Western Governors University (WGU) ACCT2350 D774 Intro to Business Accounting Practice Exam

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• Which group has the authority to elect a corporation's board of directors?
• Which item from Alliah's data is an asset?
• Based on Quiet Flag Industries budget and actual data, what is the operating cost variance?
• Explain the direct method for the statement of cash flows.
• Which cost components are included in a mixed cost?
• Under the allowance method, which statement about its impact on financial statements is true?
• Which two budgets must precede the creation of the materials cost budget in a production company?
• Which item should be reported as revenue in the income statement?
• Which item is not typically classified as a financing activity?
• Which report is one of the three primary financial statements?
• What is the final step in the sequence of the flow of costs through a manufacturing operation?
• The double-entry accounting system originated in which century?
• Where in a manufacturing business is work-in-process inventory located?
• If a revenue variance is favorable, what does that mean?
• How are dividends included in computations that impact the articulation of the balance sheet, the income statement, and the statement of cash flows?
• Which statement best describes the income statement?
• What is a common use of managerial accounting information?
• Which major economic downturn followed the Stock Market Crash of 1929?
• What is the effect of a treasury stock purchase on stockholders' equity and how is it recorded?
• Which cost is a product cost for Synesthor, a company that manufactures headphones?
• What is the starting point when using zero-based budgeting?
• Ending retained earnings equals beginning retained earnings plus net income minus dividends.
• Before goods are sold, their costs are accumulated in which inventory account?
• Which question about strategy must be answered when using zero-based budgeting?
• Under the allowance method, which entry writes off a specific uncollectible account?
• Which of the following is a liability account?
• What is a way that budgeting assists in operating a company?
• When is it appropriate for a company to use process costing?
• How is depreciation recorded using the straight-line method? Include the formula and the journal entry.
• How does capital stock differ from inventory?
• In a bank reconciliation, which statement about bank errors and company errors is true?
• Which economic event is linked to the period just before the Sarbanes-Oxley Act of 2002?
• Which balance sheet account is directly impacted by net income?
• Which statement is primarily used to assess profitability over a period?
• In which country was the double-entry accounting system developed in the 15th century?
• Which of these accounts is typically classified as a current liability?
• How is earnings per share (EPS) calculated and what restrictions apply?
• Which of these accounts is typically classified as a current liability?
• Which category is one of the three categories of product costs in a firm that makes cars?
• What is the difference between accumulated depreciation and depreciation expense?
• The amount of a company's assets and the amount of the company's liabilities are known. Which computation should be performed to determine the company's owners' equity amount according to the accounting equation?
• Which of the following is a deferral?
• Why are there no standardized regulations relating to the production of managerial accounting information?
• What is the purpose of the statement of stockholders' equity and what does it show?
• What is the purpose of the current ratio in evaluating a company's financial health?
• Which variances are caused by volume differences?
• Which item is a source of cash from a financing activity?
• Which item is listed first on the income statement?
• From Quiet Flag Industries data, which statement is true about the variance outcomes?
• What is an advantage of structuring a business as a corporation?
• Which primary financial statement provides a detailed report explaining one component in the year-to-year change in the retained earnings balance?
• What is the purpose of a petty cash fund and how is it replenished?
• What is the primary purpose of using variances in budgeting and performance measurement?
• Which information is contained in the reported amount of net income?
• Under a periodic inventory system, how is COGS computed?
• How is a write-off of an uncollectible account recorded under the allowance method?
• Which financial statement shows changes in equity accounts over a period?
• Which of the following is an example of a deferral?
• What are the three sections of the income statement in a multi-step format?
• What is the purpose of a bank reconciliation and a typical reconciling item?
• Why would a company's employees be directly interested in the company's income statement?
• What is the profit variance for Quiet Flag Industries?
• Which statement best describes a profit center?
• Distinguish between capital expenditures and revenue expenditures with examples.
• After closing entries, which balances are reset to zero?
• When issuing common stock for cash above par value, the par value is credited to which account?
• If Net Sales are 500,000 and COGS is 320,000, what is Gross Profit?
• Which problem can be caused by the small annual increases (2% or 3%) that are routinely approved with incremental budgeting?
• Which item is reported in an income statement?
• Which condition is associated with a company's break-even point?
• What is the journal entry to issue common stock for cash above par value?
• Which of the following costs would be included in product costs for inventory valuation?
• What is a major disadvantage of an incremental budget?
• If expenses increase while revenue remains constant, net income will
• ABC overhead allocation is particularly helpful when overhead costs vary by activity and are incurred across multiple products and processes.
• Which items should be used to compute Freedom Rock's net income?
• Who selects a corporation's board of directors?
• Consider these three cash flows: cash paid to repay a loan; cash paid for purchase of a building for use in operations; cash paid for inventory purchases. Which sequence represents the correct categorization of these three cash flows?
• When a note receivable accrues interest but cash is not yet received, which accounts are affected?
• What is the allowance method for bad debts and what are two common approaches?
• Which of the following is an equity account?
• Who performs external audits of financial statements?
• What does the term fiscal year mean in financial reporting?
• In the percent of sales method for estimating bad debt, what is the journal entry?
• Which item is a non-cash expense typically added back when preparing the cash flow statement using the indirect method?
• Which of these accounts are assets?
• Which item from Alliah's data represents owner's equity?
• Which statement best describes cash basis vs accrual basis accounting?
• In which situation does a company report revenue?
• Which characteristic is an advantage of zero-based budgeting?
• Which information can be learned by looking at trends in variances?
• Which measurement is highlighted in the multi-step format for the income statement?
• What is the correct journal entry to record equipment purchased on account?
• Which item should not be allocated to a profit center when evaluating its performance?
• Which type of cash collection is considered an operating activity?
• Which statement describes investing activities?
• Which item is a financing activity for Whole Pine Inc., which manufactures custom-made wood furniture?
• In Quiet Flag Industries data, which category shows the largest unfavorable variance?
• Which statement best describes how payroll transactions are recorded, including employer payroll taxes?
• Which of the following would be categorized as an investing activity?
• Which statement correctly reflects the sign of a cost variance when actual costs are less than budgeted costs?
• Which statement is true about a corporation’s ownership transfer?
• Under the aging method, why are estimates used for bad debt rather than exact amounts?
• If a company wants to avoid relying on last year's cost structure, which budgeting method would it choose?
• Which two measures are different ways to examine variances?
• What is internal control in accounting?
• Which label refers to the costs of buying or making the products a company sells?
• Explain the indirect method for preparing the statement of cash flows.
• What is contained in Securities and Exchange Commission Form 10-K?
• Distinguish between an income statement and a balance sheet.
• Explain depreciation vs amortization and provide examples.
• Retained earnings on the balance sheet is classified as which type of account?
• In a multi-step income statement, where is the cost of goods sold shown?
• Which accounts are closed to retained earnings at the end of the period, including dividends?
• During a period of rising costs, which inventory method yields the highest COGS?
• Which option correctly identifies an operating item vs. non-operating item?
• How does double-entry accounting guarantee that the accounting equation remains balanced after every transaction?
• During a revenue transaction under double-entry accounting, which of the following describes the effect on accounts and which accounts increase?
• Why are adjusting entries essential for accrual-based financial reporting?
• Which item from Alliah's data is a liability?
• What is a prepaid expense and how is it adjusted?
• Current assets are assets expected to be converted to cash within one year. Which of the following is not a current asset?
• Which items are used to compute Alliah's net income?
• Which items does a profit center manager have responsibility over?
• Before performance is satisfied, unearned revenue is recorded as which type of account?
• How does a comparative balance sheet provide information that is useful to a decision maker?
• Define perpetual vs periodic inventory systems and how COGS is determined in each.
• Under the aging of accounts receivable method, what is the typical journal entry?
• Which statement correctly defines working capital and a commonly used liquidity ratio?
• External audits of financial statements are typically performed by which credentialed professional?
• Unearned Revenue is which type of account?
• Which measure is one of the most common activity levels used when trying to understand how costs change in relation to changes in activity level?
• Accruals for revenues and expenses: which statements describe their effects on accounts?
• How is the gross margin ratio used to assess profitability?
• When does a favorable revenue variance exist?
• Compare FIFO, LIFO, and average cost methods for inventory valuation and their impact on COGS and ending inventory.
• What is unearned revenue and how is it adjusted?
• Which entry correctly replenishes a petty cash fund after expenses have been paid?
• Which section of the statement of cash flows is the income statement directly connected to?
• Which of the following is a contra asset account?
• Which cost is an example of a fixed cost?
• Which set of items is a complete listing of Alliah's current assets?
• How do you calculate the current ratio and what does a higher ratio indicate about liquidity?
• What are the three sections of the statement of cash flows and their purpose?
• Which of the following is a long-term asset?
• What is the matching principle?
• Using straight-line depreciation with cost 50,000, salvage value 5,000, useful life 10 years, what is the annual depreciation expense?
• Which question can be answered by looking at trends in cost variances?
• Under which condition is an asset considered impaired and subject to an impairment loss?
• Which accounts are affected by recording an impairment loss on a long-lived asset?
• Which transaction would typically appear in the operating activities section of the cash flow statement?
• How is a cost variance computed?
• Jaunty Coffee Co. currently has a level of sales that results in the company being below its break-even point. Which set of actions can be taken to help Jaunty reach its break-even point?
• How is gross profit calculated?
• How do the budgets of manufacturing companies differ from those of retail companies?
• Manufacturing budgets typically include which components?
• Which action is a use of cash in an investing activity?
• Which of the following is typically considered an operating expense?
• Which statement best describes the basic accounting equation and how increases in assets are financed?
• What is a trial balance and what does it verify?
• What is one of the characteristics of a corporation?
• A major change in competitive environment due to a new competitor requires what first response for Endothon’s budgets for next year?
• What mistake is the CFO making in the described scenario?
• Which securities are excluded when calculating basic earnings per share (EPS)?
• How is interest revenue on a note receivable recorded?
• What is the selling cost variance for Quiet Flag Industries (Actual vs Budget)?
• Which accounts are typically adjusted by end-of-period adjusting entries?
• Define the revenue recognition principle and provide an example.
• The passage of the Sarbanes-Oxley Act of 2002 was immediately preceded and led by which event?
• What is the difference between a note receivable and an accounts receivable?
• Which description is a characteristic of owners' equity?
• What is a common use of a cash budget?
• How does the change in the cash balance for the year impact the computation of the ending retained earnings balance?
• Which setting is appropriate for the use of an ABC overhead allocation system?
• In process costing, the cost per unit is determined by dividing total production costs by:
• Which factor must be considered when responsibilities are assigned to managers?
• In a perpetual inventory system, when is COGS recognized?
• Which of the following is NOT a product cost?
• Distinguish between accruals and deferrals with a concise description.