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answer all 50 question it’s
1. Describe the main difference between Financial Accounting and Managerial Accountin
g.
2. List 3 different users (stakeholders) of financial statement information.
3. True or False – Accounting is not important to not-for-profit organizations.
4. What does GAAP stand for? What is it?
5. The ___________ ___________ ____________ Board establishes the rules for financial accounting.
6. There are 4 main financial statements. Name and describe 1 briefly.
7. What is the accounting equation?
8. The _______________ ________________ concept states that assets must be recorded in the financial statements at their original cost.
9. True or false – the collection of all accounts and their ending balances is the trial balanc
e.
This shows whether the company’s total debits equals its total credits.
10. Assets on the Balance Sheet are listed in the order of ____________________.
11. True or false – every transaction has two sides and both sides must be in balance at all times.
12. Cash flows are broken into 3 sections for the Statement of Cash flows. Which one is not correct:
a.
financing activities
b.
operating activities
c.
investing activities
d.
ongoing activities
13. The main source of cash for a business stems from:
a.
entity activities
b. financing activities
c. operating activities
d. investing activities
14. True or false – Closing the books is the process of closing and transferring the temporary accounts to
Retained Earnings
to reset them to $0 for the next period.
15. True or false – The permanent accounts are also closed at the end of the period.
16. Which of the following accounts does not normally have a credit balance (think of the accounting equation)?
a. Liabilities
b. Equity
c. Assets
d.
Revenue
s
17. Draw a T-account and label the sides as debit side and credit side:
18. Identify the financial statement/statements on which each of the following titles or accounts would appear. If it appears on more than one statement, list all statements (income statement, statement of changes in equity, balance sheet, statement of cash flows):
|
Title or Account |
Financial Statement(s) |
|
|
a. |
Retained Earnings | |
|
b. |
Revenue | |
|
c. |
Common Stock |
|
|
d. |
Financing Activities |
|
| e. |
Salaries Expense |
|
|
f. |
Land |
|
| g. |
Ending Cash Balance |
|
|
h. |
Notes Payable |
|
19. Classify items for the statement of cash flows. Indicate how each of the following activities would be classified on the statement of cash flows as operating activities (OA), investing activities (IA) or financing activities (FA):
|
Event |
Classification |
| a. |
Borrowed cash from the bank. |
|
Paid cash for salary expense. |
|
|
Performed services for cash. |
|
|
Paid cash to purchase land. |
|
|
Paid cash for utilities expense. |
|
|
Sold land for cash. |
|
|
Paid cash on principal of loan. |
|
|
Received cash from the issuance of stock. |
20. Classify the following as an Asset (A), Liability (L), or Owner’s Equity (E) item:
a. ______ accounts receivable
b. ______ accounts payable
c. ______ equipment
d. ______ unearned revenue
e. ______ common stock
f. ______ supplies
g. ______ land
h. ______ retained earnings
i. ______ prepaid expenses
j. ______ inventory
21. Why is it required by GAAP that we use accrual accounting?
22. The account unearned revenue is
a. An asset
b. A liability
c. An expense
d. Revenue
23. A prepaid expense is ________ when it is initially recorded
a. An asset
b. A liability
c. An expense
d. Revenue
24. Which of the following accounts is not closed out during the closing process?
a. Land
b. Depreciation expense
c. Interest revenue
d. Salary expense
25. The ___________- __________ Act changed how corporations look and account for internal controls. This act was in direct response to the Enron/Arthur Andersen scandal.
26. The ______________ principle states that expenses should be recognized in the month they helped generate revenue (i.e. match expenses to the revenues they help generate).
27. State whether the following transaction increased total assets (I), decreased total assets (D), or had no effect on total assets (NE).
a. _____ borrowed $50,000 from the bank
b. _____ purchased land for $40,000 cash
c. _____ received $20,000 cash and issued stock to a shareholder
d. _____ paid $60,000 cash on accounts payable
e. _____ purchased equipment for $100,000 and signed a promissory note to pay for it later
f. _____ received $1,000 cash from a customer on account
28. Why are ethics important for accountants?
29. A (deferral or accrual) is recorded when an expense has been incurred or revenue has been earned, but cash has not yet been received/ paid.
30. A (deferral or accrual) is recorded when cash has been received/ paid but and expense has not yet been incurred or revenue has not yet been earned.
31. Identify each of the following events as an accrual, deferral, or neither.
a. Incurred other operating expenses on account _________________
b. Recorded expense for salaries owed to employees _______________
c. Paid a cash dividend to stockholders__________________
d. Paid cash to purchase supplies to be used in the next several months ______________
e. Purchased a delivery van with a 5 year life _______________
f. Provided services on account ____________________
g. Paid 1 year’s rent in advance ______________
h. Collected cash in advance for services to be performed over the next year ______________
32. True or false – the notes to the financial statements are an integral part of the financial statements and should be reviewed to gain a complete picture of the company’s financial situation.
33. True or false – the external auditors are responsible for reviewing and giving an opinion on the notes to the financial statements as well as the overall financial statements.
34. True or false – the external auditors are responsible for reviewing and giving an opinion on the management discussion and analysis section (MD&A) of the annual report.
35. Record the journal entry for the following transactions. Be sure to put the debit side and the credit side in proper form (i.e. debit listed first and not indented, credit listed 2nd and indented; do not draw T-accounts) :
a. Bought land for $40,000 with cash.
b. Purchased office supplies for $700 on account.
c. Received a cash payment of $6,000 from a customer as payment on their account (services were already performed).
36. Record the following adjusting entries (record only the adjustment, not the original entry to purchase, etc. – again record in proper journal entry form):
a. A business purchased supplies for $700. At the end of the month a physical inventory count revealed that only $300 of supplies remain. Record the adjustment for the month.
b. Your business paid $6,000 for 6 months worth of rent in advance. After 1 month, record the adjustment necessary.
c. Your business has $10,000 worth of unearned service revenue. At the end of the month it was determined that you earned 1/5th of the total. Record the necessary adjustment.
37. Sales – Cost of Goods sold = ________________________.
38. Which inventory system measures inventory continually, periodic or perpetual?
39. What do the terms 2/10, n/30 mean?
40. For each of the following events, indicate whether the freight terms are FOB destination or FOB shipping point.
| a. |
Sold merchandise and paid the freight costs. |
string |
||
| b. |
Purchased merchandise and paid the freight costs. |
|||
| c. |
Sold merchandise and the buyer paid the freight costs. |
|||
| d. |
Purchased merchandise and the seller paid the freight costs |
41. What is meant by the Lower of Cost or market rule?
42. Why would a company use ratios to measure inventory turnover and days in inventory (why would they care how fast inventory is turning over or staying in the warehouse)?
|
The following information applies to Westward Company. |
||
|
Beginning inventory |
200 units @ $23 each |
|
|
Purchases |
600 units @ $25 each |
|
|
Westward sold 700 units of inventory during the year. |
a. Determine the cost of goods sold assuming a FIFO cost flow.
b. Determine the cost of goods sold assuming a LIFO cost flow.
c. Determine the cost of goods sold assuming a weighted average cost flow.
44.
|
The following information applies to Kassouf Company. |
|
100 units @ $10 each |
|
400 units @ $12 each |
|
Kassouf sold 420 units of inventory during the year. |
a. Determine the ending inventory balance assuming a FIFO cost flow.
b. Determine the ending inventory balance assuming a LIFO cost flow.
c. Determine the ending inventory balance assuming a weighted average cost flow.
45. Craft Company carries three inventory items. The following information pertains to the ending inventory:
|
Item |
Quantity |
Unit Cost |
Unit Market Value |
||||
|
A |
150 |
$ |
10 |
8 |
|||
|
B |
250 |
|
18 |
14 |
|||
|
C |
175 |
5 |
Determine the value of the ending inventory using the lower-of-cost-or-market rule applied to each individual inventory item.
46. What are internal controls and why are they important?
47. Name and briefly describe 2 types of internal controls.
48. True or false – Adjustments to the bank balance require journal entries.
49. Identify which of the following items are added to or subtracted from the unadjusted
bank balance
to arrive at the true cash balance. (Yes, No)
|
Deposits in transit |
|
|
Certified checks |
|
|
Petty cash voucher |
|
|
NSF check from customer |
|
|
Interest revenue |
|
|
Bank service charge |
|
|
Outstanding checks |
50. Identify which of the following items are added to or subtracted from the unadjusted
book balance
to arrive at the true cash balance.
|
Charge for checks |
|
Note receivable collected by bank |
