ACCT212 Financial Accounting
WEEK 1 CHECKPOINT
Question 1
(TCO 1) Accounting
measures business
activities.
processes data into
reports and communicates the data to decision makers.
is often called the
language of business.
All of the above
Question 2
(TCO 1) Decision makers who use accounting include
the SEC.
investors.
managers.
All of the above
Question 3
(TCO 1) The Financial Accounting Standards Board is
responsible for establishing
the code of
professional conduct for accountants.
the Securities and
Exchange Commission.
generally accepted
accounting principles.
international
accounting financial standards.
Question 4
(TCO 1) The accounting assumption that states that the
business, rather than its owners, is the reporting unit is the
entity assumption.
going concern
assumption.
stable-monetary-unit
assumption.
historical cost
assumption.
Question 5
(TCO 1) The accounting equation can be stated as
Assets +
Stockholders' Equity = Liabilities.
Assets - Liabilities
= Stockholders' Equity.
Assets = Liabilities
- Stockholders' Equity.
Assets -
Stockholders' Equity + Liabilities = Zero.
Question 6
(TCO 1) The owners' equity of any business is its
revenues minus
expenses.
assets minus
liabilities.
assets plus
liabilities.
paid-in capital plus
assets.
Question 7
(TCO 1) Net income is computed as
revenues - expenses
- dividends.
revenues + expenses.
revenues - expenses.
revenues - expenses
+ dividends.
Question 8
(TCO 1) Which of the following would appear on the balance
sheet?
Assets and operating
cash flows
Dividends and
liabilities
Assets and
liabilities
Owners' equity and
revenues
Question 9
(TCO 1) Which statement(s) summarizes the revenues, gains,
expenses, and losses of an entity?
Balance sheet
Statement of cash
flows and income statement
Statement of
retained earnings and statement of operations
Income statement
Question 10
(TCO 1) What is the proper order for the categories of the
statement of cash flows?
Financing
activities, investing activities, and operating activities
Operating
activities, investing activities, and financing activities
Operating
activities, financing activities, and investing activities
Investing
activities, financing activities, and operating activities
ACCT212 Financial Accounting
WEEK 2 CHECKPOINT
Question 1
(TCO 2) The debt created by a business when it makes a
purchase on account is a(n)
revenue.
prepaid expense.
account receivable.
account payable.
Question 2
(TCO 2) A company performed services for a customer for
cash. This transaction increased assets and
decreased equity.
increased
liabilities.
increased expenses.
increased revenues.
Question 3
(TCO 2) When a company borrows cash from the bank
total assets remain
the same.
liabilities are
increased.
retained earnings is
decreased.
total liabilities
remain the same.
Question 4
(TCO 2) Which of the following is a true statement regarding
T-accounts?
The transaction
needs to be analyzed to determine which accounts are affected before entering
amounts in the T-accounts.
If a company pays
cash, an amount would be entered on the left side of the T-account.
T-accounts are only
used to record complex transactions.
To debit an asset,
an amount is entered on the left side of the T-account and to debit a liability
an amount is entered on the right side of the T-account.
Question 5
(TCO 2) An important rule of debits and credits is
credits increase a
liability account.
debits decrease an
asset account
revenues are
increased by a debit.
expenses are
increased by a credit.
Question 6
(TCO 2) Accounting transactions are initially recorded in
the
T-account.
ledger.
journal.
financial
statements.
Question 7
(TCO 3) Under accrual accounting, revenue is recorded
when the cash is
collected, regardless of when the services are performed.
when the services
are performed, regardless of when the cash is received.
either when the cash
is received or the sale is made.
only if the cash is
received at the same time the services are performed.
Question 8
(TCO 3) The event that triggers revenue recognition for the
sale of goods is the
date a contract is
signed.
date cash is
received.
transfer of control
of the goods to the purchaser.
completion of the
services.
Question 9
(TCO 3) The balance sheet reports
assets, liabilities
and stockholders' equity.
the changes in
retained earnings.
assets, liabilities,
revenues and expenses.
revenues and
expenses.
Question 10
(TCO 3) Closing entries
are made at the
beginning of each accounting period.
prepare the accounts
for the next period's transaction.
cannot be done using
a computer.
are the same as
adjusting entries.
ACCT212 Financial Accounting
WEEK 3 CHECKPOINT
Question 1
(TCO 5) The three main components of the fraud triangle are
rationalization,
opportunity, and greed.
opportunity, motive,
and lack of ethics.
motive, opportunity,
and rationalization.
None of the above
Question 2
(TCO 5) Fraud is the ultimate unethical act in business
because
the perpetrators
usually do so for their own short-term economic gain at the expense of others.
fraud is illegal.
fraud violates the
rights of many for the temporary betterment of a few.
All of the above
Question 3
(TCO 5) The primary way that fraud is prevented and detected
is through a proper system of
checks and balances.
management
directives.
internal control.
internal and external
audits.
Question 4
(TCO 5) The "tone at the top"
is a component of
the control procedures.
starts with low
level employees.
means that owners
and top managers must behave honorably to set a good example for employees.
is set by the PCAOB.
Question 5
(TCO 5) The information system component of internal control
ensures that every
system that processes accounting data should have the ability to capture
transactions as they occur.
monitors controls.
offers hints of
where fraud or errors could occur.
ensures that the IT
department has adequate control procedures in place to ensure that no one can
hack into the company's database.
Question 6
(TCO 5) Creating bogus websites for the purpose of stealing
unauthorized data is a(n)
encryption device.
phishing expedition.
computer virus.
Trojan horse.
Question 7
(TCO 5) When preparing a bank reconciliation, which of the
following items should be added to the book balance?
EFT receipts
Deposits in transit
Collection items
Both EFT receipts
and collection items
Question 8
(TCO 5) When a company receives cash by mail
all incoming mail
containing cash receipts should be opened by the accounting department.
the mailroom sends
all customer checks to the internal audit department.
the remittance
advice goes to the accounting department for preparation of the journal
entries.
the bank deposit is
prepared by the mail room.
Question 9
(TCO 5) Another name for short-term investments is
equity investments.
marketable
securities.
market investments.
available-for-sale
securities.
Question 10
(TCO 5) Which of the following is a true statement about
sales?
Net revenue is gross
revenue plus sales discounts less sales returns and allowances.
Sales discounts are
offered to customers in order to speed up cash flow.
Sales returns and
allowances increase a company's profit.
Retailers do not
generally record sales returns and allowances in a separate account.
ACCT212 Financial Accounting
WEEK 4 CHECKPOINT
Question 1
(TCO 4) The cost of the inventory that the business has sold
to customers is called
inventory.
cost of goods sold.
purchases.
gross profit.
Question 2
(TCO 4) The cost of inventory that is still on hand and has
not been sold to customers is called
cost of goods sold,
an expense that appears on the balance sheet.
inventory, a current
asset that appears on the income statement.
inventory, a current
asset that appears on the balance sheet.
purchases, an
expense that appears on the income statement.
Question 3
(TCO 4) A small _____ would most likely use a perpetual
inventory system.
automobile
dealership
fabric store
restaurant
flower shop
Question 4
(TCO 4) The cost of inventory is the
purchase price.
sum of all the costs
incurred to bring the inventory to its intended use.
sum of all the costs
incurred to bring the inventory to its intended use, plus any discounts and
allowances.
sum of all the costs
incurred to bring the inventory to its intended use, less any discounts and
allowances.
Question 5
(TCO 4) ABC Auto Sales sells new Lexus vehicles. ABC will
most likely use the _____ method to cost its ending inventory.
first-in, first-out
last-in, first-out
specific-unit-cost
weighted-average
Question 6
(TCO 4) When inventory prices are increasing, the FIFO
costing method will generally yield a cost of goods sold that is
higher than cost of
goods sold under the LIFO method.
lower than cost of
goods sold under the LIFO method.
equal to the gross
profit under the LIFO method.
equal to cost of
goods sold under the LIFO method.
Question 7
(TCO 4) When inventory prices are falling, the LIFO costing
method will generally result in
a lower gross profit
than under FIFO.
a higher gross
profit than under FIFO.
a lower inventory
value than under FIFO.
the same inventory
value as FIFO.
Question 8
(TCO 4) The _____ principle states that the financial
statements of a business must report enough information for outsiders to make
knowledgeable decisions about the business.
consistency
historical cost
disclosure
conservatism
Question 9
(TCO 4) When applying the lower-of-cost-or-market rule,
market value generally refers to
FIFO cost using the
periodic method.
LIFO cost using the
periodic method.
current sales price
of the inventory.
current replacement
cost of the inventory.
Question 10
(TCO 4) The inventory turnover ratio
is determined by
dividing cost of goods sold by net sales.
shows how many times
the company sold its average level of inventory.
should be high for a
company that sells high-priced inventory items.
will be lower for
companies that have many low-priced items in their inventory .
ACCT212 Financial Accounting
WEEK 5 CHECKPOINT
Question 1
(TCO 6) An asset with no physical form, but that has special
rights to current and expected future benefits is a(n)
intangible asset.
natural resource.
plant asset.
fixed asset.
Question 2
(TCO 6) The process of allocating the cost of a plant asset
to expense over the period in which the asset is used is called
amortization.
allocation.
depreciation.
disclosure.
Question 3
(TCO 6) All of the following are classified as natural
resources and are depleted except for
land.
timber.
minerals.
oil.
Question 4
(TCO 6) An investor who owns 25% of the outstanding stock of
another company should report the investment using the
market value method.
consolidated method.
equity method.
historical cost
method.
Question 5
(TCO 6) All of the following are necessary to compute the
future value of a single amount except the
interest rate.
number of periods.
principal.
maturity value.
Question 6
(TCO 6) All of the following are reported as current
liabilities except
bonds payable.
sales tax payable.
accounts payable.
unearned revenues.
Question 7
(TCO 6) The current ratio is current assets
minus current
liabilities.
divided by current
liabilities.
plus current
liabilities.
multiplied by
current liabilities.
Question 8
(TCO 6) If bonds are issued at a discount, it means that the
market interest rate
is higher than the stated interest rate.
market interest rate
is lower than the stated interest rate.
financial strength
of the issuer is weak.
bond is convertible.
Question 9
(TCO 6) Bonds which are backed only by the good faith of the
borrower are referred to as
junk bonds.
unregistered bonds.
debenture bonds.
callable bonds.
Question 10
(TCO 6) The financing option that has the lowest risk to a
company is financing by
retained earnings.
issuing stock.
issuing bonds
payable.
issuing notes
payable.
ACCT212 Financial Accounting
WEEK 6 CHECKPOINT
Question 1
(TCO 7) The authority structure of a corporation would show
the
board of directors
delegating to the stockholders.
president delegating
to the board of directors.
chief financial
officer delegating to the board of directors.
stockholders delegating
to the board of directors.
Question 2
(TCO 7) The basic unit of ownership for a corporation is
dividends.
stock.
retained earnings.
capital.
Question 3
(TCO 7) When a company issues common stock greater than its
par value, the excess should be credited to
retained earnings.
common stock.
paid-in capital in
excess of par.
capital.
Question 4
(TCO 7) Reasons that a company would purchase treasury stock
include all of the following except
management wants to
avoid a takeover by an outside party.
it needs the stock
for distribution to employees under stock purchase plans.
it wants to increase
net assets by buying its stock low and reselling it at a higher price.
management wants to
decrease earnings per share of common stock.
Question 5
(TCO 7) The date when a cash dividend becomes a legal
obligation is on the
date of record.
declaration date.
last day of the
corporate year.
payment date.
Question 6
(TCO 7) If stock is issued for an asset other than cash, the
asset should be recorded on the books of the corporation at
fair market value.
cost.
par value of the
stock.
zero.
Question 7
(TCO 1) The statement of cash flows
can be prepared
instead of an income statement.
must be prepared
daily.
summarizes the operating,
financing, and investing activities of an entity.
is part of the
income statement.
Question 8
(TCO 1) The best gauge of a company's ability to produce
ample cash to continue as a going concern is net cash provided by
operating
activities.
investing
activities.
financing
activities.
analytical
activities.
Question 9
(TCO 1) Which of the three types of activities reported on
the statement of cash flows is the most critical?
Investing activities
Operating activities
Financing activities
Investing and
financing activities
Question 10
(TCO 1) Investing activities include
obtaining cash from
creditors.
collecting cash on
loans.
obtaining capital
from owners.
repaying borrowed
money.
