practice 1
Q1. By understanding the time value of money concept, you know that:
○ Saving money can buy time on debt payment
○ It is better to receive $101 a year from now than $100 today
✔ It is better to receive $100 today than $101 a year from now
○ Time and money are related by due date
Q2. Which of the following elements are needed to determine the future value of money placed in a savings account for one year?
○ Interest rates and annual income
○ Late fees and insurance rates
○ Quarterly wages and principal amount
✔ Principal amount and interest rate
Q3. For an investment to yield positive results at the end of the investment period, the earnings should:
○ Be accrued on a debt security
○ Be documented appropriately
○ Grow by at least 10%
✔ Exceed the rate of inflation
Q4. Which of the following is an example of personal financial information?
○ Sales invoice
○ Expense report
○ Accounts payable record
✔ Pay stub
Q5. Which of the following is an example of business-related financial information?
○ School-loan document
○ Sales receipt from purchasing a new mattress
○ Pay stub
✔ Accounts receivable record
Q6. In its raw state, financial data aren’t very helpful. To be useful to businesses, financial data need to be:
✔ Gathered and organized in some way
○ Listed in order of size from smallest to largest
○ Formatted in HTML
○ Inserted into a spreadsheet
Q7. Useful financial information is understandable to:
○ Everyone
○ Anyone with a background in finance
○ Accountants and managers
✔ Anyone who needs to use it
Q8. “Jargon” is a term used to describe specialized language. Financial info that contains jargon would:
○ Be considered complete
○ Be considered neutral
✔ Not be considered understandable
○ Not be considered relevant
Q9. For financial information to be relevant, it must also be:
○ Digital
○ Perfect
○ Certified by an auditor
✔ Timely
Q10. Which of the following would be most relevant when a business wants to buy new machinery?
○ How much money the company spent on machinery five years ago
○ The current salaries of top executives
○ The amount spent by a competing company
✔ The amount of money left in the budget for the fiscal year
Q11. For financial information to be reliable, it must also be:
✔ Complete
○ Relevant
○ Understandable
○ Biased
Q12. If a business wants to prepare reliable financial reports, it must be:
○ Partial
✔ Neutral
○ Supervised
○ Certified
Q13. Financial information that is ___________ conforms to specific processing standards.
○ Understandable
○ Comparable
✔ Reliable
○ Relevant
Q14. For financial information to be comparable, it must also be:
○ Current
○ Private
✔ Consistent
○ Digital
Q15. There may be more than one acceptable way to record and organize financial information, but it's important to:
○ Create your own accounting standards
✔ Do it the same way every time
○ Make sure competitors don’t find out about it
○ Keep all paper copies of receipts
Q16. In business, the most important application of financial information is:
○ Getting to know the target market
○ Trend identification
✔ Business decision-making
○ Determining salaries
Q17. A business sees it can save money by switching internet providers. This is an example of:
○ Increase sales
✔ Reduce expenses
○ Create a budget
○ Plan business expansion
Q18. A retail business checks if it can afford to add a new product. This is an example of:
○ Reduce expenses
○ Check on the competition
○ Manage debt
✔ Increase sales
Q19. Businesses use financial information to create and adjust:
○ Mission statements
○ Accounting standards
✔ Budgets
○ Trends
Q20. A business uses surplus cash to pay off a loan early. This is an example of:
✔ Manage debt
○ Make purchases
○ Increase sales
○ Create budgets
Q21. Before signing a contract, businesses review financial info to ensure payment terms are acceptable. This shows they use financial info to:
✔ Enter into legal agreements
○ Make purchases
○ Boost profitability
○ Increase sales
Q22. A business expected to reduce expenses by 4% but only managed 2%. This is an example of:
○ Manage debt
○ Acquire new businesses
✔ Monitor ongoing business activities
○ Boost profits
Q23. Why might a business look at financial information from another company?
○ To determine how to increase sales
○ To monitor their company’s ongoing business activities
○ To manage their company’s debt
✔ To see how their company compares to the competition
Q24. The process of keeping the financial records of a business is known as:
○ Financing
✔ Accounting
○ Bookkeeping
○ Controlling
Q25. The overall purpose of accounting is to:
✔ Control the finances of the business
○ Compile the business’s expenses
○ Keep track of sales
○ Maintain accurate reports
Q26. Why are accurate accounting records important to a business?
○ They give the business an image of success
✔ They show how the business is doing
○ They increase the return on investments
○ They prevent any financial losses
Q27. Which of the following groups makes regular use of a business’s managerial accounting information:
✔ Supervisors
○ Creditors
○ Customers
○ Investors
Q28. A creditor is most likely to examine a business’s financial accounting records if the business is:
○ Complying with regulations
○ Using cash accounting
○ Selecting a new market
✔ Applying for a bank loan
Q29. The government studies business accounting reports mainly to:
○ Decide if funds are available for pay raises
○ Determine creditworthiness
○ Search for profitable investments
✔ Identify trends in the industry
Q30. For an accounting system to be useful, the accounting information must be:
○ Posted by an accountant
○ Approved by the CEO
✔ Accurate and up to date
○ Recorded using the accrual method
Proceeding with Q31–Q35.
Here are questions Q31–Q35 in Kahoot-style format:
Q31. Which of the following is a requirement for a good accounting system:
○ It should be updated annually
✔ It should provide needed information quickly
○ It should eliminate the need for an accountant
○ It should be replaced every two or three years
Q32. Two employees stole $50,000 by changing records. What did the accounting system lack?
○ A manual system as backup
✔ Protection from theft and fraud
○ Printed financial statements
○ An affordable price
Q33. Checks, receipts, invoices, and purchase orders are examples of:
○ Accounting standards
○ Department ledgers
✔ Source documents
○ Financial statements
Q34. What accounting method would a small business without credit most likely use?
✔ Cash method
○ Accrual method
○ Check method
○ COD method
Q35. What accounting method would a large business with many charge accounts use?
○ Cash method
✔ Accrual method
○ Check method
○ COD method
Continuing with Q36–Q40.
Here are questions Q36–Q40 in Kahoot-style format:
Q36. Accounting records show $125,000 in total sales: $50,000 cash and $75,000 credit. This is an example of:
○ Classifying financial information
○ An income statement
✔ The accrual method of accounting
○ The cash accounting method
Q37. Which of the following is a true statement:
○ Bookkeeping does not use computers
✔ Bookkeeping records business transactions
○ Bookkeeping is the same as accounting
○ Bookkeeping is limited to information on sales
Q38. Which of the following presents the first three steps in the accounting cycle in the correct order:
○ Post, analyze, and journalize
○ Post, journalize, and analyze
○ Analyze, post, and journalize
✔ Analyze, journalize, and post
Q39. What makes comparisons of the financial conditions at multiple organizations possible?
○ Source documents
○ Bookkeeping
✔ Accounting standards
○ Trial balance
Q40. Which of the following categories of information are found on a balance sheet?
✔ Assets, liabilities, owner’s equity
○ Income, expenditures, profit
○ Revenues, expenses, profit
○ Assets, liabilities, margin
Now continuing with Q41–Q45.
Here are questions Q41–Q45 in Kahoot-style format:
Q41. A bank denies credit due to high debts. Which report did it most likely review?
○ Income statement
✔ Balance sheet
○ Operating budget
○ Budget
Q42. What accounting record would summarize a business’s profit or loss for a previous year?
○ Bank statement
○ Inventory record
✔ Income statement
○ Balance sheet
Q43. Which financial report provides estimates of when, where, and how much money will move in/out of a business?
✔ Cash flow statement
○ Income statement
○ Bank statement
○ Balance sheet
Q44. What is the purpose of ethics?
○ Ethics are punishments for those who make mistakes
○ Ethics prevent problems from occurring
✔ Ethics help people know how to do what is right
○ Ethics are a substitute for rules and laws
Q45. Which of the following is an example of a task performed by a managerial accountant?
○ Purchasing
○ Auditing
✔ Developing budgets
○ Creating balance sheets
Next up: Q46–Q50.
Here are questions Q46–Q50 in Kahoot-style format:
Q46. Financial accountants provide information primarily to:
✔ Investors
○ Suppliers
○ Competitors
○ Employees
Q47. Being ethical is especially critical for those who provide __________ and handle __________.
✔ Important services; sensitive information
○ Marketing data; clients
○ Documents; medical information
○ Advice; legal matters
Q48. Which is most likely to happen if a business neglects its financial information?
○ Competitors will perform better
○ The target market might not be reached
○ Salespeople might not be prepared
✔ A business might exceed its budget
Q49. Ethics help __________ the roles and responsibilities of all accountants.
○ Integrate
✔ Standardize
○ Differentiate
○ Minimize
Q50. What is the relationship between ethics and decision-making?
○ Ethical principles often conflict with the right decision
○ Ethics make decision-making difficult
✔ Ethics are a framework for good decision-making
○ Decision-making helps form ethical principles
Now working on Q51–Q55.
Here are questions Q51–Q55 in Kahoot-style format:
Q51. Why should a company’s stakeholders care about ethical accounting practices?
✔ Ethics limit stakeholders’ exposure to risk
○ Ethics challenge stakeholders to perform better
○ Ethics ensure that the company will be profitable
○ Only unethical stakeholders lose money
Q52. Which example demonstrates the relationship between ethics and efficiency?
✔ A company’s code of ethics helps accountants respond to dilemmas quickly
○ Accountants who follow ethics save time because they never make mistakes
○ Efficient business practices always lead to ethical behavior
○ A company wastes hours of paid time reviewing ethical guidelines
Q53. If an accountant decides to “fudge the numbers” in a financial statement,
○ The accountant is practicing due care
○ The company will lose efficiency
○ The company’s stocks will perform better
✔ The accountant is breaking the law
Q54. If an accountant keeps accurate financial records, their company is likely to:
○ Struggle with decision-making
○ Guarantee a profit
✔ Develop smarter business plans
○ Commit tax evasion
Q55. Bethany left her accountant after unethical behavior. This shows how:
○ Accountants cannot control customer satisfaction
○ Customers control a company’s ethical policies
✔ Ethics affect customer loyalty
○ Ethics reduce legal liability
Now moving on to Q56–Q60.
Here are questions Q56–Q60 in Kahoot-style format:
Q56. To figure out what ethics look like in different situations, accountants should look to:
○ Their managers
○ Rules
○ Laws
✔ A code of ethics
Q57. Accountants must take ownership of their roles. This illustrates the ethical principle of:
○ Transparency/full disclosure
○ The public interest
✔ Responsibility
○ Confidentiality
Q58. Evelyn refuses to overstate earnings despite being told to. She is showing:
✔ Integrity
○ Objectivity/independence
○ Transparency/full disclosure
○ Confidentiality
Q59. Which is an example of transparency/full disclosure?
✔ Tristan adds notes to financial statements explaining a policy
○ Russell completes his financials on time and accurately
○ Company sends accountants to conferences
○ Firm avoids hiring someone due to client conflict
Q60. Which ethical principle means striving to improve and do the best you can?
✔ Due care
○ Confidentiality
○ Objectivity/Independence
○ Responsibility
Q61. Marty works for a firm that just took on his father’s former employer. Marty is risking his:
○ Integrity
○ Due care
✔ Objectivity/independence
○ Confidentiality
Q62. Tatiana learns of a company merger while preparing the budget. To stay ethical, she should:
○ Make sure the merger benefits the public interest
✔ Keep this information confidential
○ Report this to the SEC
○ Maintain her independence
Q63. An accountant should consider how their work affects society. This shows the ethical principle of:
○ Confidentiality
○ Integrity
✔ The public interest
○ Objectivity/independence