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Enroll Now : BUS103: Introduction to Financial Accounting Exam Link
This course will introduce you to financial accounting in preparation for more advanced business topics. Recording financial information in a standard format allows managers, investors, lenders, stakeholders, and regulators to make appropriate decisions. In this course, we will look at the Income Statement, Balance Sheet, Statement of Cash Flows, and Statement of Shareholders’ Equity. You will learn how to compile and analyze these financial statements from the accounting data you have created.
To receive a free Course Completion Certificate, you will need to earn a grade of 70% or higher on this final exam. Your grade for the exam will be calculated as soon as you complete it. If you do not pass the exam on your first try, you can take it again as many times as you want, with a 7-day waiting period between each attempt.
Once you pass this final exam, you will be awarded a free Course Completion Certificate.
Here are the questions and answers :
Question 1 :Susan’s Candies had an unfortunate disaster at their factory and had to write down their inventory due to the loss. Their inventory account went from $100,000 to $20,000. Before the disaster, their total assets were $250,000, liabilities were $120,000 and owner’s equity was $130,000. What is the value in these accounts after the write-down?
a.Assets $170,000, Liabilities $40,000 and Owner’s Equity $120,000
b.Assets $170,000, Liabilities $120,000 and Owner’s Equity $50,000
c.Assets $250,000, Liabilities $80,000, and Owner’s Equity $90,000
d.Assets $250,000, Liabilities $120,000 and Owner’s Equity $130,000
Question 2 :Peter owns a small home-based business and decides to do his own accounting. This table is a random listing of the account balances in the various assets, liabilities, revenues, and expense accounts that Peter has identified. Peter invested $40,000 to start the business. Later in the year, he withdrew $11,000 for personal use. What is Peter’s net income/loss at the end of the year?
Cash :$7,000
Accounts receivable
$16,500
Car
$12,500
Accounts payable
$2,700
Salary expense
$2,500
Equipment
$4,400
Supplies expense
$2,800
Service revenue
$60,800
Gasoline expense
$2,200
Notes payable
$5,100
Question 2
a.$41,300
b.$53,300
c.$60,800
d.$75,000
Question 3:Which of the following is a key advantage of the corporate form of organization, as compared to sole proprietorships and partnerships?
Question 3
A.Finite life
b.Limited liability
c.Double taxation
d.Lower reporting requirements
Question 4:Which private regulatory governing body establishes financial accounting and reporting standards for the United States?
Question 4
a.American Accounting Association (AAA)
b.Financial Accounting Standards Board (FASB)
c.Governmental Accounting Standards Board (GASB)
d.Securities and Exchange Commission (SEC)
Question 5:Which of the following is an objective of managerial accounting?
Question 5
a.To submit required tax documents to the IRS
b.To meet the reporting requirements for a publicly traded company under the SEC
c.To provide information for effective decision making by the management of a company
d.To produce information for external users, including investors, creditors, customers, suppliers, and government agencies
There is a social service agency named Project Plum. This agency does a variety of things and services a number of people in the community within its three different programs. The programs operated by Project Plum used to be separate social service agencies that decided they could get more done as a combined social service agency. When they made the decision to combine their social services, they also considered how they would go about accounting for the revenues and expenses of the business. They decided that even though they were going to combine their financial records into a unified report, they still needed to track and record their individual activity separately, especially because they get funding (revenue) from various sources. Which accounting principle best describes this situation?
Question 6
a.Time period assumption
b.Monetary unit assumption
c.Going concern assumption
d.Economic entity assumption
Question 7
A retailer puts cameras above the checkouts as a way to deter fraud. The company is trying to mitigate which aspect of the fraud triangle?
Question 7
a.Incentive
b.Peer pressure
c.Rationalization
d.Perceived opportunity
Question 8
Which of the following was made a requirement by the Sarbanes Oxley Act?
Question 8
a.Companies must be publicly traded on a recognized stock exchange
b.Companies must hire expensive consulting firms to manage their internal controls
c.The CFO and CEO are personally responsible for financial reporting and internal controls
d.Senior management must not review internal audit reports to ensure their independence
Question 9
If an owner invests $200,000 into his or her business, what would be debited, and what would be credited?
Question 9
a.Cash would be debited and capital would be credited
b.Capital would be debited and revenue would be credited
c.Owners’ equity would be debited and assets would be credited
d.Revenue would be debited and cash would be credited
Question 10
You just finished posting all the journal entries to the accounts in the ledger. What is your next step in the accounting cycle?
Question 10
a.Closing the books
b.Preparing a trial balance
c.Preparing financial statements
d.Journalizing and adjusting entries
If a business pays off its $5,000 balance in April for inventory it purchased on account and used in March, what would the journal entry look like for this transaction?
Question 11
a.Cash $5,000 Accounts receivable 5,000
b.Accounts payable $5,000 Cash$5,000
c.Inventory $5,000 Cash $5,000
d.Accounts payable $5,000 Inventory $5,000
Question 12 : You have the following accounts and balances after posting to the general ledger. What is your total debits amount on the trial balance?
Accounts Receivable $15,000
Land 70,000
Cash $20,000
Owner’s Equity $80,000
Sales Revenue $20,000
Cost of Goods Sold $15,000
Inventory $10,000
Miscellaneous Expenses $1,000
Notes Payable $31,000
a.$100,000
b.$105,000
c.$115,000
d.$131,000
Question 13 Cara’s Candies pays their employees every Friday. This month, the month ends on Thursday.`Cara closes the books without recognizing an unpaid labor expense. What impact will this have on her financial statements?
a.Her cash account will be overstated.
b.Her expenses will be too high compared to her revenue.
c.Her income will be overstated and her liabilities will be understated.
d.Her liabilities will be overstated and her income will be understated.
Question 14 :Imagine you own a lawn service business and you perform service for a client during the month of June, but do not receive a payment until July. According to the rules of adjusting entries, you would be identifying this adjustment as which of the following?
a.Accrual
b.Debit
c.Deferral
d.Prepaid asset
Question 15 : Mai operates a used music and video store. In the store, she also sells snack foods and soda. In July, Mai orders one thousand candy bars from a wholesale company. Mai receives the candy bars in August and pays for them in September. When would the wholesaler recognize the sales revenue?
a.In July, when Mai places the order
b.In August, when they deliver the candy bars to Mai
c.In September, when Mai pays for the candy bars
d.In October, after the close of the September accounting cycle
Question 16 :Moe’s Trucking purchased a new $30,000 snow-plowing truck at the beginning of 2020. The company put $15,000 down and took out a 5% notes payable for the balance. Over the course of the year, the truck incurred a depreciation expense of $2,200, which was recorded on the income statement. Using the information given, what was the balance of accumulated depreciation on December 31, 2020?
a.$750
b.$1,500
c.$2,200
d.$27,800
Question 17 : This is the list of accounts in the general ledger after adjustments are made. Prepare the adjusted trial balance. What is the total of the debits on the adjusted trial balance?
Accounts Payable $40,000
Cash $50,000
Deferred income Tax $10,000
Prepaid Rent $15,000
Capital Stock $80,000
Sales Revenue $35,000
Advertising Expense $15,000
Dividends$20,000
Supplies $10,000
Interest Expense $ 2,000
Plant Equipment $25,000
Depreciation Expense $7,000
Insurance Expense $6,000
Accumulated Depreciation $10,000
Accounts Receivable $25,000
Question 17
a.$140,000
b.$165,000
c.$175,000
d.$190,000
Question 18 Which of the following is an account that ends up on the income statement once the closing process has been completed?
a.Supplies
b.Insurance expense
c.Accumulated depreciation
d.Unearned Service revenue
Question 19 :Before you can complete the accounting cycle, you will have to close out your temporary accounts into an income summary account. Once the income summary account has been created, it will have to be closed out at the end of the accounting cycle. What happens to the income summary account?
a.It gets closed to the cash account
b.It gets closed to the capital account
c.It gets closed to the service revenue account
d.It gets closed to the unearned revenue account
Question 20
Which of the following types of accounts will appear on the post-closing trial balance?
a.Assets, liabilities, capital stock, and retained earnings
b.Assets, liabilities, capital stock, and revenues
c.Assets, liabilities, revenues and expenses
d.Revenues, expenses, capital stock, and assets
Question 26 :Which inventory valuation method minimizes taxes during periods of inflation?
a.FIFO
b.LIFO
c.Weighted Average
d.Specific Identification
Question 27 :Using this information, what is the cost of goods sold for Com Healthcare if the company is using a periodic inventory system?
Sales revenue: $1,550,000
Beginning inventory: $300,000
Ending inventory: $470,000
Purchases: $910,000
Question 27
a.$640,000
b.$740,000
c.$940,000
d.$2,290,000
Question 28 :Tech-time has this financial information:
Net Sales Revenue $95,000
Cost of Goods Sold $42,000
Inventory, Jan 1 $28,000
Inventory, Dec 31 $32,000
What is the company’s inventory turnover ratio?
Question 28
a.1.3
b.1.4
c.1.5
d.3.2
Question 29
A merchandising business had beginning inventory in the amount of $105,000 and ending inventory in the amount of $111,000. Additionally, the business did not have any associated freight costs; cost of goods sold was $97,000, and total purchases were $105,000. What would be the amount identified for purchase returns and allowances?
Question 29
a.$0
b.$2,000
c.$6,000
d.$14,000
Question 30 :Which of the following statements concerning inventory systems is true?
Question 30
a.A periodic inventory system is required under GAAP rules
b.The perpetual inventory system always provides an accurate count of goods on the floor
c.Users of perpetual inventory systems still usually choose to do a physical inventory annually
d.Choosing a perpetual or periodic system depends on whether you use LIFO or FIFO accounting
b b b b c
Question 31 : ACM has credit sales of $1,200,000 during 2020, and estimates at the end of 2020 that 1 percent of these credit sales will default. What is the adjusting entry to record the bad debt expense for 2020?
a.Debit Credit Allowance for Doubtful Accounts 12,000 Accounts Receivable 12,000
b.Debit Credit Bad Debt Expense 12,000 Allowance for Doubtful Accounts 12,000
c.Debit Credit Sales Revenue 12,000 Accounts Receivable 12,000
d.Debit Credit Bad Debt Expense 12,000 Cash 12,000
Question 32 : Given this information for Wintech Holdings:
Net Sales $760,000
Cost of Goods Sold:$500,000
Accounts Receivable Jan 1 $100,000
Accounts Receivable, Dec 31 $150,000
What is Wintech’s Average Collection Period?
Question 32
a.48 days
b.60 days
c.72 days
d.91 days
Question 33
Tasha’s Toys needs financing to purchase inventory for the busy Christmas season. Which of the following would be an appropriate source of short term financing?
Question 33
a.Stock issue
b.Corporate bond
c.Selling equipment
d.Interest bearing note
Question 34
Serena’s Salon accepted a $500 note from a customer in exchange for services. The customer will pay back the note in one year with 8% interest. What is the journal entry for the customer payment?
Question 34
a.Cash $540
Notes Receivable $500
Interest Revenue $40
b. Cash $500
Interest Receivable $40
Notes Receivable $540
c. Cash $500 Notes Receivable $500
d.Cash $540 Interest Expense $40 Notes Receivable $500
Question 35
Knight Corp. uses the Percentage of Credit Sales Method to estimate their bad debts expense. Their annual credit sales were $680,000. The Allowance for Doubtful Accounts has a credit balance of $56,000, and the balance in Accounts Receivable is $230,000. Past history shows that 4% of all credit sales go uncollected. When Knight Corp. makes their adjusting entry at the end of the year, what will the amount of their Bad Debts Expense be?
Question 35
a.$9,200
b.$27,200
c.$28,800
d.$83,200
Rocks Inc. estimates that 3% of all its credit sales will be uncollectible. An analysis of their accounts shows the following: Credit sales = $450,000, Accounts receivable balance = $120,000, Allowance for Doubtful Accounts = $6,500 (credit). What is the appropriate amount of bad debts expense when Rocks does their adjusting entries?
Question 36
a.$6,500
b.$7,000
c.$13,500
d.$20,000
Question 37
Which of the following statements about tangible and intangible assets is true?
Question 37
a.Tangible assets result in depletion expense, while intangible assets result in no expense
b.Tangible assets result in depletion expense, while intangible assets result in amortization expense
c.Tangible assets result in depreciation expense, while intangible assets result in depletion expense
d.Tangible assets result in depreciation expense, while intangible assets result in amortization expense
Question 38
Steffan Office Supply purchased a new copier on January 1, 2018. They paid $50,000 in cash for the copier, delivery, and set-up. The copier was expected to last 5 years, and have no residual value. On December 31, 2020, Steffan decided to sell the copier for $10,000 and get a new one. The company uses the straight line method of depreciation. What is the entry to record the sale of the copier?
Question 38
a.Debit Equipment $50,000, Credit Cash $10,000 and credit Gain on Sale of Asset $40,000
b.Debit Cash $10,000, Debit Loss on Sale of Equipment $40,000 and Credit Equipment $50,000
c.Debit Accumulated Depreciation – Equipment $30,000, Debit Cash $10,000, Credit Equipment $50,000 and Credit Loss on Sale of Equipment $10,000
d.Debit Accumulated Depreciation – Equipment $30,000, Debit Cash $10,000, Debit Loss on Sale of Equipment $10,000, and Credit Equipment $50,000
Question 39
Taco World purchased equipment at the beginning of 2020 for $500,000. The company decided to depreciate the equipment over a 10-year period using the straight-line method. The company estimated the equipment’s residual value at $50,000. The journal entry to record depreciation expense for 2021 is a debit to which of the following?
Question 39
a.Accumulated Depreciation, and a credit to Equipment for $50,000
b.Depreciation Expense, and a credit to Equipment for $45,000
c.Depreciation Expense, and a credit to Accumulated Depreciation for $45,000
d.Depreciation Expense, and a credit to Accumulated Depreciation for $50,000
Question 40
California Creatures purchased land for $200,000 in 2015. In 2021, an appraiser assessed the value of the land at $450,000. The cost of the appraisal was $2,000. At what amount should the land be recorded on the company’s 2021 financial statements?
Question 40
a.$200,000
b.$250,000
c.$448,000
d.$450,000
Which of the following is an advantage of holding stocks versus bonds?
Question 41
a.Voting rights
b.Ability to exercise a call provision
c.Legal right to receive regular payments
d.Higher claim to assets in the event of bankruptcy
Question 42
What does it mean if a bond is trading at 95?
Question 42
a.The bond price is $95
b.The bond is trading at par value
c.The bond is trading at a premium
d.The bond price is 95% of face value
Question 43 :hich of the following statements is correct regarding bond prices and interest rates?
Question 43
a.A bond will sell at par if the coupon rate is higher than the market rate
b.A bond will sell at a discount if the coupon rate equals the market rate
c.A bond will sell at a premium if the coupon rate is lower than the market rate
d.A bond will sell at a premium if the coupon rate is higher than the market rate
Question 44
TLC Company issued bonds with a total face value of $1,000,000. The bonds sold at a discount and the company received $975,000 from the sale. The bonds mature in 10 years. Which of the following is the correct journal entry to record the bond issue?
Question 44
a.Debit Cash $975,000; Credit Bonds Payable $975,000
b.Debit Cash $975,000, Debit Premium on Bonds Payable $25,000; Credit Bonds Payable $1,000,000
c.Debit Cash $975,000, Debit Discount on Bonds Payable $25,000; Credit Bonds Payable $1,000,000
d.Debit Cash $1,000,000; Credit Bonds Payable $975,000, Credit Discount on Bonds Payable $25,000
Question 45
Which type of security carries a fixed dividend in perpetuity?
Question 45
a.Bonds
b.Common stock
c.Preferred stock
d.Treasury stock
Carlos operates a snack-food truck. This table is the accounting data from a specific accounting period after Carlos calculated all of his receipts. Using this data, what are the total expenses Carlos incurred during this period?
Net income for the current period $21,000
Ending owners’ equity $35,000
Beginning owners’ equity $17,000
Owner withdrawals $1,900
Revenue for the current period $57,000
Question 46
a.$19,100
b.$36,000
c.$56,000
d.$71,000
Question 47
Exeter Corp. raises $1,000,000 from a new issue of common stock. The issue was for 50,000 shares of stock with a par value of $1. What is the appropriate journal entry to record the issue?
Question 47
a.Debit Cash $1,000,000, Credit Common Stock $1,000,000
b.Debit Cash $1,000,000; Credit Common Stock $50,000, Credit Paid-in-Capital – Common $950,000
c.Debit Cash $1,000,000, Credit Paid-in Capital Common $50,000, Credit Common Stock $950,000
d.Debit Cash $1,000,000; Credit Common Stock $950,000, Credit Retained Earnings $50,000
Question 48
How are interest and dividend income presented in a statement of cash flows?
Question 48
a.As an inflow to operating activities
b.As an outflow to operating activities
c.As an inflow to financing activities
d.As an outflow to investing activities
Question 49
How is a depreciation expense for an office building handled?
Question 49
a.It is subtracted from the cash outflow for a building in the investment activities section of a statement of cash flows
b.It is subtracted from net income in the operating activities section of a statement of cash flows prepared with the indirect method
c.It is added to net income in the operating activities section of a statement of cash flows prepared with the indirect method
d.It is added to cash receipts in the operating activities section of a statement of cash flows prepared with the indirect method
Question 50
Given this data from the Rocky Corporation, and using the indirect method, what is the net cash flow from operating activities?
Net Income :$10,000
Depreciation :$40,000
Decrease in Accounts Receivable : $20,000
Increase in Inventory :$10,000
Increase in Accounts Payable :$20,000
Decrease in Interest Payable :$1,000
Question 50
a.$79,000
b.$81,000
c.$99,000
d.$101,000
b b a c a
