sample questions in accounting/auditing
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8/11/2019 Sample Questions in Accounting/Auditing
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Accounting/Auditing Sample Test
Questions
Some state jobs require knowledge of accounting. Our questions of this type generallycover accounting terms, principles and procedures, accounting problems, journalizing,and auditing. Eamples of each type are shown below.
!. " credit to a revenue account#
!. decreases revenues.
$. increases equity.
%. decreases equity.
&. increases assets.
$. 'he function of internal control, from the viewpoint of the auditor is to#
!. provide some measure of assurance that errors and irregularities may be discoveredwith reasonable promptness.
$. assure that all records have been cross(checked and warranted as correct.
%. indicate that accounts have been checked and verified before certifying the agency)sfinancial position.
&. assure that accounts may be accepted upon oral presentation.
*se the following information to answer the net question#
+ook, ncorporated is a major department store in this area. -elow is a partial list ofaccounts used in the business.
"ccounts ayable
"ccounts +eceivable
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"llowance for -ad /ebts
-ad /ebts Epense
0ash
0ash /ividends
0ommon Stock
nsurance Epense
nterest Epense
nterest ncome
nterest +eceivable
1otes ayable
repaid 'aes
urchases
urchase +eturns 2 "llowances
+etained Earnings 0ommon Stock
Sales
Sales +eturns 2 "llowances
'a Epense
'aes ayable
3uestion % is based on transactions which occurred during the current accounting period.n answering the question you should choose the correct journal entry for the transaction
listed. *se only the above listed accounts in formulating your journal entry.
'he company bought merchandise totaling 4566 on account#
%. !. debit "ccounts ayable7 credit 0ash.
$. debit urchases7 credit "ccounts ayable.
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%. debit 0ash7 credit Sales.
&. debit "ccounts ayable7 credit urchases.
5. debit urchases7 credit 0ash.
&. 'he 8armon 0ar and 9oundry 0ompany was working on a contract calling for $!6railway cars, all of the same type. 'he price on these cars was fied in the contract at4$!,666 each. On /ecember %!, !::6, you find that the company had incurred costs of4$,;66,666 on this contract, that !<6 cars had been delivered to the purchaser, that $5were in the process of construction, and $5 were yet to be built. 'he $5 cars in processwere estimated by management to be about =6 percent complete. "ll costs were chargedto a single work order calling for the construction of $!6 cars. "t what value should the!<6 cars be costed in the statement of income>
!. 4$,666,666
$. 4$,566,666
%. 4$,&66,666
&. 4$,$66,666
Accounting/Auditing Sample Questions Answers
!. 'he correct answer is number $.
$. 'he correct answer is number !.
%. 'he correct answer is number $.
&. 'he correct answer is number %.
PAGE
1
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
These questions ae inten!e! to "e o# e$ie% in natue an! &a' not
"e
the "est (e!i)to o# 'ou (e#o&an)e on the qua*i#i)ation
e+a&ination,
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It is ston-*' e)o&&en!e! that 'ou e$ie% 'ou *e)tue note an!
ho&e%o. #o& 'ou #inan)ia* an! &ana-eia* )*asses as the &ain
)ouse
o# stu!',
This sa&(*e test %i** -i$e 'ou an in!i)ation o# ho% (e(ae! 'ou
&i-ht
"e,
Ans%es %i** "e -i$en out !uin- the AQE e$ie% session,
Than.s an! -oo! *u)./
0e(t, o# A))ountin-
MULTIPLE CHOICE
1, hi)h o# the #o**o%in- state&ents is FALSE 2
a, Co(oations !o&inate the U,S, e)ono&' "oth in shee nu&"e o#
"usiness o-ani3ations an! )onto* o# (i$ate esou)es,
", Non"usiness entities *a). an i!enti#ia"*e o%ne an! ae
o-ani3e!
(i&ai*' to se$e the nee!s o# so)iet' athe than ean a(o#it,
), The in)o&e o# )o(oations is ta+e! !ie)t*' to the "usiness
entit'
%hi*e the in)o&e o# so*e (o(ietoshi(s an! (atneshi(s is
ta+e!
to the o%nes4 not the "usiness entit',
!, Genea**' o%nes o# )o(oations ha$e (esona* esou)es at
is.
equa* to thei in$est&ent in the "usiness entit' %hi*e so*e
(o(ietos an! (atnes &a' "e (esona**' *ia"*e #o "usiness
!e"ts,
Cao*e Co(, e(ote! the #o**o%in- ite&s on its "a*an)e sheet at
the
en! o# the )uent 'ea, A** a))ounts ae *iste!, Use this
in#o&ation to ans%e the #o**o%in- set o# questions,
Cuent assets 5 664777 Cuent *ia"i*ities 5 874777
Po(et'4 (*ant 9 Lon-:te& !e"t 674777
equi(&ent 1;74777 Ca(ita* sto). 1774777
Othe assets <74777 Retaine! eanin-s 2
<, hat a&ount %i** Cao*e e(ot on its "a*an)e sheet #o Tota*
Lia"i*ities an! Sto).ho*!es= Equit'2
a, 5<664777
", 5>64777
), 51?74777
!, Cannot "e !ete&ine!
@, hi)h o# the #o**o%in- is NOT an assu&(tion &a!e in the
(e(aation o#
#inan)ia* state&ents2
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a, Moneta' unit
", Goin- )on)en
), Ti&e (eio!
!, Le-a* entit'
The #o**o%in- set o# questions in)*u!es a))ounts t'(i)a**' #oun!
in the #inan)ia* state&ents o# *a-e )o(oations, Fo ea)h a))ount
*iste!4 i!enti#' the a))ount t'(e Asset4 Lia"i*it'4 O%nes= Equit'4
Re$enue4 o E+(ense,
8, Retaine! Eanin-s
a, Asset
", Lia"i*it'
), O%nes= Equit'
!, Re$enue
e, E+(ense
6, In$entoies
a, Asset
", Lia"i*it'
), O%nes= Equit'
!, Re$enue
e, E+(ense
>, Sa*es Co&&ission
a, Asset
", Lia"i*it'
), O%nes= Equit'
!, Re$enue
e, E+(ense
B, The qua*it' o# a))ountin- in#o&ation %hi)h a**o%s the !ata #o
the
#inan)ia* state&ents o# a "usiness entit' to "e )o&(ae! #o& one
a))ountin- (eio! to anothe is
a, )onsisten)',
", )o&(aa"i*it',
), $ei#ia"i*it',
!, neuta*it',
;, An a))ountant is un)etain a"out the "est esti&ate o# an a&ount#o a
"usiness tansa)tion, I# t%o a&ounts ae a"out equa**' *i.e*'4
the
a&ount *east *i.e*' to o$estate the assets an! in)o&e is
se*e)te!,
This is an e+a&(*e o# a((*'in- the qua*it' o#
a, )o&(aa"i*it',
", neuta*it',
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), )onse$atis&,
!, &ateia*it',
?, Un!e )uent a))ountin- (in)i(*es4 in)o&e is &easue! as
a, the net )han-e in o%nes= equit' !uin- a (eio! a#te
a!ust&ent
#o in$est&ents an! %ith!a%a*s "' o%nes,
", the e+)ess o# e$enues o$e e+(enses !uin- a (eio!,
), the net )han-e in the etaine! eanin-s "a*an)e a#te
a!ust&ent
#o !i$i!en!s,
!, the e+)ess o# e$enues o$e e+(enses (*usD&inus )etain
a!ust&ents
equie! "' the FAS=s )o&(ehensi$e in)o&e )on)e(t,
17, Gi**es(ie4 In), is )on)ene! a"out its (o#ita"i*it' #o the
)uent
'ea4 sin)e its eanin-s ha$e !o((e! 17 sin)e *ast 'ea, hi)h
o#
the #o**o%in- )o&(aisons %ou*! "e the LEAST use#u* ine$a*uatin- the
!o( in Gi**es(ie=s (o#it &a-in2
a, Co&(aison o# Gi**es(ie=s )uent (o#it &a-in %ith the
in!ust'
a$ea-e #o the )uent 'ea
", Co&(aison o# Gi**es(ie=s )uent (o#it &a-in to its "u!-ete!
(o#it &a-in #o the )uent 'ea
), Co&(aison o# Gi**es(ie=s )uent (o#it &a-in %ith the (o#it
&a-ins #o &ao )o&(etitos #o the )uent 'ea
!, Co&(aison o# Gi**es(ie=s )uent (o#it &a-in %ith its (o#it
&a-in #o the (ast 6 'eas
11, Assu&e that 'ou %ant to !ete&ine the a&ount o# !i$i!en!s
!e)*ae! an!
(ai! "' a )o&(an', hi)h o# the #o**o%in- #inan)ia* state&ents
is the
"est sou)e o# this in#o&ation2
a, Retaine! Eanin-s State&ent
", State&ent o# Sto).ho*!es= Equit'
), Cash F*o% State&ent
!, In)o&e State&ent
Se*e)te! a))ounts that &i-ht a((ea on a !etai*e! &u*ti(*e:ste(
in)o&e state&ent #o a etai*e su)h as :Mat o a*:Mat ae (esente!
in
the #o**o%in- set o# questions, I!enti#' ho% ea)h a))ount %ou*!
"e
)*assi#ie! on the in)o&e state&ent,
1<, A!$etisin- E+(ense
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a, O(eatin- Re$enue
", Cost o# Goo!s So*!
), Se**in- E+(enses
!, Genea* an! A!&inistati$e E+(enses
e, Othe Re$enues 9 E+(enses
1@, Stoe Mana-es= Sa*aies
a, O(eatin- Re$enue
", Cost o# Goo!s So*!
), Se**in- E+(enses
!, Genea* an! A!&inistati$e E+(enses
e, Othe Re$enues 9 E+(enses
Se*e)te! ite&s #o& the state&ent o# )ash #*o%s #o the Qua.e
Oats
Co&(an' ae (esente! in the #o**o%in- set o# questions, I!enti#'
ho%
ea)h ite& %ou*! "e )*assi#ie! on the state&ent o# )ash #*o%s,
18, Cash !i$i!en!s (ai!
a, O(eatin- A)ti$ities
", In$estin- A)ti$ities
), Finan)in- A)ti$ities
16, 0e)ease in)ease in in$entoies
a, O(eatin- A)ti$ities
", In$estin- A)ti$ities
), Finan)in- A)ti$ities
1>, 0e)ease in)ease in ta!e a))ounts (a'a"*e
a, O(eatin- A)ti$ities
", In$estin- A)ti$ities
), Finan)in- A)ti$ities
1B, Loss on !is(osition o# (o(et' an! equi(&ent
a, O(eatin- A)ti$ities
", In$estin- A)ti$ities
), Finan)in- A)ti$ities
1;, hi)h o# the #o**o%in- a))ountin- (in)i(*es is "ein- a((*ie! %hena
#i& !e*a's e)o-nition o# a sa*e &a!e to a )usto&e %ho has
!e)*ae!
"an.u(t)'4 unti* )ash is e)ei$e! #o& the )usto&e
a, Mat)hin-
", O"e)ti$it'
), Goin- )on)en
!, Conse$atis&,
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1?, hi)h o# the #o**o%in- e)ono&i) e$ents !oes NOT esu*t in a
)o(oation in)uin- a *ia"i*it'2
a, The )o(oation "u's &e)han!ise on )e!it,
", The )o(oation !e)*aes a !i$i!en! to "e (ai! in t%o &onths,
), The )o(oation announ)es a (a' in)ease #o the #o**o%in- 'ea
#o
its hou*' (ai! %o.es,
!, The )o(oation se**s "on!s,
<7, hat e##e)ts !oes the (u)hase o# o##i)e equi(&ent on )e!it ha$e
on the a))ountin- equation2
a, Assets !e)ease an! o%nes= equit' !e)eases,
", Lia"i*ities in)ease an! o%nes= equit' !e)eases,
), Assets in)ease an! *ia"i*ities in)ease,
!, Assets !e)ease an! *ia"i*ities !e)ease,
<1, e' Co(, (u)hase! o##i)e su((*ies #o )ash, hat e##e)ts !oes
this tansa)tion ha$e on the a))ountin- equation2
a, Assets in)ease an! o%nes= equit' !e)eases,
", Assets in)ease an! assets !e)ease,
), Assets in)ease an! *ia"i*ities in)ease,
!, Assets !e)ease an! *ia"i*ities !e)ease,
Re)a** that the "asi) a))ountin- e)o!s in)*u!e a))ounts4
ouna*s4
*e!-es4 a )hat o# a))ounts4 an! a tia* "a*an)e, I!enti#' the
)oe)t te& #o ea)h state&ent in the #o**o%in- set o# questions,
<<, A *ist o# a** a))ounts an! thei "a*an)es %hi)h is use! to (o$e
the
equa*it' o# !e"its an! )e!its as o# a s(e)i#i) !ate
a, A))ount
", Genea* Jouna*
), Genea* Le!-e
!, Chat o# A))ounts
e, Tia* a*an)e
Re)a** that the "oo..ee(in- (o)ess in$o*$es a !ou"*e ent'
s'ste&4
!e"its4 )e!its4 ouna*i3in-4 an! (ostin-, I!enti#' the )oe)t
te& #o ea)h state&ent in the #o**o%in- set o# questions,
<@, The (o)ess o# tans#ein- a&ounts #o& a "oo. o# oi-ina* ent'
to
s(e)i#i) assets4 *ia"i*ities4 e$enues4 e+(enses4 an! o%nes=
equit'
a, 0ou"*e ent' s'ste&
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Consi!e the a))ountin- equation #o&at "e*o% in ans%ein- the
questions %hi)h #o**o%
Assets Lia"i*ities O%nes= Equit' Re$enues : E+(enses
<B, hat ae the e##e)ts o# the O)to"e > tansa)tion2
a, Funitue an! Su((*ies E+(ense in)ease an! Cash !e)eases,
", Funitue4 Su((*ies E+(ense4 an! A))ounts Pa'a"*e in)eases,
), Funitue4 Su((*ies4 an! A))ounts Pa'a"*e in)ease,
!, A))ounts Pa'a"*e an! Cash !e)ease,
<;, Measue&ent o# the e)ono&i) e##e)ts on an entit' in$o*$es ea)h o#
the
#o**o%in- EKCEPT
a, Quanti#i)ation o# the e##e)ts
", I!enti#i)ation o# the atti"ute to "e &easue!
), Se*e)tion o# an a((o(iate unit o# &easue
!, Re)o!in- the e)ono&i) e##e)ts in the #inan)ia* state&ents
PAGE
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UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
<?, The a))ua* "asis o# a))ountin-
a, e)o-ni3es e$enues %hen )ash is e)ei$e! an! e+(enses %hen
)ash is (ai!,
", e)o-ni3es e$enues %hen )ash is e)ei$e! an! e+(enses ae
in)ue!,
), e)o-ni3es e$enues %hen eane! an! e+(enses %hen in)ue!,
!, e)o-ni3es e$enues %hen eane! an! e+(enses %hen )ash is (ai!,
@7, Oa. Hi**s Go*# C*u" se**s season &e&"eshi(s #o 5>77 ea)h, Fo
1??64 67 season &e&"eshi(s %ee so*!, As o# Ma)h @14 1??64 51;4777 o#
season &e&"eshi( #ees ha! "een )o**e)te!, The -o*# season uns #o >
&onths statin- A(i* 14 1??6, hi)h o# the #o**o%in- state&ents is
FALSE 2
a, The in)o&e state&ent #o the (eio! en!in- Ma)h @14 1??64 %i**
in)*u!e -o*# &e&"eshi( e$enue o# 5:7:,
", The )ash #*o% state&ent #o the (eio! en!in- Ma)h @14 1??64%i**
in)*u!e )ash e)ei(ts #o& o(eatin- a)ti$ities o# 51;4777,
), The "a*an)e sheet at Ma)h @14 1??64 %i** in)*u!e a "a*an)e #o
a))ounts e)ei$a"*e o# 51<4777,
!, Go*# &e&"eshi( e$enue #o the (eio! en!in- Ma)h @14 1??64
e+)ee!s )ash e)ei(ts #o& -o*# &e&"eshi(s "' 51<4777,
@1, Je' Man!e se**s ne% )as an! eans a )o&&ission o# 5177 #o
ea)h
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)a he se**s, 0uin- the &onth o# Se(te&"e4 1??64 Je' so*! 17
ne%
)as, Je' is (ai! "' the )a !ea*e on the 16th !a' o# the ne+t
&onth, Je' o(eates on the )ash "asis the )a !ea*e o(eates
on
the a))ua* "asis, hi)h o# the #o**o%in- state&ents is TRUE 2
a, Je' %ou*! ean )o&&ission e$enue o# 514777 in Se(te&"e,
", The )a !ea*e %ou*! e)o-ni3e )o&&ission e+(ense o# 514777 in
Se(te&"e,
), The )a !ea*e %ou*! e)o-ni3e )o&&ission e+(ense o# 514777 in
O)to"e,
!, Je' &ust e)o-ni3e e$enue in the sa&e &onth that the )a
!ea*e
e)o-ni3es e+(ense,
@<, hi)h o# the #o**o%in- is an e+a&(*e o# an a))ue! e+(ense2
a, a-es ha$e "een eane! "' e&(*o'ees4 "ut ha$e not "een (ai! at
the
en! o# the (eio!, ", Equi(&ent %hi)h %i** "ene#it se$ea* (eio!s has "een
(u)hase!,
), An insuan)e (o*i)' %hi)h e+(ies in a #utue (eio! has "een
a)quie!,
!, Su((*ies ae (u)hase! an! use! o$e se$ea* &onths,
PAGE
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UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
@@, hi)h o# the #o**o%in- is an e+a&(*e o# a !e#ee! e$enue2
a, Sa*es ae &a!e to )usto&es on )e!it,
", Inteest has "een eane! on a "an. !e(osit4 "ut has not "een
e)o!e!,
), Pa'&ents ae e)ei$e! )ontinuous*' thou-hout a (eio! #o
one:4
t%o:4 an! thee:'ea &a-a3ine su"s)i(tions,
!, Cash sa*es ae &a!e to )usto&es,
@8, I!enti#' the e)ono&i) e##e)ts o# e)o-ni3in- a))ue! %a-es e+(ense
at
the en! o# the a))ountin- (eio!,
a, Assets !e)ease an! o%nes= equit' !e)eases,
", Assets in)ease an! o%nes= equit' in)eases,
), Assets !e)ease an! *ia"i*ities !e)ease,
!, Lia"i*ities in)ease an! o%nes= equit' !e)eases,
Fo ea)h tansa)tion in the #o**o%in- set o# questions4 i!enti#'
%hi)h
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t'(es o# a!ust&ent is equie!,
@6, The a&ount o# e$enue eane! #o& a!$an)e (a'&ents #o& )*ients
#o
se$i)es (o$i!e! is e)o!e!,
a, 0e#ee! e+(ense::)ash (ai! "e#oe e+(ense is in)ue!
", 0e#ee! e$enue::)ash e)ei$e! "e#oe e$enue is eane!
), A))ue! *ia"i*it'::e+(ense in)ue! "e#oe )ash is (ai!
!, A))ue! asset::e$enue eane! "e#oe )ash is e)ei$e!
@>, The )ost o# sa*aies eane! "' e&(*o'ees4 "ut not (ai! at the en!
o#
the a))ountin- (eio! is e)o!e!,
a, 0e#ee! e+(ense::)ash (ai! "e#oe e+(ense is in)ue!
", 0e#ee! e$enue::)ash e)ei$e! "e#oe e$enue is eane!
), A))ue! *ia"i*it'::e+(ense in)ue! "e#oe )ash is (ai!
!, A))ue! asset::e$enue eane! "e#oe )ash is e)ei$e!
@B, C*a&& Co(, (u)hase! su((*ies at a )ost o# 5<4677 !uin- 1??6,
At
Janua' 14 1??64 su((*ies on han! %ee 5@77, At 0e)e&"e @14
1??64
su((*ies on han! ae 5877, Su((*ies e+(ense #o 1??6 %i** "e
a, 5<4877
", 5<4;77
), 5<4177
!, 5<4677
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17
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
@;, hi)h o# the #o**o%in- ste(s in the a))ountin- )')*e is (e#o&e!
on*' at the en! o# the a))ountin- (eio!2
a, Co**e)tin- an! ana*'3in- in#o&ation #o& sou)e !o)u&ents
", Re)o!in- "usiness tansa)tions
), Postin- ouna* enties to a))ounts in the *e!-e
!, Re)o!in- an! (ostin- a!ust&ents
@?, Fi$e &ao -ou(s o# a))ounts a((ea on a "a*an)e sheet o an
in)o&e
state&ent, hi)h o# these #i$e -ou(s o# a))ounts "e-in ea)h
a))ountin- (eio! %ith 3eo "a*an)es2
a, Assets4 *ia"i*ities4 an! o%nes= equit' a))ounts
", Re$enue an! e+(ense a))ounts
), A** #i$e o# these -ou(s o# a))ounts
!, None o# these #i$e -ou(s o# a))ounts
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87, hist*e Co(, e(ote! e$enues o# 5>7747774 e+(enses o#
56>647774
!i$i!en!s o# 5<747774 an! "e-innin- etaine! eanin-s o# 5B74777,
The
en!in- etaine! eanin-s "a*an)e %i** "e
a, 5674777
", 5164777
), 51764777
!, 5;64777
81, I!enti#' %hi)h o# the #o**o%in- "usiness a)ti$ities e(esents a
)*osin- ent',
a, Su((*ies ae (u)hase! on )e!it4 5667,
", Su((*ies on han! at the en! o# the &onth ae !ete&ine! to "e
51;7,
), Su((*ies use! ae tans#ee! to an e+(ense a))ount,
!, The "a*an)e o# Su((*ies E+(ense is tans#ee! to the In)o&e
Su&&a' a))ount,
8<, On the &onin- o# June <B4 1??84 'ou (u)hase! a s%eate %hi)h
%as
oi-ina**' (i)e! at 51<7 in a sa*e #o 567 )ash, In the
a#tenoon4
'ou %ee o##ee! 5;7 #o it4 %hi)h 'ou %i** e)ei$e on Ju*' 14
1??8,
You ae )etain that 'ou %i** e)ei$e the &one', Fo the !a' o#
June
<B4 1??84 'ou net in)o&e an! in)ease in )ash #*o% es(e)ti$e*'
%ee
a, 5@7 an! 5@7
", 5B7 an! 5@7
), 57 an! 5:67
!, 5@7 an! :567
PAGE
11
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
8@, hat ae the e##e)ts on the a))ountin- equation o# a stoe %hen it
e)o!s &e)han!ise etune! "' )usto&es2
a, Assets an! o%nes= equit' !e)ease,
", Assets an! o%nes= equit' in)ease,
), Assets !e)ease an! *ia"i*ities in)ease,
!, O%nes= equit' !e)eases an! *ia"i*ities in)ease,
88, hat !oes the )e!it te& <D174 nD@7 &ean2
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a, A < ta!e !is)ount )an "e ta.en i# 17 ite&s ae (u)hase!4 an!
the
#u** in$oi)e (i)e is !ue %ithin @7 !a's,
", A < )ash !is)ount )an "e ta.en i# the in$oi)e is (ai! %ithin
17 to
@7 !a's othe%ise4 the #u** in$oi)e (i)e is !ue a#te @7
!a's,
), A < !is)ount )an "e ta.en i# the in$oi)e is (ai! %ithin 17
!a's
the #u** in$oi)e (i)e is !ue %ithin @7 !a's,
!, A < (ena*t' %i** "e assesse! i# the in$oi)e is not (ai! %ithin
17
to @7 !a's,
86, Ma's Co(, so*! &e)han!ise to a )usto&e on )e!it, The in$oi)e
a&ount %as 5<4677 the in$oi)e !ate %as O)to"e 17 )e!it te&s
%ee
1D174 nD@7, hi)h o# the #o**o%in- state&ents is TRUE 2
a, The )usto&e )an ta.e a 5<6 !is)ount i# the in$oi)e is (ai! "'
O)to"e <7, ", The )usto&e shou*! (a' 5<48B6 i# the in$oi)e is (ai! "'
No$e&"e ?,
), The )usto&e &ust (a' a 5<6 (ena*t' i# (a'&ent is &a!e a#te
No$e&"e ?,
!, The )usto&e &ust (a' 5<46<6 i# (a'&ent is &a!e a#te O)to"e
<7,
Jin.s Co(, o##es a 17 quantit' !is)ount to )usto&es %ho
(u)hase
17 o &oe o# the sa&e (o!u)t, A*so4 Jin.s o##es )e!it te&s
o#
<D174 nD@7 to )e!it )usto&es, Ha'es Co(, (u)hase! 17 o##i)e
)hais %ith a *ist (i)e o# 5167 ea)h on Ju*' 64 1??6, Ans%e the
#o**o%in- questions "ase! on this in#o&ation,
8>, I# Ha'es (a's the in$oi)e #o its (u)hase on Ju*' 164 1??64 %hat
a&ount o# )ash &ust "e e&itte! to Jin.s2
a, 514677
", 514@67
), 5148B7
!, 514@<@
PAGE1<
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
Fo the #o**o%in- set o# questions4 use the in#o&ation "e*o%
#o& the
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Pe' Co, 1??6 in)o&e state&ent
Pu)hases 5;64777
Tans(otation:In 14<77
In$ento'4 Janua' 14 1??6 1>4677
In$ento'4 0e)e&"e @14 1??6 1;4;77
Pu)hase Retuns 9 A**o%an)es 14877
8B, The a&ount Pe' %ou*! e(ot as its Cost o# Goo!s So*! in the
1??6
in)o&e state&ent is
a, 5;84;77
", 5;<4677
), 5;B4177
!, 51714@77
Fo the #o**o%in- set o# questions4 use the #a)ts (esente!
"e*o%,
Cao**4 In), (u)hase! &e)han!ise #o& Han.s Co(, on A(i* 64
1??6,
The sa*es (i)e o# the &e)han!ise %as 5@4777, The )e!it te&s
%ee
1D174 nD@7, The shi((in- te&s %ee FO shi((in- (oint, Cao**
e)ei$e! the &e)han!ise on A(i* 174 1??6, Cao** (ai! the
a&ount
!ue on A(i* @74 1??6,
8;, I# Cao** uses the (eio!i) in$ento' s'ste& an! the -oss ðo!
o#
e)o!in- (u)hases4 %hat ae the e##e)ts on assets4 *ia"i*ities4
an!
o%nes= equit' %hen the &e)han!ise (u)hase on A(i* 64 1??64 is
e)o!e!2
Assets Lia"i*ities O%nes= Equit'
a, In)ease In)ease No e##e)t
", No e##e)t No e##e)t No e##e)t
), 0e)ease No e##e)t 0e)ease
!, No e##e)t In)ease 0e)ease
8?, Most annua* e(ots no% in)*u!e a Re(ot o# Mana-e&ent to the
sto).ho*!es, In this e(ot4 the -ou( i!enti#ie! as "ein-
(i&ai*' es(onsi"*e #o the (e(aation an! inte-it' o# the #inan)ia*
state&ents is
a, &ana-e&ent,
", the )o&(an'=s CPAs,
), the )o&(an'=s intena* au!it sta##,
!, the au!it )o&&ittee o# the )o&(an'=s oa! o# 0ie)tos,
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PAGE
1@
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
Use the in#o&ation (esente! "e*o% to ans%e the #o**o%in- set
o#
questions,
Mani*a Co(, is a &e)han!isin- )o&(an' %hi)h uses the (eio!i)
in$ento' s'ste&, Se*e)te! a))ount "a*an)es ae *iste! "e*o%
Sa*es 5;674777
Pu)hases 8674777
In$ento' "e-innin- 864777
In$ento' en!in- 664777
O(eatin- E+(enses @<64777
In)o&e Ta+ E+(ense @64777 Retaine! Eanin-s "e-innin- B64777
0i$i!en!s 164777
67, Assu&e that Cost o# Goo!s So*! is 58674777, The en!in- "a*an)e o#
Retaine! Eanin-s #o Mani*a Co(, is
a, 51774777
", 5>74777
), 51164777
!, 51874777
The #o**o%in- set o# questions is "ase! on the tansa)tions
(esente!
"e*o%
O)t, @ Pu)hase! &e)han!ise on )e!it #o 564777,
16 So*! &e)han!ise on )e!it #o 5@4677 the )ost o# the
&e)han!ise %as 5<4777, The &e)han!ise %as shi((e! FO
!estination an! %as e)ei$e! "' the )usto&e on O)to"e
<7,
61, I# the PERIO0IC in$ento' s'ste& is use!4 %hat ae the e##e)ts
on the a))ountin- equation o# the &e)han!ise (u)hase on O)t, @2
a, Assets an! *ia"i*ities in)ease 564777,
", Lia"i*ities in)ease an! o%nes= equit' !e)eases 564777,
), Assets an! o%nes= equit' !e)ease 564777,
!, Lia"i*ities an! assets !e)ease 564777,
6<, I# the PERPETUAL in$ento' s'ste& is use!4 %hat ae the e##e)ts
on the a))ountin- equation o# the &e)han!ise (u)hase on O)t, @2
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a, Lia"i*ities in)ease 564777 an! o%nes= equit' !e)eases
564777,
", Assets an! o%nes= equit' !e)ease 564777,
), Assets !e)ease 564777 an! o%nes= equit' in)eases 564777,
!, Assets an! *ia"i*ities in)ease 564777,
PAGE
18
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
6@, hi)h o# the #o**o%in- t'(es o# in$ento' %ou*! NOT "e use! "' a
&anu#a)tuin- "usiness2
a, Me)han!ise in$ento'
", Ra% &ateia*s in$ento'
), o. in (o)ess in$ento'
!, Finishe! -oo!s in$ento'
68, hi)h o# the #o**o%in- state&ents is FALSE 2
a, The )ost o# -oo!s a$ai*a"*e #o sa*e )onsists o# en!in-
in$ento' an! (u)hases,
", An eo in assi-nin- in$ento' )osts to the en!in- in$ento'
"a*an)e a##e)ts the )ost o# -oo!s so*! #o the sa&e (eio!,
), En!in- in$ento' )osts e(esent a&ounts to "e e)o-ni3e! as
e+(ense in #utue (eio!s %hen the in$ento' is so*!,
!, Cost o# -oo!s so*! e(esents e+(ie! in$ento' )osts,
66, A))ountin- theo' an! (a)ti)e !i##e in the teat&ent o# so&e
)osts o# a)quiin- in$ento', Ea)h o# the #o**o%in- )osts shou*! "e
in)*u!e! in in$ento' )ost in theo' EKCEPT
a, 0e*i$e' e+(ense
", Stoa-e )osts
), E+)ise an! sa*es ta+es
!, Insuan)e !uin- tansit on &e)han!ise (u)hase!
6>, hi)h in$ento' )ostin- ðo! assi-ns the sa&e )ost to a** units
%hethe the' ae so*! o *e#t in en!in- in$ento'2
a, LIFO
", FIFO
), A$ea-e )ost
!, S(e)i#i):i!enti#i)ation
PAGE
16
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
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Use the !ata "e*o% to ans%e the #o**o%in- set o# questions,
Assu&e that the )o&(an' uses the PERIO0IC in$ento' ðo!,
Ma' 1 On han!4 <7 units 58,77 ea)h 5 ;7
6 Pu)hase! 177 units 58,17 ea)h 817
18 Pu)hase! ;7 units 58,<7 ea)h @@>
:::
Tota* )ost o# -oo!s a$ai*a"*e #o sa*e 5 ;<>
@1 On han!4 @7 units
6B, I# the )o&(an' uses the FIFO in$ento' ðo!4 the a&ount assi-ne!
to
the Ma' @1 in$ento' %ou*! "e
a, 51<1
", 51<@,?7
), 51<6 !, 51<>
Use the !ata "e*o% to ans%e the #o**o%in- set o# questions,
Assu&e that the )o&(an' uses the PERIO0IC in$ento' ðo!,
Au- 1 On han!4 67 units 5<,67 ea)h 5 1<6
6 Pu)hase! 177 units 5<,86 ea)h <86
18 Pu)hase! 67 units 5<,@> ea)h 11;
:::
Tota* )ost o# -oo!s a$ai*a"*e #o sa*e 5 8;;
@1 On han!4 >7 units
6;, I# the )o&(an' uses the LIFO in$ento' ðo!4 the a&ount assi-ne!
to
the Au-ust @1 in$ento' %ou*! "e
a, 518<,67
", 5181,>7
), 518?,67
!, 518<,67
6?, A &ao a!$anta-e o# the %ei-hte!:a$ea-e ðo! o# in$ento'
)ostin-
is that
a, )ost #*o%s )oes(on! %ith the (h'si)a* #*o% o# &e)han!ise,
", e)ent )osts ae assi-ne! to the en!in- in$ento' "a*an)e,
), it is si&(*e to a((*',
!, it &at)hes )uent )osts %ith e$enues,
PAGE
1>
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UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
>7, Fae**4 In), has "een in "usiness #o <7 'eas, 0uin- that ti&e
the
)o&(an' has )onsistent*' use! the LIFO in$ento' )ostin- ðo!,
A*so4 )ost (i)es #o &e)han!ise ha$e in)ease! )onsistent*' o$e
the
<7 'eas, I# the )o&(an' has &aintaine! o in)ease! its
in$ento'
*e$e* quantit' o$e the <7 'eas4 %hi)h o# the #o**o%in-
state&ents
is TRUE 2
a, The en!in- in$ento' #i-ue e(ote! on the "a*an)e sheet &a'
"e
si-ni#i)ant*' *o%e than its )uent $a*ue,
", Fae** %i** ha$e (ai! &oe in)o&e ta+es o$e the (ast <7 'eas
than it %ou*! ha$e i# it ha! use! the FIFO ðo!, ), Fae**=s tota* net in)o&e #o the (ast <7 'eas is -eate
than it
%ou*! ha$e e(ote! usin- anothe in$ento' ðo!,
!, The )o&(an' %i** ha$e to )ontinue usin- the LIFO ðo!
in!e#inite*' "e)ause o# -enea**' a))e(te! a))ountin- stan!a!s
an!
#e!ea* in)o&e ta+ u*es,
>1, Assu&e that a )o&(an' %hi)h uses the LIFO in$ento' ðo! is
#a)e!
%ith the (ossi"i*it' o# a LIFO *iqui!ation #o the )uent (eio!,
A*so assu&e that &e)han!ise )ost (i)es ha$e in)ease! sin)e the
LIFO
ðo! %as a!o(te!, I# the )o&(an' !oes not (u)hase a!!itiona*
&e)han!ise "e#oe 'ea:en!4 a** o# the #o**o%in- e##e)ts %i**
o))u
as a esu*t o# a LIFO *iqui!ation EKCEPT
a, Re(ote! eanin-s #o the )uent (eio! %i** "e hi-he,
", In)o&e ta+es #o the )uent (eio! %i** "e hi-he,
), Cost o# -oo!s so*! #o the )uent (eio! %i** "e hi-he,
!, Goss &a-in #o the )uent (eio! %i** "e hi-he,
><, Man' &e)han!ise )o&(anies e(ot the !i##een)e "et%een thei
in$ento' un!e the LIFO an! FIFO ðo!s in the #ootnotes to the
#inan)ia* state&ents, Assu&e that a )o&(an' e(ote! an en!in-
in$ento' o# 5> &i**ion in its "a*an)e sheet #o 1??6, A*so4assu&e
that the )o&(an' in!i)ate! that the en!in- in$ento' #o 1??6
%ou*!
ha$e "een 5B,6 &i**ion4 an! that this !i##een)e ha! in)ease! "'
58774777 !uin- 1??6, hi)h o# the #o**o%in- state&ents e-a!in-
this situation %ou*! "e FALSE 2
a, The )o&(an' has a LIFO ese$e o# 51,6 &i**ion at the en! o#
1??6,
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", In)o&e "e#oe ta+es %as 58774777 *o%e in 1??6 "e)ause the
)o&(an'
use! LIFO athe than FIFO,
), In)o&e ta+es (ai! !uin- 1??6 %ee hi-he "e)ause the )o&(an'
use!
LIFO athe than FIFO,
!, The )o&(an'=s LIFO ese$e in)ease! 58774777 !uin- 1??6,
PAGE
1B
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
>@, hi)h o# the #o**o%in- state&ents e-a!in- the (o(u*ait' o#
in$ento' )ostin- ðo!s an! in$ento' s'ste&s is FALSE 2
a, FIFO an! LIFO )ontinue to "e the t%o &ost )o&&on*' use!
in$ento' )ostin- ðo!s,
", The a"i*it' to )o&(utei3e the in$ento' s'ste& to!a' has
esu*te!
in an in)ease in the use o# the (eio!i) s'ste&,
), Man' )o&(anies use one in$ento' ðo!4 su)h as LIFO4 #o
)etain
in$ento' ite&s an! anothe ðo! #o othe in$ento' ite&s,
!, An' o# the )o&&on in$ento' )ostin- ðo!s !is)usse! in the
te+t
)an "e use! %ith eithe the (eio!i) o (e(etua* in$ento'
s'ste&s,
>8, hen the &a.et $a*ue o# in$ento' ite&s has !e)*ine! "e*o% thei
)ost4 &an' )o&(anies a((*' %hi)h o# the #o**o%in- in$ento'
ðo!s2
a, Lo%e:o#:)ost:o:&a.et ðo!
", LIFO ðo!
), Retai* ðo!
!, Goss (o#it ðo!
>6, The #o**o%in- in#o&ation %as ta.en #o& the o(eatin- a)ti$it'
se)tion o# the 1??6 state&ent o# )ash #*o%s #o Hais Co(,
A!!itions to net in)o&e
Chan-e in a))ounts (a'a"*e 5?4777
0e!u)tions #o& net in)o&e
Chan-e in in$entoies 64777
ase! on the in#o&ation (o$i!e!4 %hi)h o# the #o**o%in-
)on)*usions
is INCORRECT 2
a, A))ounts (a'a"*e in)ease! 5?4777 in 1??6,
", In$entoies in)ease! 564777 in 1??6,
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), The in!ie)t ðo! %as use! to (e(ae the o(eatin- se)tion
o#
the )ash #*o% state&ent,
!, Cash (a'&ents o# &e)han!ise e+)ee!e! )ost o# -oo!s so*! "'
584777,
>>, hi)h in$ento' )ostin- ðo!s %i** 'ie*! the sa&e esu*ts #o
en!in- in$ento' an! )ost o# -oo!s so*! un!e "oth the (eio!i)
an!
(e(etua* in$ento' s'ste&s2
a, A$ea-e:)ost
", LIFO
), FIFO
!, A** o# the a"o$e
PAGE
1;
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
The #o**o%in- set o# questions is "ase! on the !ata (esente!
"e*o%,
Assu&e that the )o&(an' uses the PERPETUAL in$ento' s'ste& ,
Fe", 1 On han!4 <77 units at 56,77 ea)h 5 14777
; Pu)hase! 877 units at 56,16 ea)h <47>7
16 So*! 677 units
<< Pu)hase! 877 units at 56,<7 ea)h <47;7
<; On han!4 677 units
>B, I# the LIFO ðo! is use!4 %hat is the a&ount assi-ne! to )ost o#
-oo!s so*! #o the units so*! on Fe"ua' 162
a, 5<46?6
", 5<46>7
), 5<4667
!, 5<46B7
>;, I# the &o$in-:a$ea-e ðo! is use!4 %hat is the a&ount assi-ne!
to
the en!in- in$ento' on Fe"ua' <;2
a, 5<46?6
", 5<46;7
), 5<46B7
!, 5<46?7
Use the in#o&ation "e*o% to ans%e the #o**o%in- set o#
questions,
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Ves(e Co(, "e-an the &onth o# A(i* %ith a )ash "a*an)e o#
5<14777,
0uin- A(i* the )o&(an' eane! (o#its o# 5164777, The #o**o%in-
&e)han!ise sa*es an! (u)hases an! e*ate! )ash e)ei(ts an! )ash
(a'&ents o))ue! !uin- A(i*
Pu)hase! &e)han!ise at a )ost o# 58;4777 on )e!it,
Ma!e (a'&ents to )e!itos #o &e)han!ise (u)hases o#
56>4777,
So*! &e)han!ise %ith a )ost o# 5@>4777 on )e!it #o 5>74777,
Co**e)te! 5674777 #o& )e!it )usto&es,
>?, hat is the )ost o# -oo!s so*! e+(ense #o A(i*2
a, 584777
", 51<4777
), 5184777
!, 5<84777
PAGE
1?
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
B7, hat is the )ash #*o% e##e)t o# the tansa)tions !es)i"e! a"o$e
on
Ves(e=s )ash "a*an)e at the en! o# A(i*2
a, The )ash "a*an)e %i** in)ease 5<4777,
", The )ash "a*an)e %i** !e)ease 5>4777,
), The )ash "a*an)e %i** in)ease 5<84777,
!, The )ash "a*an)e %i** in)ease 5164777,
Use the in#o&ation (esente! "e*o% to ans%e the #o**o%in- set
o#
questions,
Ca*os Co(, se**s a sin-*e (o!u)t4 %i!-ets4 %hi)h it (u)hases
#o&
se$ea* !i##eent &anu#a)tues, 0uin- the &onth o# O)to"e the
a)ti$it' #o %i!-ets is as #o**o%s
O)t, 1 a*an)e ;77 units at 51<,77Dunit 5 ?4>77
6 Pu)hase <4777 units at 51<,67Dunit <64777
11 So*! <4677 units at 5<6,77Dunit
18 Pu)hase <4<77 units at 51@,77Dunit <;4>77
<< So*! 14677 units at 5<6,77Dunit
@1 a*an)e 14777 units
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B1, I# Ca*os uses the FIFO ðo! an! the PERPETUAL in$ento'
s'ste&4
%i** the a&ount assi-ne! to the en!in- in$ento' at O)to"e @1 "e
the
sa&e4 &oe4 o *ess than the a&ount assi-ne! un!e the PERIO0IC
in$ento' s'ste&2
a, The sa&e a&ount is assi-ne! to en!in- in$ento' un!e "oth the
(eio!i) an! (e(etua* in$ento' s'ste&s,
", A hi-he a&ount is assi-ne! to en!in- in$ento' un!e the
(e(etua*
in$ento' s'ste&,
), A s&a**e a&ount is assi-ne! to en!in- in$ento' un!e the
(e(etua* in$ento' s'ste&,
B<, Jenn' 0e(at&ent Stoe uses a (eio!i) in$ento' s'ste&, hat is
the
i&(a)t on the #inan)ia* state&ents o# an o$estate&ent o# en!in-
in$ento'2
a, Cuent 'ea=s net in)o&e %i** "e o$estate!, ", Ne+t 'ea=s net in)o&e %i** "e o$estate!,
), Ne+t 'ea=s en!in- in$ento' %i** "e o$estate!
!, Ne+t 'ea=s en!in- in$ento' %i** "e un!estate!,
PAGE
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UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
B@, Fo**o%in- a (eio! o# stee(*' isin- (i)es4 a )o&(an' has a!o(te!
a
ne% ðo! o# (o!u)tion )a**e! ust:in:ti&e %hi)h has esu*te! in
a
!a&ati) e!u)tion in in$entoies, The e##e)t o# this on e(ote!
eanin-s an! in$ento' tuno$e in the 'ea the )han-e ta.es (*a)e
is
a, in)ease eanin-s4 !e)ease in$ento' tuno$e
", in)ease eanin-s4 in)ease in$ento' tuno$e
), !e)ease eanin-s4 !e)ease in$ento' tuno$e
!, !e)ease eanin-s4 in)ease in$ento' tuno$e
B8, The (i&a' eason that "usinesses &a' in$est in shot:te&
in$est&ents is that
a, the' ae t'in- to )onto* the a)ti$ities o# othe )o&(anies,
", the' ae s(e)u*atin- in the a((e)iation in $a*ue o# the
se)uities,
), the' ae in$estin- e+)ess )ash unti* it is nee!e! *ate #o
"usiness o(eations,
!, the' ae *en!in- &one' to )o&(anies %hi)h )annot o"tain "an.
*oans,
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B6, hat ae the e##e)ts on the a))ountin- equation o# in$estin- )ash
in
shot:te& in$est&ents2
a, Assets an! o%nes= equit' in)ease,
", No e##e)t::assets in)ease an! !e)ease "' the sa&e a&ount,
), Assets an! *ia"i*ities in)ease,
!, O%nes= equit' in)eases an! *ia"i*ities !e)ease,
B>, The a))ountant #o Haiett Co(, %as (e(ain- a "an.
e)on)i*iation
as o# A(i* @74 1??6 the #o**o%in- ite&s %ee i!enti#ie!
Haiett=s "oo. "a*an)e 5 1>4<77
Eo "' Haiett in e)o!in- a )usto&e=s
)he). the a&ount %as e)o!e! in )ash
e)ei(ts as 5167 the )oe)t a&ount o#
5617 %as e)o!e! "' the "an. as a !e(osit
Outstan!in- )he).s 14177
Inteest eane! on )he).in- a))ount 67
Custo&e=s NSF )he). etune! "' the "an. 677
Haiett=s a!uste! )ash "a*an)e at A(i* @74 1??64 is
a, 51>4<67
", 5184>67
), 51>4117
!, 5164;?7
PAGE
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UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
BB, hat is the !istin-uishin- )haa)teisti) "et%een a))ounts
e)ei$a"*e an! notes e)ei$a"*e2
a, A))ounts e)ei$a"*e esu*t #o& )e!it sa*es4 %hi*e notes
e)ei$a"*e esu*t #o& *oans an! sa*es o# assets othe than
&e)han!ise in$ento',
", A))ounts e)ei$a"*e equie (a'&ent o# inteest i# not (ai!
%ithin
the usua* )e!it te&s,
), Notes e)ei$a"*e esu*t #o& a %itten (o&ise to (a' %ithin a
s(e)i#ie! (eio! o# ti&e, !, Notes e)ei$a"*e esu*t #o& )e!it sa*e tansa)tions #o
se$i)e
)o&(anies4 %hi*e a))ounts e)ei$a"*e esu*t #o& )e!it sa*es
tansa)tions #o &e)han!isin- )o&(anies,
B;, e!o). Co(, uses the a**o%an)e ðo! to a))ount #o "a! !e"ts,
hat ae the e##e)ts on the a))ountin- equation o# the ent' to
e)o!
the %ite:o## o# a )usto&e=s a))ount "a*an)e2
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a, No e##e)t::assets in)ease an! !e)ease "' the sa&e a&ount,
", Assets an! *ia"i*ities !e)ease,
), Assets an! o%nes= equit' !e)ease,
!, O%nes= equit' !e)eases an! *ia"i*ities in)ease,
The #o**o%in- questions ae "ase! on the !ata (esente! "e*o% #o
Taant Co(, #o the 'ea en!e! 0e)e&"e @14 1??6
Sa*es 177 on )e!it 514<774777
Sa*es Retuns <64777
A))ounts Re)ei$a"*e 0e)e&"e @14 1??6 1;74777
A**o%an)e #o 0ou"t#u* A))ounts "e#oe
a!ust&ent at 0e)e&"e @14 1??6 )e!it
"a*an)e 14177
Esti&ate! a&ount o# un)o**e)ti"*e a))ounts
"ase! on an a-in- ana*'sis 1@4777
B?, I# Taant esti&ates its "a! !e"ts at 1 o# net )e!it sa*es4 %hat a&ount %i** "e e(ote! as "a! !e"ts #o 1??62
a, 51@4777
", 51<4777
), 5114B67
!, 5174>67
PAGE
<<
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
;7, I# Taant uses the (e)enta-e o# sa*es ðo! to esti&ate its "a!
!e"ts4 %hat %i** "e the "a*an)e in the A**o%an)e #o 0ou"t#u*
A))ounts
a#te the a!ust&ent #o "a! !e"ts2
a, 5184177
", 5174>67
), 5114B67
!, 51<4;67
;1, I# Taant uses the a-in- a((oa)h to esti&ate its "a! !e"ts4 %hat
%i** "e the net ea*i3a"*e $a*ue o# its a))ounts e)ei$a"*e a#tethe
a!ust&ent #o "a! !e"ts2
a, 51;74777
", 51>B4777
), 51?14?77
!, 51>;4177
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The #o**o%in- set o# questions is "ase! on the situation
!es)i"e!
"e*o%,
Mun)hen Co(, esti&ates "a! !e"t e+(ense usin- the (e)enta-e o#
sa*es
a((oa)h, At the en! o# 1??6 the )o&(an' e)o!e! an a!ust&ent
#o
51;4777 o# "a! !e"t e+(ense, In ea*' 1??> the' %ote o## a
)usto&e=s
a))ount #o 5>77,
;<, hat ae the e##e)ts on the a))ountin- equation o# the a!ust&ent
#o
"a! !e"t e+(ense at the en! o# 1??62
a, No e##e)t::assets in)ease an! !e)ease "' the sa&e a&ount,
", Assets an! o%nes= equit' !e)ease,
), Assets an! *ia"i*ities in)ease,
!, Lia"i*ities in)ease an! o%nes= equit' !e)ease,
;@, Feis Co(, e(ote! Net Sa*es a** on )e!it o# 514;774777 an!
Cost
o# Goo!s So*! o# 514<774777 #o 1??6, Its "e-innin- "a*an)e o#
A))ounts Re)ei$a"*e %as 51864777, The A))ounts Re)ei$a"*e "a*an)e
in)ease! "' 5174777 !uin- 1??6, hat is Feis= A))ounts
Re)ei$a"*e
Tuno$e ate #o 1??62 Roun! 'ou ans%e to t%o !e)i&a*
(*a)es,
a, 1<,81
", ;,77
), ;,<;
!, 1<,77
PAGE
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UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
;8, The (at' to a (o&isso' note that a-ees to e(a' &one' at the
&atuit' !ate o# the note is )a**e! the
a, &a.e o# the note, ", (a'ee o# the note
), e)i(ient o# the note,
!, *en!e,
The #o**o%in- set o# questions is "ase! on the in#o&ation
(esente!
"e*o%,
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Hou-hton Co&(an' so*! &e)han!ise to Peninsu*a Co(, on No$e&"e
14
1??64 #o 5;4777, Hou-hton a))e(te! a (o&isso' note #o&
Peninsu*a
#o 5;4777, The note has a te& o# ?7 !a's an! a state! inteest
ate
o# ?, Hou-hton=s a))ountin- (eio! en!s on 0e)e&"e @14 1??6,
;6, hat a&ount shou*! Hou-hton e)o-ni3e as inteest e$enue on
0e)e&"e
@14 1??62
a, 5 :7:
", 5 1;7
), 5 1<7
!, 5 >7
;>, hat a&ount shou*! Hou-hton e)o-ni3e as inteest e$enue on the
&atuit' !ate o# the note2
a, 5 :7:
", 5 1;7
), 5 1<7
!, 5 >7
;B, The #a)e a&ount o# a))ounts e)ei$a"*e #o Co&(an' A is 5674777,
It is
esti&ate! that < o# these %i** (o$e un)o**e)ti"*e4 that
)usto&es
%i** ta.e a!$anta-e o# )ash !is)ounts o# 514777 an! that sa*es o#
5<4777 %i** "e etune!, The net ea*i3a"*e $a*ue o# a))ounts
e)ei$a"*e is
a, 5674777
", 58?4777
), 58;4777
!, 58>4777
PAGE
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UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
;;, hi)h o# the #o**o%in- te&s is NOT )o&&on*' use! on the "a*an)e
sheet #o a )o&(an'=s tan-i"*e o(eatin- assets2
a, P*ant Assets
", Po(et'4 P*ant an! Equi(&ent
), Othe Assets
!, Fi+e! Assets
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;?, Ho% shou*! intan-i"*e assets "e !is)*ose! on the "a*an)e sheet2
,
a, Net o# the )osts a*ea!' a&oti3e!
", At )ost %ith the a&ount o# a))u&u*ate! a&oti3ation e(ote! in
a se(aate a))ount
), Eithe a o " is a))e(ta"*e
!, None o# the a"o$e
?7, hi)h o# the #o**o%in- #a)tos is NOT e*ate! to the !e)*ine in
the
use#u*ness o# (*ant an! equi(&ent assets an! thee#oe !oes not
nee!
to "e )onsi!ee! in se*e)tin- an a((o(iate !e(e)iation ðo!2
a, Ph'si)a* !eteioation
", O"so*es)en)e
), Re(ai an! &aintenan)e (o*i)ies
!, Cuent e(*a)e&ent )ost
The #o**o%in- set o# questions is "ase! on the in#o&ation
(esente!
"e*o%,
etts4 In),4 (u)hase! )o&(ute equi(&ent at a )ost o# 5184677,
The
equi(&ent has an esti&ate! esi!ua* $a*ue o# 5<4677 an! an
esti&ate!
*i#e o# 8 'eas4 o 174777 hous o# o(eation, The equi(&ent %as
(u)hase! at the "e-innin- o# 1??6 a #u** 'ea=s !e(e)iation
e+(ense
is to "e e)o!e! #o 1??6, At the en! o# #ou 'eas4 it is
e+(e)te!
that the equi(&ent %i** "e e(*a)e! at an esti&ate! )ost o#
51>4777,
?1, I# etts uses the su&:o#:'eas:!i-its !e(e)iation ðo!4 %hat
a&ount
%i** "e e)o!e! as !e(e)iation e+(ense #o 1??62
a, 5@4777
", 584;77
), 564;77
!, 5>4777
PAGE
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UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
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The #o**o%in- set o# questions is "ase! on the in#o&ation
(esente!
"e*o%,
Ru--*e=s4 In), (u)hase! a ne% !e*i$e' tu). at the "e-innin- o#
1??6, The tu). has a )ost o# 5@@47774 an esti&ate! *i#e o# 6
'eas4
an! an esti&ate! esi!ua* $a*ue o# 5>4777, A #u** 'ea=s
!e(e)iation
e+(ense is to "e e)o!e! in 1??6, The tu). %as !i$en 164777
&i*es
!uin- 1??6 the nu&"e o# e+(e)te! &i*es o$e 6 'eas is ;74777,
?<, A#te the tu). is !e(e)iate! #o 6 'eas4 an! "e#oe it is
e(*a)e!4
the "oo. $a*ue o# the tu). %i** "e
a, 5 :7:
", 5<B4777
), 5@@4777 !, 5>4777
?@, Po-essi$e Co(, uses (*ant assets %hi)h ae su"e)t to a(i!
!e)eases in $a*ue !ue to o"so*es)en)e an! (h'si)a* !eteioation,
hi)h o# the #o**o%in- !e(e)iation ðo!s is &ost a((o(iate to
&easue the !e)*ine in the use#u*ness o# the )o&(an'=s assets2
a, Units o# (o!u)tion
", Stai-ht:*ine
), Su&:o#:'eas:!i-its
!, 0ou"*e:!e)*inin-:"a*an)e
PAGE
<>
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
The #o**o%in- set o# questions is "ase! on the in#o&ation
(esente!
"e*o% #o a)o4 In),4 #o 1??6 an! 1??>, Assu&e that a)o uses
the
stai-ht:*ine !e(e)iation ðo!,
1??6 1??>
:::::::::: ::::::::::
Po(et'4 P*ant 9 Equi(&ent 5 B674777 5 ;774777
A))u&u*ate! 0e(e)iation @774777 @674777
0e(e)iation E+(ense 674777 674777
Net Sa*es <4<774777 <48774777
Tota* Assets 146774777 14B774777
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?8, Usin- the !ata #o 1??>4 !ete&ine the a$ea-e a-e o# a)o=s
(o(et'4
(*ant 9 equi(&ent,
a, 1> 'eas
", ? 'eas
), 8; 'eas
!, B 'eas
?6, h' is !e(e)iation a!!e! to net in)o&e in the o(eatin- a)ti$it'
se)tion o# the state&ent o# )ash #*o%s %hen the in!ie)t ðo! is
use! to (e(ae the o(eatin- a)ti$it' se)tion2
a, 0e(e)iation is an a!!itiona* sou)e o# )ash %hi)h %as not
in)*u!e!
in net in)o&e,
", 0e(e)iation &ust "e e(ote! in the in$estin- a)ti$it' se)tion
a*on- %ith the assets "ein- !e(e)iate!,
), 0e(e)iation %as !e!u)te! in ai$in- at net in)o&e on the
a))ua*
"asis o# a))ountin- ho%e$e4 it !i! not equie the use o#)ash as
&ost othe e+(enses !o,
!, 0e(e)iation %as not in)*u!e! 'et in !ete&inin- net in)o&e #o
the
)uent (eio!,
?>, I# a )o&(an' &a.es a e$enue e+(en!itue in %hi)h a !e"t is
in)ue!4
%hat ae the e##e)ts o# this tansa)tion on the )o&(an'=s
#inan)ia*
state&ents2
a, Assets in)ease an! !e)ease "' the sa&e a&ount,
", E+(enses in)ease an! assets !e)ease,
), E+(enses in)ease an! *ia"i*ities in)ease,
!, Assets in)ease an! *ia"i*ities in)ease,
PAGE
<B
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
Use the #o**o%in- in#o&ation to ans%e questions 118 thou-h11;,
On 0e)e&"e 14 1??84 Co&(an' K "ou-ht #o& Co&(an' Y *an! %ith a
%aehouse on it #o 5;774777, Co&(an' Y sho%e! the *an! an!
"ui*!in-s
on its "a*an)e sheet at 56774777, The #ai &a.et $a*ues o# the
*an!
an! "ui*!in-s at the ti&e o# (u)hase %ee 5B774777 an! 5@774777
es(e)ti$e*',
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?B, A )o&(an' uses stai-ht:*ine !e(e)iation #o its "ui*!in-s4
assu&in-
a thit' 'ea *i#e an! 3eo esi!ua* $a*ue, The CEO (oints out
that
the "ui*!in-s *ast &u)h *on-e than @7 'eas4 o#ten >7 'eas4 an!
as.s
%hat the i&(a)t o# !e(e)iatin- "ui*!in-s o$e >7 'eas athe
than @7
'eas %ou*! ha$e on eanin-s (e shae an! !e"t:equit' atio, You
e(*' that
a, eanin-s (e shae %i** in)ease an! !e"t:equit' atio %i**
!e)ease,
", "oth eanin-s (e shae an! !e"t:equit' atio %i** !e)ease,
), "oth eanin-s (e shae an! !e"t:equit' atio %i** in)ease,
!, eanin-s (e shae %i** !e)ease an! !e"t:equit' atio %i**
in)ease,
?;, Cuent *ia"i*ities ae !e#ine! as those *ia"i*ities %hi)h %i** "e satis#ie!
a, %ithin 1 'ea o %ithin the o(eatin- )')*e %hi)he$e is
shote,
", %ithin 1 'ea o %ithin the o(eatin- )')*e %hi)he$e is
*on-e,
), %ithin 1 'ea,
!, "' the en! o# the o(eatin- )')*e,
??, I# a )o&(an' (u)hases 514777 %oth o# in$ento' %ith te&s o#
<D174
nD@7 an! (a's %ithin 17 !a's4 then the a&ount (ai! to the se**e
%ou*!
"e
a, 5?77
", 5;77
), 514777
!, 5?;7
177, An e+a&(*e o# a )uent *ia"i*it' that &ust "e a))ue! is
a, Ta+es Pa'a"*e,
", A))ounts Pa'a"*e,
), Cuent Matuit' o# Lon-:Te& 0e"t,
!, Re$enue Re)ei$e! in A!$an)e,
PAGE
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UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
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So*utions to the #o**o%in- (o"*e&s equie ti&e:$a*ue:o#:&one'
)a*)u*ations, Re#een)e to Ta"*es ?:1 thou-h ?:8 in the te+t is
ne)essa' to )o&(*ete the )a*)u*ations,
171, I# 'ou &ust )a*)u*ate the (esent $a*ue o# an a&ount at ;
)o&(oun!e!
quate*' #o < 'eas4 then the inteest #a)to use! in the
)a*)u*ation is
a, ; #o < (eio!s,
", < #o ; (eio!s,
), the inteest #a)to #o ; #o < 'eas !i$i!e! "' 8,
!, t%i)e that #o 1 (eio! at ;,
17<, The (esent $a*ue o# 5B67 at 17 )o&(oun!e! annua**' #o 17 'eas
is
a, 58>7
", 5<?7
), 514787 !, 5B4677
17@, Usin- the #utue $a*ue ta"*e4 a stu!ent #oun! that the #utue
$a*ue
a&ount o# 51 #o 6 'eas at an annua* inteest ate o# 17 is
1,>11,
The stu!ent a*so o"se$e! that the #utue $a*ue o# 51 #o 6 'eas
at
17 )o&(oun!e! se&iannua**' is 1,><?, This &eans that
a, the &oe o#ten the )o&(oun!in-4 the hi-he the #utue $a*ue,
", the stu!ent %as *oo.in- in the %on- )o*u&n the se)on! a&ount
shou*! "e 1,>11D<,
), thee %as an eo in the ta"*e,
!, %hen inteest is )o&(oun!e! se&iannua**'4 &oe &one' &ust "e
!e(osite! to ha$e a !esie! en!in- "a*an)e,
178, The inteest #a)to #o the #utue $a*ue o# an annuit' is
a, the sa&e as #o the #utue $a*ue o# 514 &u*ti(*ie! "' the
nu&"e o#
!e(osits,
", the e)i(o)a* o# the #utue $a*ue o# 51,
), a )u&u*ati$e tota* o# the #utue $a*ue o# 51 #a)tos,
!, not !ete&ina"*e #o& the #utue $a*ue o# 51,
176, A )o&(an' has ust (u)hase! a &a)hine %ith a )ost o# 56747774 an! si-ne! a note a-eein- to (a' the &anu#a)tue equa* annua*
a&ounts o#
5B4B?7, I# the )uent ate o# inteest is ?4 ho% &an' equa*
annua*
(a'&ents %i** "e &a!e2
a, >
", ;
), 17
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!, 1<
PAGE
<?
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
17>, A )o&(an'=s %ee.*' (a'o** a&ounts to 5164777 an! (a'!a' is e$e'
Fi!a', I# the (e$ious (a'!a' %as Janua' <> an! the a))ountin-
(eio! en!s on Janua' @14 %hat a&ount is the en!in- "a*an)e in
the
%a-es (a'a"*e a))ount2
a, 57
", 5164777
), 5174777
!, 5?4777
17B, hen "on!s ae so*! "' a )o&(an'4 the a))ountin- ent' sho%s
a, an in)ease in *ia"i*ities an! a !e)ease in o%nes= equit',
", an in)ease in *ia"i*ities an! an in)ease in o%nes= equit',
), an in)ease in assets an! an in)ease in *ia"i*ities,
!, an in)ease in assets an! an in)ease in o%nes= equit',
17;, on!s in the a&ount o# 5<64777 an! a *i#e o# 6 'eas %ee issue!
"'
the San)he3 Co&(an', I# the )ou(on ate is 8 an! inteest is
(ai!
annua**'4 %hat %ou*! "e the tota* a&ount o# inteest (ai! o$e the
*i#e o# the "on!s2
a, 5<4777
", 5@4777
), 584777
!, 564777
17?, I# 5674777 %oth o# "on!s !ue in ten 'eas is issue! %ith a
)ou(on
ate o# >4 (ai! se&iannua**'4 then at the en! o# the #ist
inteest
(eio! the "on! in$estos %i** e)ei$e
a, 5@4777
", 514677 ), 564777
!, 5<4677
117, A&oti3ation o# "on! !is)ount esu*ts in
a, a !e)ease o# "on! (a'a"*e,
", a !e)ease o# o%nes= equit',
), an in)ease o# o%nes= equit',
!, a !e)ease in the )ash a))ount,
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Co&(an' ha! a$ai*a"*e 5<774777 #o !i$i!en!s4 ho% &u)h )ou*! it
(a' to
the )o&&on sto).ho*!es2
a, 5<74777
", 51874777
), 5;74777
!, 5>74777
PAGE
@1
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
116, I# a )o&(an' issues no:(a sto).4
a, the )o&(an' !oes not !istin-uish "et%een (a an! the se**in-
(i)e, ", *e-a**' it is sti** equie! to set a &ini&u& se**in- (i)e,
), the shaeho*!es &a' "e *ia"*e #o a!!itiona* (a'&ents in the
#utue,
!, *ia"i*ities ae in)ease! as a esu*t o# the tansa)tion,
11>, The "a*an)e o# the 51,67 (a Co&&on Sto). a))ount #o the
Potoo*a
Co&(an' %as 5864777 "e#oe its e)ent @:#o:1 sto). s(*it, The
&a.et
(i)e o# the sto). %as 5@7, hat o))ue! as a esu*t o# the
s(*it2
a, The "a*an)e in the etaine! eanin-s a))ount %as !e)ease!,
", The "a*an)e in the )o&&on sto). a))ount %as 5164777,
), The &a.et (i)e o# the sto). %as not a##e)te!,
!, The &a.et (i)e o# the sto). %as a((o+i&ate*' 517 (e shae,
The #o**o%in- questions ae "ase! on ite&s se*e)te! #o& the
a*an)e
Sheet o# a )o&(an' *i.e the SEARS CORPORATION, In!i)ate %hee
ea)h
ite& %ou*! "e e(ote! on the "a*an)e sheet,
11B, A))u&u*ate! eanin-s
a, In the sto).ho*!es= equit' se)tion
", In so&e othe "a*an)e sheet se)tion
), In a #inan)ia* state&ent othe than the "a*an)e sheet
11;, A))ue! e+(enses an! othe )uent *ia"i*ities
a, In the sto).ho*!es= equit' se)tion
", In so&e othe "a*an)e sheet se)tion
), In a #inan)ia* state&ent othe than the "a*an)e sheet
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!, 51@74777
1<<, hi)h o# the #o**o%in- ite&s is o# &ost inteest to a shaeho*!e
o# a
)o(oation2
a, Cash #*o%
", Net in)o&e
), Goss (o#it
!, In)o&e ta+ e+(ense
PAGE
@@
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
1<@, hi)h o# the #o**o%in- !oes NOT qua*i#' as a !is)ontinue!o(eation2
a, A )o&(an' that has sa*es to etai* as %e** as %ho*esa*e
)usto&es
has !e)i!e! to !is)ontinue its sa*es to etai* )usto&es,
", A !e(at&ent stoe !is)ontinue! its sa*es o# sno%&o"i*es,
), A *a-e )o(oation has !e)i!e! to !is)ontinue sa*es in othe
)ounties,
!, A )eea* &anu#a)tue has so*! a to' )o&(an' that it o%ne!,
1<8, 0a&a-e )ause! "' %hi)h one o# the #o**o%in- situations %ou*! &ost
(o"a"*' "e )*assi#ie! as an e+tao!ina' ite&2
a, F*oo!s in the Mi!%esten U,S,
", A hui)ane in F*oi!a
), An eathqua.e in Ca*i#onia
!, A tona!o in Ne% Yo. Cit'
1<6, hi)h o# the #o**o%in- %ou*! NOT "e )onsi!ee! an e+tao!ina'
ite&2
a, A -ain esu*tin- #o& e!e&(tion o# a )o&(an'=s "on!s
", The sa*e o# (at o# the "usiness at a *oss
), A *oss esu*tin- #o& the#t o# in$ento'
!, Co( !a&a-e esu*tin- #o& inse)t in#estation
1<>, hi)h o# the #o**o%in- state&ents e-a!in- eanin-s (e shae isTRUE 2
a, Pu"*i) )o&(anies ae equie! to sho% this atio on the "a*an)e
sheet,
", Pu"*i) )o&(anies &a' sho% this atio i# the' %ish to,
), The eanin-s (e shae atio is not e*e$ant to (o(ietoshi(s
o
(atneshi(s,
!, Eanin-s (e shae is )a*)u*ate! as net in)o&e !i$i!e! "' the
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nu&"e o# shaes o# Co&&on Sto). outstan!in- at the en! o# the
'ea,
1<B, hi)h o# the #o**o%in- ite&s %ou*! NOT a((ea on the in)o&e
state&ent2
a, E+tao!ina' ite&
", 0is)ontinue! o(eations
), Pio (eio! a!ust&ent
!, Eanin-s (e shae
PAGE
@8
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
1<;, The Phono&ati) Co(oation is in the (o)ess o# (e(ain- its
State&ent o# Sto).ho*!es= Equit', The "e-innin- "a*an)e in the Co&&on Sto). a))ount4 56 (a4 is 5164777 an! the en!in- "a*an)e is
5<74777, The on*' tansa)tion a##e)tin- the a))ount %as an issue
o#
sto). !uin- the 'ea, Ho% &an' shaes %ee issue! "' Phono&ati)2
a, @4777 shaes
", 84777 shaes
), 14777 shaes
!, The nu&"e o# shaes )annot "e !ete&ine! %ithout a!!itiona*
in#o&ation,
1<?, A *oss #o& #ie !a&a-e o))ue! in the (*ant o# the I$' Co&(an',
The
a&ount %as 5<46774 net o# ta+, Assu&in- the )o&(an' uses the
in!ie)t
ðo!4 %hat is the e##e)t o# the *oss on the State&ent o# Cash
F*o%s2
a, An a&ount o# 5<4677 %i** "e !e!u)te! on the state&ent,
", An a&ount o# 5<4677 %i** "e a!!e! on the state&ent,
), The a&ount %i** not a##e)t the State&ent o# Cash F*o%s,
!, Not enou-h in#o&ation is -i$en to ans%e the question,
The #o**o%in- questions ae "ase! on the Finan)ia* State&ents o#
a
)o&(an' *i.e MOTOROLA, I!enti#' %hee ea)h ite& "e*o% %ou*!a((ea in
the Finan)ia* State&ents,
1@7, Eanin-s (e shae
a, In)o&e state&ent
", State&ent o# etaine! eanin-s
), a*an)e sheet
!, State&ent o# )ash #*o%s
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1@1, Chan-e in a))ountin- (in)i(*e
a, In)o&e state&ent
", State&ent o# etaine! eanin-s
), a*an)e sheet
!, State&ent o# )ash #*o%s
1@<, hi)h o# the #o**o%in- is NOT a )uent e(otin- equie&ent
#o a
state&ent e(otin- )han-es in )ash o$e a (eio! o# ti&e2
a, This state&ent &ust )*assi#' )ash #*o%s into thee )ate-oies
o(eatin-4 in$estin-4 an! #inan)in- a)ti$ities,
", Cash equi$a*ents &ust "e )o&"ine! %ith )ash in (e(ain- this
state&ent,
), o.in- )a(ita* &a' "e use! as a su"stitute #o )ash in
(e(ain-
this state&ent,
!, The tit*e #o this state&ent is State&ent o# Cash F*o%s,
PAGE
@6
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
1@@, Cash #*o%s #o& issuin- an! e(u)hasin- sto). o issuin- an!
e(a'in-
etiin- !e"t ae )*assi#ie! as
a, o(eatin- a)ti$ities,
", in$estin- a)ti$ities,
), #inan)in- a)ti$ities,
1@8, hi)h "a*an)e sheet a))ounts ae a##e)te! "' in$estin- a)ti$ities2
a, Cuent assets an! )uent *ia"i*ities
", Non:)uent assets
), Non:)uent *ia"i*ities
!, Sto).ho*!es= equit'
1@6, hi)h ðo! o# (e(ain- the o(eatin- a)ti$ities se)tion o# a
state&ent o# )ash #*o%s a!usts net in)o&e to e&o$e the e##e)ts
o#
!e#ea*s an! a))ua*s #o e$enues an! e+(enses2
a, The !ie)t ðo!
", The in!ie)t ðo!
), oth the !ie)t an! in!ie)t ðo!s
!, Neithe the !ie)t ðo! no the in!ie)t ðo!
1@>, hi)h o# the #o**o%in- state&ents is FALSE 2
a, The ðo! o# (e(ain- the o(eatin- a)ti$ities se)tion o# a
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), Finan)in- a)ti$it'
!, Non)ash in$estin- an! #inan)in- a)ti$it'
e, Not e(ote! on the state&ent o# )ash #*o%s
Fo the #o**o%in- set o# questions4 in!i)ate ho% ea)h tansa)tion
!es)i"e! %ou*! "e )*assi#ie! on a state&ent o# )ash #*o%s i# the
o(eatin- a)ti$ities se)tion is (e(ae! un!e the IN0IRECT
ðo! ,
187, 0e(e)iation e+(ense is e)o!e!,
a, O(eatin- a)ti$it'
", In$estin- a)ti$it'
), Finan)in- a)ti$it'
!, Non)ash in$estin- an! #inan)in- a)ti$it'
e, Not e(ote! on the state&ent o# )ash #*o%s
181, Cash !i$i!en!s ae !e)*ae!4 "ut not (ai!,
a, O(eatin- a)ti$it'
", In$estin- a)ti$it'
), Finan)in- a)ti$it'
!, Non)ash in$estin- an! #inan)in- a)ti$it'
e, Not e(ote! on the state&ent o# )ash #*o%s
18<, Sto). is issue! to etie a *on-:te& !e"t,
a, O(eatin- a)ti$it'
", In$estin- a)ti$it'
), Finan)in- a)ti$it'
!, Non)ash in$estin- an! #inan)in- a)ti$it'
e, Not e(ote! on the state&ent o# )ash #*o%s
PAGE
@B
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
Use the equation (esente! "e*o% to ans%e the #o**o%in- set o#
questions,
Cash CL LTL CS RE : NCCA : LTA
%hee CL Cuent *ia"i*ities
LTL Lon-:te& *ia"i*ities
CS Co&&on sto).
RE Retaine! eanin-s
NCCA Non)ash )uent assets
LTA Lon-:te& assets
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18@, hi)h o# the #o**o%in- o(eatin- a)ti$ities esu*ts in a )ash
out#*o%2
a, Pa'in- )e!itos #o &e)han!ise
", Co**e)tin- a))ounts e)ei$a"*e
), Ma.in- )ash sa*es
!, Re)ei$in- !e(osits e)o!e! as uneane! e$enue
188, hi)h o# the #o**o%in- a)ti$ities is &ost *i.e*' to ha$e a )ash
#*o%
e##e)t2
a, An in$est&ent in &one' &a.et #un!s
", 0e)*ain- )ash !i$i!en!s
), Reissuin- teasu' sto).
!, Issuin- sto). to a)quie a (atent
186, Ro&eo Co(, e(ote! the #o**o%in- in#o&ation #o 1??8 an! 1??6,
A))ounts e)ei$a"*e4 0e)e&"e @14 1??8 5 >B4777
A))ounts e)ei$a"*e4 0e)e&"e @14 1??6 B@4777 Sa*es::1??6 ;864777
hat a&ount o# )ash %as )o**e)te! #o& )usto&es !uin- 1??62
a, 5;@?4777
", 5;614777
), 5;864777
PAGE
@;
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
18>, Out"a). Co(, e(ote! the #o**o%in- in#o&ation #o 1??8 an!
1??6,
Inteest e)ei$a"*e4 0e)e&"e @14 1??8 5 14177
Inteest e)ei$a"*e4 0e)e&"e @14 1??6 >77
Inteest in)o&e::1??6 @4<77
hat a&ount o# )ash %as e)ei$e! #o inteest !uin- 1??62
a, 5@4B77
", 5<4B77 ), 5@4<77
!, 5@4;77
18B, 'sta* Co(, e(ote! the #o**o%in- in#o&ation #o 1??8 an!
1??6,
A))ounts e)ei$a"*e4 0e)e&"e @14 1??8 5 884777
A))ounts e)ei$a"*e4 0e)e&"e @14 1??6 8?4777
Uneane! #ees4 0e)e&"e @14 1??8 B4777
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Uneane! #ees4 0e)e&"e @14 1??6 @4777
Fees e$enue::1??6 @;>4777
hat a&ount o# )ash %as )o**e)te! #o& )usto&es !uin- 1??62
a, 5@BB4777
", 5@;B4777
), 5@;14777
!, 5@?14777
18;, Peot Co(, e(ote! the #o**o%in- in#o&ation in its annua*
e(ot
#o 1??6,
Cash #*o%s #o& o(eatin- a)ti$ities 5 <>14777
A!!itions to (o(et'4 (*ant an! equi(&ent 11B4777
Po)ee!s #o& !is(osa*s o# (o(et'4 (*ant
an! equi(&ent 6B4777
Tota* (a'&ents e+(e)te! to etie *on-:te&
!e"t o$e the ne+t 6 'eas 1674777
hat is Peot=s )ash #*o% a!equa)' atio #o 1??62
a, >,B7
", 1,B8
), ;,B7
!, 8,;7
PAGE
@?
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
Use the se*e)te! !ata #o& the #inan)ia* state&ents o# Ge)o
Co(, (esente! "e*o% to ans%e the #o**o%in- set o#
questions,
1??6 1??8
:::::::: ::::::::
A))ounts e)ei$a"*e 5 @74777 5 @64777
Me)han!ise in$ento' 6<4777 8;4777
Tota* assets <174777 1?74777
Net sa*es 6774777 8674777
Cost o# -oo!s so*! <;74777 <>14777
18?, hi)h o# the #o**o%in- %ou*! esu*t #o& a $eti)a* ana*'sis o#
the
"a*an)e sheet2
a, A))ounts e)ei$a"*e !e)ease! 564777 o 18,<? !uin- 1??6,
", Me)han!ise in$ento' in)ease! 584777 o B,>? !uin- 1??6,
), A))ounts e)ei$a"*e ae 16,77 o# tota* assets #o 1??6,
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!, Me)han!ise in$ento' is <8,B> o# tota* assets #o 1??6,
167, hi)h o# the #o**o%in- esu*ts in a tota* !o**a &easue o#
*iqui!it'2
a, o.in- )a(ita*
", Cuent atio
), Cash #*o% #o& o(eations to )uent *ia"i*ities atio
!, A))ounts e)ei$a"*e tuno$e
PAGE
87
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
Use the se*e)te! !ata "e*o% #o& the #inan)ia* state&ents o#
Cosi)a Co(, to ans%e the #o**o%in- set o# questions,
1??6 1??8
:::::::: ::::::::
Cash 5 164777 5 <74777
A))ounts e)ei$a"*e @64777 @<4777
Me)han!ise in$ento' <;4777 <84777
Pe(ai! e+(enses @4777 <4777
:::::::: :::::::
Tota* )uent assets 5 ;14777 5 B;4777
Tota* )uent *ia"i*ities @74777 <>4777
Net sa*es 8<74777 @;74777
Cost o# -oo!s so*! <6<4777 <@;4777
Net )ash in#*o% #o& o(eatin-
a)ti$ities 8<4777 @>4777
161, The a))ounts e)ei$a"*e tuno$e #o 1??6 is
a, 11,8@ ti&es
", 11,B> ti&es
), 1<,77 ti&es
!, 1<,68 ti&es
16<, hi)h (o#ita"i*it' atio equies the use o# the eanin-s (e
shae
atio an! the )uent &a.et (i)e o# )o&&on sto). to "e)a*)u*ate!2
a, Retun on sto).ho*!es= equit'
", 0i$i!en! (a'out atio
), 0i$i!en! 'ie*! atio
!, Pi)e:eanin-s atio
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81
UNIVERSITY OF ILLINOIS AT CHICAGO
SAMPLE FINANCIAL ACCOUNTING QUESTIONS
ACCOUNTING QUALIFICATION EKAMINATION
Pesente! "e*o% ae se*e)te! !ata #o& the #inan)ia*
state&ents o# Siou+ Co&(an' #o 1??6 an! 1??8, Use this
!ata4 an! the a!!itiona* in#o&ation (o$i!e!4 to ans%e the
#o**o%in- set o# questions,
1??6 1??8
:::::::: ::::::::
Tota* assets 5?674777 5;674777
Pe#ee! sto). 567 (a 1774777 1774777
Co&&on sto). 517 (a <674777 <774777
Pai!:in )a(ita* in e+)ess o#
(a::)o&&on sto). 1;74777 1<74777
Retaine! eanin-s 1174777 ;74777 Net sa*es ;774777 B774777
Cost o# -oo!s so*! 8?>4777 8<B4777
Inteest e+(ense ;4777 ;4777
Net in)o&e 8;4777 @<4777
Cash !i$i!en!s (ai! on (e#ee! sto). >4777 >4777
A!!itiona* in#o&ation
:::::::::::::::::::::::
a The in)o&e ta+ ate #o "oth 'eas %as 87,
" Tota* assets at the en! o# 1??@ %ee 5;774777,
) Tota* )o&&on sto).ho*!es= equit' at the en! o# 1??@ %as
5@B74777,
16@, hi)h o# the #o**o%in- state&ents is FALSE 2
a, The -oss (o#it atio in)ease! !uin- 1??6,
", The (o#it &a-in atio in)ease! !uin- 1??6,
), The )ost o# -oo!s so*! (e)enta-e !e)ease! !uin- 1??6,
!, ase! on the ten!s in (o#its an! )ost o# -oo!s so*!4 it
a((eas
that o(eatin- e+(enses !e)ease!,
168, hi)h o# the #o**o%in- atios is &ost *i.e*' to "e s(e)i#ie! in a
!e"t
)o$enant equiin- a!equate *iqui!it' to "e &aintaine!2
a, 0e"t:to:equit' atio ", qui). atio
), asset tuno$e atio
!, eanin-s (e shae
166, hi)h o# the #o**o%in- atios is i&&e!iate*' a##e)te! "' a sto).
e(u)hase2
a, Asset tuno$e atio
", !e"t:to:equit' atio
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), -oss (o#it atio
!, in$ento' tuno$e atio
) 1??> "' Ha)out a)e 9 Co&(an', A** i-hts ese$e!,
Sample Questions:Examination No. #1
1. According to the FAS conceptual !ramewor" the process o! reporting an item in
the !inancial statements o! an entit$ is
". "llocation.
-. 8atching.
0. +ealization.
/. +ecognition
%. &n the hierarch$ o! generall$ accepted accounting principles A' (pinions ha)e
the same authorit$ as A&*'A
". Statements of osition.
-. ndustry "udit and "ccounting ?uides.
0. ssues apers.
/. "ccounting +esearch -ulletins.
+. (ne o! the elements o! a !inancial statement is comprehensi)e income.
*omprehensi)e income excludes changes in e,uit$ resulting !rom which o! the!ollowing-
". @oss from discontinued operations.
-. rior period error correction.
0. /ividends paid to stockholders.
/. *nrealized loss on investments in noncurrent marketable equity securities.
. nder Statements o! Financial Accounting *oncepts which o! the !ollowing
relates to 0oth rele)ance and relia0ilit$-
". 'imeliness.
-. 1eutrality.
0. 9eedback value.
/. 0onsistency.
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. According to the FAS conceptual !ramewor" comprehensi)e income includes
which o! the !ollowing-
2ross margin (perating income
". 1o 1o
-. 1o Aes
0. Aes Aes
/. Aes 1o
3. 4eporting in)entor$ at the lower o! cost or mar"et is a departure !rom the
accounting principle o!
". Bistorical cost.
-. 0onsistency.0. 0onservatism.
/. 9ull disclosure.
;. 5artin *ompan$ had the !ollowing account 0alances !or the $ear ended
6ecem0er +1 177+:
&nterest expense. . . . . . . . . . . . . . . . . . . . . . . . 81%9999
oss on disposal
o! noncurrent in)estment . . . . . . . . . . . . . . . . .;9999
<ritedown o! plant and e,uipment to estimated reali=a0le )alue. . . . . . . . . . . . . . .39999
&n its income statement !or 177+ how much should 5artin report as total
extraordinar$ items-
". 46
-. 4!&6,666
0. 4!=6,666
/. 4$66,666
;. <hen a segment o! a 0usiness has 0een discontinued during the $ear the gain or
loss on disposal should
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". -e an etraordinary item.
-. Eclude operating losses during the phase(out period.
0. nclude operating losses of the current period up to the measurement date.
/. -e net of applicable income taes.
7. 5ilton *o. 0egan operations on >anuar$ 1 17;7. (n >anuar$ 1 1771 5ilton
changed its in)entor$ method !rom &F( to F&F( !or 0oth !inancial and income tax
reporting. &! F&F( had 0een used in prior $ears 5ilton?s in)entories would ha)e
0een higher 0$ 839999 and 89999 at 6ecem0er 1 1771 and 1779 respecti)el$.
5ilton has a +9@ income tax rate. <hat amount should 5ilton report as the
cumulati)e e!!ect o! this accounting change in its income statement !or the $ear
ended 6ecem0er +1 1771-
". 46
-. 4!&,666
0. 4$=,666
/. 4&$,666
19. *or$ *ompan$ ac,uired some machiner$ on >anuar$ % 177%. *or$ was using
straightline depreciation with an estimated li!e o! !i!teen $ears with no sal)age
)alue !or this machiner$. (n >anuar$ % 177B *or$ estimated that the remained li!e
o! this machiner$ was six $ears with no sal)age )alue. Cow should this change 0e
accounted !or 0$ *or$>
". 8aking a prior period adjustment and changing to an accelerated depreciationmethod that will compensate for underdepreciation in prior years.
-. Estimating the effects of the change on each year)s net earnings, but maintainingthe method of depreciation as originally determined.
0. +evising future depreciation per year to equal the book value on Canuary $, !::;,divided by si.
/. +evising future depreciation per year to equal the original cost divided by si.
11. olte *orp. had the !ollowing in!re,uent gains during l7;7:
8%19999 on reac,uisition and retirement o! 0onds 8 B999 on repa$ment at maturit$ o! a longterm note denominated in a !oreign
currenc$ 8%9999 on sale o! a plant !acilit$ Dolte continues similar operations at another
location.
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&n its 17;7 income statement what amount should olte report as total in!re,uent
gains which are not considered extraordinar$-
". 4&56,666
-. 4%!5,6660. 4$=5,666
/. 4$&6,666
1%. (n (cto0er 1 17 5ann *ompan$ appro)ed a !ormal plan to sell 5ill
6i)ision considered a segment o! the 0usiness. The sale will occur on 5arch +1
173. The di)ision had operating income o! 899999 !or the ,uarter ended
6ecem0er +1 17 0ut expects to incur an operating loss o! 8199999 !or the !irst
,uarter o! 173. 5ann also estimates that it will incur a loss o! 8B9999 on the sale
o! the di)ision?s assets. 5ann?s tax rate !or 17 is 9@. &n its income statement !or
the $ear ended 6ecem0er +1 17 how much should 5ann report as Goss ondiscontinued operationsG o! 5ill 6i)ision-
". 4$!6,666 loss.
-. 4!56,666 loss.
0. 4%56,666 loss.
/. 4566,666 gain.
1+. 6uring 17B 5oore *orp. had the !ollowing two classes o! stoc" issued and
outstanding !or the entire $ear:
H 199999 shares o! common stoc" 81 par. H 1999 shares o! @ pre!erred stoc" 8199 par con)erti0le share !or share into
common stoc".
5oore?s 17B net income was 8799999 and its income tax rate !or the $ear was
+9@. &n the computation o! 0asic earnings per share !or 17B the amount to 0e
used in the numerator is
". 4=:<,666
-. 4=:=,=66
0. 4:66,666
/. 4:6!,$66
1. The next two ,uestions are 0ased on the !ollowing data: &n!ormation relating to the capital structure o! 'ar"e *orporation is as !ollows:
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6ecem0er 179 171
(utstanding shares o!: *ommon stoc" 79999 79999 're!erred stoc"
con)erti0le into +9999 shares o! common +9999 +9999 19@ con)erti0le 0onds
con)erti0le into %9999 shares o! common 81999999 81999999
/uring !:D! arke paid 4&5,666 dividends on the preferred stock. arke)s net incomefor !:D! was 4:=6,666 and the income ta rate was &6.
9or the year ended /ecember %!, !:D!, the basic earnings per share is
". 4!6.=:
-. 4!6.%:
0. 4 =.!;
/. 4 ;.;:
1. For the $ear ended 6ecem0er +1 171 the diluted earnings per share is:
". 4:.=$
-. 4=.$:0. 4;.;!
/. 4;.&%
/, /, 0, /, 0, ", ", /, ", 0, -, -, ", -, /
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