CLEP Financial Accounting: Study Guide & Test Prep Final Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. An antiques dealer would most likely use which method for inventory valuation and cost of goods sold?

Question 2 2. A machine is purchased for $10,000. It has an estimated life of five years and 2,000 machine hours with no residual value. It will be depreciated by the units of production method. How much is the depreciation for year 1 when it runs for 500 hours?

Question 3 3. In a period of rising prices, which of the following methods results in the highest inventory valuation?

Question 4 4. An increase in which of these items will also cause an increase in equity?

Question 5 5. Suppose sales = $10,000, beginning inventory = $2,000, purchases = $3,000, end inventory = $1,500 and operating expenses are $2,000. How much is net income?

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Question 6 6. Which of the following equals the total equity of a company?

Question 7 7. How would depreciation expense be shown when using the indirect method for the statement of cash flows?

Question 8 8. What is the term for entries that reduce revenues, expenses, and dividends to zero for the next accounting period?

Question 9 9. A company signs a $5,000 note on Jan 1. If the interest rate is 5%, what is the accrued interest on March 31?

Question 10 10. Jones company issues $10,000,000 of bonds on Jan 1, and the cash proceeds are $9,500,000. Which of the following is true about the bonds?

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Question 11 11. Which ratio determines how quickly a form collects cash on its credit sales?

Question 12 12. Smith Co has 20,000 shares authorized and 15,000 issued. 1,000 shares are treasury stock. If a $1.00 per share dividend is declared, how much is the total cash dividend?

Question 13 13. A company buys a patent that is good for 17 years for $150,000. The remaining legal life is 8 years and the company believes it's useful life will be 5 years. How much of the assets price is expensed in year 1?

Question 14 14. Which of the following statements offers the BEST explanation of contingent liabilities?

Question 15 15. Bob is an investor. Bob knows Steve who is the CEO of XYZ Technologies. Steve is offering to sell Bob a bond worth $50,000. The sales price of the bond is $60,000. The bond will have coupon interest payments of $7,000 for 10 years until it reaches maturity. If Bob purchased this bond, what would he be doing?

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Question 16 16. The interest rate of a bond decreases. What might a bond holder do at that point?

Question 17 17. Which of the following is true about a bond issuer?

Question 18 18. How is a bull market best described?

Question 19 19. Gomez's Grocery has run out of a fast selling salsa product. Gomez hates losing business, so he calls his wholesaler and orders three cases for overnight delivery. The added cost he pays for overnight delivery is a (an) _____ cost.

Question 20 20. Gomez's Grocery makes a standard order of salsa every month. He buys it from a grocery wholesaler at a list price of $75 per case. His standard order is 5 cases which gets him a trade discounts of 20% for ordering more than 3 cases. Gomez also takes advantage of a 3% purchase discount for paying the bill within 10 days. The cases cost a $30 flat rate to ship by truck. What is the final cost of Gomez salsa order?

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Question 21 21.

Which of the following terms fits this definition?

For every transaction that occurs in a business at least two accounts are affected.

Question 22 22. When Carly's Clothing has merchandise in her store for sale that she is selling on commission for the clothing maker, the goods _____.

Question 23 23. Which of the following accounts are debited in a credit sale?

Question 24 24. You have invested $30,000 of your money into your company. In what part of the financial statements would you find this information?

Question 25 25. Monica reads in the newspaper that in the year ended December 31, 2015, Profit For Two Inc made $1 million profit. Monica wants to confirm for herself that this is really the case. What financial statement of Profit For Two Inc should Monica read to confirm the newspaper report?

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Question 26 26. Which of the following would be the most significant contribution of technology to accounting?

Question 27 27. While auditing a company, you find that several of its employees are not satisfied with their jobs. You decide not to write this in the report because of which of the following reasons?

Question 28 28. Adam wants to find out the assets and liabilities of a company. Which financial statement should Adam read to find out this information?

Question 29 29. Examining the source documents is the _____ step in the accounting cycle.

Question 30 30. There are five basic _____ which are calculated using information found in the balance sheet and income statement that are measures of the productivity and efficiency of a business.

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Question 31 31. Which of the following is NOT a current asset for Brenda's Bake Shoppe?

Question 32 32. Which of the following accounts has balance increases when it is debited and balance decreases when it is credited?

Question 33 33. Return on Assets measures how well a company uses its assets to generate _____.

Question 34 34. To deliberately omit or misstate financial information with the intent of deceiving investors and creditors is _____.

Question 35 35. Where would a worker most likely find a list of internal controls for your company?

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Question 36 36. What is the term for balancing a company's cash account to its bank account?

Question 37 37. Procedures that are put in place within an organization to ensure business is carried out in an orderly, effective and accurate manner are called _____.

Question 38 38. What is the law that protects investors from fraudulent accounting activity?

Question 39 39. What are events that occurred after the date on the balance sheet but before the financial statements have been issued called?

Question 40 40. What is a liability that has not yet occurred but the conditions are favorable that it will occur called?

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Question 41 41. Which of the following would be a cash outflow operating activity for a small healthcare manufacturer?

Question 42 42. The Widget Company is changing the way it does its accounting. They used to report revenue only when the money was received, but now they will report it once an order is made. How will this show in the notes?

Question 43 43. What are the rules and regulations that must be followed when reporting all financial data?

Question 44 44. Account adjustments are a result of _____.

Question 45 45. The report that lists all the accounts of a company and their balances after all adjustments and closing entries have been made is called the _____.

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Question 46 46. Which financial statement details dividends, retained earnings, and current retained earnings?

Question 47 47. The method of accounting that recognizes revenue when it is earned and expenses when they are incurred is called:

Question 48 48. What are expenses incurred in one accounting period but not paid until another?

Question 49 49. How do you report a loss at the early retirement of a bond?

Question 50 50. Which is an non-harmful cause for differences between the bank account and the accounting paperwork?

CLEP Financial Accounting: Study Guide & Test Prep Final Exam Instructions

Choose your answers to the questions and click 'Next' to see the next question. You can skip questions if you would like and come back to them later with the "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. You will lose your work if you close or refresh this page. Good luck!

CLEP Financial Accounting: Study Guide & Test Prep  /  Business Courses