Final Exam Review

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ACC/290 Final Examination Study Guide

This study guide will prepare you for the Final Examination you will complete in Week Five. It contains practice questions, which are related to each week’s objectives. In addition, refer to each week’s readings and your student guide as study references for the Final Examination.

Week One: Basic Accounting Principles and Concepts

Objective: Identify the four basic financial statements.

1. Which of the four basic financial statements has three main sections: one dealing with operating expenses, another dealing with financial activities, and another dealing with investment activities? a. Income statement

b. Retained earnings statement
c. Balance sheet
d. Statement of cash flows

2. Which of the following lists the main sections of the statement of cash flows? a. Operations, investment, and credit activities
b. Investments, credit, and cash operations
c. Operations, investment, and financial activities
d. Financing, investment, and credit activities

Objective: Classify transactions using the rules of debit and credit.

3. Which accounts have a normal credit balance?
a. Assets and expenses
b. Liabilities and expenses
c. Assets and revenue
d. Liabilities and revenue

4. A debit entry may indicate which of the following:
a. An increase in an asset account
b. A decrease in an asset account
c. An increase in a liability account
d. An increase in a capital account

Objective: Journalize basic transactions.

5. ABC Corporation records sales for the day totaling $50,000 in cash sales and $35,000 in sales on account. Which of the following is the correct journal entry? a. Cash $50,000

Accounts Receivable $35,000
Sales $85,000 b. Cash $50,000
Accounts Receivable $35,000
Sales on Account $35,000 Cash Sales $50,000 c. Sales $85,000

Cash $50,000 Accounts Receivable $35,000 d. Sales on Account $35,000

Cash Sales $50,000
Cash $50,000 Accounts Receivable $35,000

6. ABC Corporation pays its utility bill for October. They received an invoice for $6,000. Which of the following is the correct journal entry? a. Utility expense$6,000
b. Prepaid utilities$6,000
c. Cash$6,000
Prepaid Utilities$6,000
d. Cash$6,000
Utility expense$6,000

Objective: Post transactions from journals to ledgers.

7. ABC Corporation is a merchandiser that sells high volume merchandise to a large number of customers on account on a daily basis. ABC records credit sales in a sales journal and cash sales in their cash receipts journal. ABC will most likely post the sales journal transactions to subsidiary ledger a. daily

b. at least once per month and before customer billings
c. quarterly, before closing
d. once a year, prior to preparing financial statements

8. The accounts receivable ledger should reconcile to a control account located in which ledger? a. Accounts payable control ledger
b. Accounts receivable control ledger
c. Accounts payable subsidiary ledger
d. General ledger

Week Two: Starting the Accounting Cycle

Objective: Differentiate between accrual basis and cash basis accounting.

9. Using accrual basis accounting, expenses are recorded and reported only a. when they are incurred, whether or not cash is paid
b. when they are incurred...
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