Intro to Financial Accounting Final Exam Flashcards

1
Q

Which of the following does a check classify as?

A. Cash
B. Cash Equivalent
C. other

A

A. Cash

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2
Q

Which of the following does a check in need of a deposit classify as?

A. Cash
B. Cash equivalent
C. Other

A

A. Cash

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2
Q

Which of the following does a 60-day US treasury bill classify as?

A. Cash
B. Cash equivalent
C. Other

A

B. Cash equivalent

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2
Q

Which of the following does a six-month commercial paper classify as?

A. Cash
B. Cash equivalent
C. other

A

C. Other - Short term investment

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3
Q

Which of the following does a savings account classify as?

A. Cash
B. Cash equivalent
C. Other

A

A. Cash

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4
Q

Which of the following does an employee’s loan/IOU classify as?

A. Cash
B. Cash equivalent
C. Other

A

C. Other - Note receivable

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5
Q

Which of the following does a 3-month commercial paper classify as?

A. Cash
B. Cash equivalent
C. Other

A

B. Cash equivalent

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6
Q

How to compute net revenue?

A

Revenue - contra revenue

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7
Q

Which of the following is NOT a contra revenue?

A. Sales returns
B. Sales discounts
C. Sales loans
D. Sales Allowances

A

C. Sales Loans

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8
Q

Beginning Inventory + Purchases - Ending Inventory = ?

A

Cost of Goods Sold

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9
Q

Net Sales - Cost of Goods Sold = ?

A

Gross Profit

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10
Q

(Beginning Inventory + Purchases = Ending Inventory + Cost of Goods Sold) ?

A

Goods Available for Sale

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11
Q

Gross Profit - operating expenses = ?

A

Operating income

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12
Q

Operating income - non operating revenues/expenses = ?

A

Income before tax

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13
Q

Income before tax - Income tax expense = ?

A

Net income

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14
Q

Gross Profit / Net sales = ?

A

Gross Profit Ratio

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15
Q

A liability that will be paid within the current operating cycle, or 1 year (whichever is longer)

A

Current Liability

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16
Q

A liability that is recorded at the cash equivalent amount (PV)

A

Non-current liabilities

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17
Q

What formula is the result of Principle x Rate x Time

A

Interest formula

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18
Q

Which of the following is responsible for payroll liabilities?

A. Employers
B. Employees
C. Both D. Neither

A

A. Employers

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19
Q

Which of the following is NOT a Payroll Liability?

A. fringe benefits
B. expenses
C. salaries
D. taxes

A

B. expenses

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20
Q

The principal amount of the debt coming due within a year of the balance sheet date

A

Current Portion of Long-Term Debt

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21
Q

Contingent liabilities are reported on the financial statements and disclosed if they

A. Can’t be estimated and are probable
B. Can be estimated and are probable
C. Reasonably possible regardless of estimation

A

B. Can be estimated and are probable

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22
Q

Contingent liabilities are only disclosed in notes if they are

A. Probable and reasonably estimated
B. Probable and not estimated
C. Reasonably possible regardless of estimation
D. Both B and C

A

D. Both B and C

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23
Q

Current Assets / Current Liabilities = ?

A

Current Ratio

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24
Q

“A dollar today is worth more than a dollar in the future” ?

A

Time Value of Money (TVM)

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25
Q

A constant dollar amount occurs at the same time of each period.

A. Annuity
B. Single Sum

A

A. Annuity

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26
Q

A dollar amount that can occur at any time and isn’t constant regardless of time and period.

A. Annuity
B. Single Sum

A

B. Single Sum

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27
Q

Number of Compounding periods

A

N

28
Q

Interest rate

A

I/Y

29
Q

Present Value

A

PV

30
Q

Future Value

A

FV

31
Q

Annuity cash flow (payment)

A

PMT

32
Q

Which of the following is a recurring payment?

A. Lease
B. Installment Notes
C. Bonds
D. Other

A

B. Installment Notes

33
Q

Which of the following gives a user the right to use an asset for a given period of time?

A. Lease
B. Installment Notes
C. Bonds
D. Other

A

A. Lease

34
Q

Which of the following is a way to borrow money in order to reinvest it?

A. Lease
B. Installment Notes
C. Bonds
D. Other

A

C. Bonds

35
Q

An alternative form of the accounting equation is:

A. Stockholders’ Equity = Assets + Liabilities.
B. Net Income = Revenues − Expenses.
C. Assets = Liabilities − Stockholders’ Equity.
D. Assets − Liabilities = Stockholders’ Equity.

A

D. Assets - Liabilities = Stockholders’ Equity.

36
Q

The form of business organization that is legally separate from its owners is a:

A. Separation entity.
B. Sole proprietorship.
C. Corporation.
D. Partnership.

A

C. Corporation

37
Q

What is the primary purpose of financial accounting?

A. Measure business activities and communicate those measures to external users to make decisions B. Measure the profitability of the company in order to assist employees with making decisions C. Determine the amount of tax liability owed to the government D. Communicate business activities to internal management

A

A. Measure business activities and communicate those measures to external users to make decisions

38
Q

When a company pays employees’ salaries for the current period, how will the basic accounting equation be affected?

A. Stockholders’ equity decreases B. Liabilities decrease
C. Revenues decrease
D. Expenses decrease

A

A. Stockholders’ equity decreases

39
Q

When a company pays money in dividends to its stockholders, how would the transaction be recorded?

A. Debit Retained Earnings; credit Dividends
B. Debit Dividends; credit Cash
C. Debit Cash; credit Dividends
D. Debit Dividends; credit Accounts Payable

A

B. Debit Dividends; Credit Cash

40
Q

Which of the following would increase assets and increase liabilities?

A. Pay dividends to stockholders. B. Receive a utility bill for the current month. Plan to pay bill beginning of next month.
C. Provide services to customers on account.
D. Purchase office supplies on account.

A

D. Purchase office supplies on account

41
Q

Which of the following best describes the information reported in the income statement?

A. The extent to which cash inflows exceed cash outflows
B. The portion of profits paid in cash to stockholders
C. The current resources available to pay current obligations
D. The difference between total revenues and total expenses equals net income.

A

D. The difference between total revenues and total expenses equals net income.

42
Q

Under accrual-basis accounting:

A. Revenue should be recorded in the period the cash is received. B. Revenue is a component of common stock. C. Revenue should be recorded in the balance sheet. D. Revenue should be recorded in the period goods and services are provided.

A

D. Revenue should be recorded in the period goods and services are provided.

43
Q

Which one of the following accounts would not have a balance after closing entries?

A. Deferred Revenue
B. Dividends
C. Supplies
D. Prepaid Rent

A

B. Dividends

44
Q

Common examples of cash equivalents include all of the following EXCEPT:

A. Certificates of deposit.
B. Money market funds.
C. Treasury bills.
D. Accounts receivable.

A

D. Accounts receivable.

45
Q

What is the concept behind separation of duties in establishing internal controls?

A. The external auditors of the company should have no contact with managers while the audit is taking place.
B. Employee fraud is less likely to occur when access to assets and access to accounting records are separated.
C. The company’s financial accountant should not share information with the company’s tax accountant.
D. Duties of middle-level managers should be clearly separated from those of top executives.

A

B. Employee fraud is less likely to occur when access to assets and access to accounting records are separated.

46
Q

Which of the following would NOT need to be accounted for in a bank reconciliation?

A. NSF checks from customers recorded by the bank but not by the company
B. Deposits recorded by the company but not the bank
C. Interest recorded by the bank but not the company
D. Checks written by the company and recorded by the bank

A

D. Checks written by the company and recorded by the bank

47
Q

Which of the following is not a reason why a bank reconciliation is necessary?

A. Petty cash has a low balance.
B. The bank has transactions that the company has not recorded.
C. Reconciliations provide a control over cash.
D. The company has transactions that the bank has not recorded.

A

A. Petty cash has a low balance.

48
Q

Which of the following sales would typically be reported as a cash sale?

A. Sale with credit card
B. Sale in exchange for office supplies received
C. Sale in exchange for equipment received
D. Sale on account

A

A. Sale with credit card

49
Q

Using the allowance method, writing off an actual bad debt would include a:

A.Credit to Allowance for Uncollectible Accounts.
B. Debit to Accounts Receivable.
C. Debit to Bad Debt Expense.
D. Credit to Accounts Receivable.

A

D. Credit to Accounts Receivable.

50
Q

Credit sales are recorded as:

A. Debit Service Revenue, credit Accounts Receivable.
B. Debit Accounts Receivable, credit Service Revenue
C. Debit Cash, credit Service Revenue.
D. Debit Cash, credit Deferred Revenue.

A

B. Debit Accounts Receivable, credit Service Revenue

51
Q

The amounts owed to a company by its customers from the sale of goods or services on account is commonly referred to as:

A. Accounts payable.
B. Cash.
C. Accounts receivable.
D. Revenue.

A

C. Accounts receivable.

52
Q

The cost of unsold inventory at the end of the year is classified as a(n) ______ in the ______.

A. Liability; Balance sheet
B. Expense; Income statement
C. Revenue; Income statement
D. Asset; Balance sheet

A

D. Asset; Balance sheet

53
Q

Which of the following subsequent expenditures would be capitalized?

A. Costs that increase the service life of an asset
B. Ordinary repairs
C. Routine maintenance
D. Ordinary repairs and routine maintenance

A

A. Costs that increase the service life of an asset

54
Q

The purchase of a new cooling system for $150,000 to upgrade an office building owned by the company would be accounted for as:

A. A patent.
B. An addition in the Buildings account.
C. An expense in the period of the purchase.
D. Goodwill.

A

B. An addition in the Buildings account.

55
Q

When a company reports a gain on the sale of a depreciable asset, which of the following is always true?

A. The company sold the asset before its service life was over.
B. The company sold the asset for more than its fair value.
C. The company sold the asset for more than it was worth.
D. The company sold the asset for more than its book value.

A

D. The company sold the asset for more than its book value.

56
Q

Which of the following are included in an employer’s payroll tax expense?

A. Federal unemployment taxes
B. All of these answer choices are correct.
C. State unemployment taxes
D. Matching FICA tax

A

B. All of these answer choices are correct.

57
Q

When a company borrows cash from a bank promising to repay the amount borrowed plus interest, the borrower reports its liability as notes payable.

A. True
B. False

A

A. True

58
Q

The current portion of long-term debt should be:

A. Reported as a long-term liability in the balance sheet.
B. Combined with the rest of the long-term debt in the balance sheet.
C. Paid immediately.
D. Reported as a current liability in the balance sheet.

A

D. Reported as a current liability in the balance sheet.

59
Q

On December 2, 2023, Quebecor Printing received cash from customers for online subscriptions to begin in 2024. What would be the appropriate journal entry at the time cash was received on December 2, 2023?

A. Debit Cash, credit Deferred Revenue
B. No journal entry is necessary.
C. Debit Subscription Revenue, credit Cash
D. Debit Cash, credit Subscription Revenue

A

A. Debit Cash, credit Deferred Revenue

60
Q

Airlines do not record revenue when a ticket is sold, but wait to record revenue until the actual flight occurs.

A. True
B. False

A

A. True

61
Q

The concept that interest causes the value of money received today to be greater than the value of that same amount of money received in the future is referred to as the:

A. Historical cost principle.
B. Monetary unit assumption.
C. Matching principle.
D. Time value of money.

A

D. Time value of money.

62
Q

Which of the following is a correct statement?

A. The future value table should be used when determining how much an amount today will grow to be in the future.
B. The number of compounding periods and interest rate per compounding period are needed to use the future value table and the present value table.
C. All of the other answer choices are correct.
D. The present value table should be used when determining how much an amount in the future is worth today.

A

C. All of the other answer choices are correct.

63
Q

The cash interest payment each period is calculated as the:

A. Face amount times the market interest rate.
B. Carrying value times the stated interest rate.
C. Face amount times the stated interest rate.
D. Carrying value times the market interest rate.

A

C. Face amount times the stated interest rate.

64
Q

Using the effective interest method, the carrying value:

A. Would increase each year if the bonds were sold at a premium.
B. Would increase each year if the bonds were sold at a discount.
C. Of bonds will never increase.
D. Would increase each year if the bonds were sold at either a discount or a premium.

A

B. Would increase each year if the bonds were sold at a discount.

65
Q

Interest expense on bonds issued at a discount or premium is calculated as the:

A. Carrying value times the market interest rate.
B. Carrying value times the stated interest rate.
C. Face amount times the stated interest rate.
D. Face amount times the market interest rate.

A

A. Carrying value times the market interest rate.

66
Q

The balance of Retained Earning at the end of the year represents:

A. Total earnings less payments to owners over the life of the company.
B. Current year’s profits less payments to owners.
C. Total earnings over the life of the company.
D. Total contributions from owners less withdrawals over the life of the company.

A

A. Total earnings less payments to owners over the life of the company.

67
Q

When treasury stock is acquired, what is the effect on total stockholders’ equity?

A. Cannot determine from the given information
B. No effect
C. Increase
D. Decrease

A

D. Decrease

68
Q

The statement of stockholders’ equity shows:

A. How each equity account changed over time.
B. Only the beginning balance in each stockholders’ equity account.
C. Less information than the stockholders’ equity section in the balance sheet.
D. Only the ending balance in each stockholders’ equity account.

A

A. How each equity account changed over time.

69
Q

The issuer of a 100% common stock dividend (large stock dividend) to common stockholders should credit Common Stock for an amount equal to the:

A. Book value of the shares issued.
B. Market value of the shares issued.
C. Minimum legal requirements.
D. Par value of the shares issued.

A

D. Par value of the shares issued.