of the following most likely would be classified as a current liability?
A)Dividends payable
B)Bonds payable
C)Three-year notes payable
D)Mortgage payable
Q3) Fundamentally,liabilities are measured in conformity with which of the following?
A)The revenue principle.
B)The matching principle.
C)The cost principle.
D)The materiality constraint.
Q4) Liabilities are defined as probable future economic benefits.
A)True
B)False
Q5) What are "Future Income taxes"? Where specifically would they appear in financial statements?
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Reporting and Interpreting Stockholders Equity
Available Study Resources on Quizplus for this Chatper
161 Verified Questions
161 Flashcards
Source URL: https://quizplus.com/quiz/77163
Sample Questions
Q1) Bonds payable usually are classified on the statement of financial position as which of the following?
A)Current liabilities.
B)Long-term liabilities.
C)Investments and funds.
D)Current assets.
Q2) The amortization of a bond discount results in periodic interest expense
A)greater than the constant percentage of the carrying amount of the bonds.
B)less than the constant percentage of the carrying amount of the bonds.
C)equal to the constant percentage of the carrying amount of the bonds.
D)increasing over the term of the bond issue.
Q3) Which of the following is true?
A)An outflow of cash for interest payments is an investing activity.
B)An outflow of cash when convertible bonds are converted is an investing activity.
C)An outflow of cash when callable bonds are recalled by the issuer is a financing activity.
D)Payment of interest is an investing activity since we would not have interest unless we borrowed money or sold bonds to the public.
To view all questions and flashcards with answers, click on the resource link above.
13
Chapter 12: Statement of Cash Flows
Available Study Resources on Quizplus for this Chatper
136 Verified Questions
136 Flashcards
Source URL: https://quizplus.com/quiz/77162
Sample Questions
Q1) A very low dividend yield ratio is usually indicative of a growth-oriented corporation.
A)True
B)False
Q2) A primary advantage of a general partnership,compared with a corporation,does not include which of the following?
A)Ease of formation.
B)Limited liability for the owners.
C)No income tax on the business itself.
D)Complete control by the partners.
Q3) What is the difference between cumulative and noncumulative preferred shares?
A)They both receive dividends in arrears.
B)Cumulative preferred shares' undeclared dividends accumulate each year until paid,while noncumulative preferred shares' right to receive dividends is forfeited in any year that dividends are not declared.
C)Cumulative does not receive dividends but noncumulative does.
D)Cumulative preferred share's right to receive dividends is forfeited in any year that dividends are not declared.However,noncumulative preferred shares' undeclared dividends accumulate each year until paid.
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Analyzing Financial Statements
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/77161
Sample Questions
Q1) At the end of 20B,Wild Corporation reported net income of $70,000,gross sales revenue of $1,525,000,and sales returns of $125,000.The profit margin was ______%.
Q2) Which of the following ratios is not a test of solvency?
A)Debt to equity ratio.
B)Owners' equity to total equity ratio.
C)Creditors' equity to total equity ratio.
D)Earnings per share ratio.
Q3) If the current ratio is 2 to 1,the payment of a cash dividend,which was recorded as a liability on the date of declaration,will do which of the following?
A)Increase the current ratio.
B)Decrease the current ratio.
C)Have no effect on the current ratio.
D)Invalidate earnings per share.
Q4) What is usually the base amount in preparing a common-size income statement?
A)Cost of goods sold.
B)Gross profit.
C)Net sales.
D)Profit.
To view all questions and flashcards with answers, click on the resource link above.
Page 15