2026/2027
ACG 2021 Accounting Principles Final
Exam Study Guide 2026/2027 for Florida
International University (FIU) – Detailed
Review, Test Bank Practice, and Quiz
Preparation Manual
Question 1:
Which of the following best describes the three main factors that contribute to
fraudulent activity in an organization?
A. Pressure, opportunity, and rationalization
B. Supervision, control, and auditing
C. Error, negligence, and oversight
D. Policy, procedure, and compliance
Correct Answer: A. Pressure, opportunity, and rationalization
Rationale: Fraud occurs when an individual experiences financial or personal pressure,
identifies an opportunity due to weak internal controls, and justifies the dishonest
behavior through rationalization. The other options describe organizational processes
but not the fraud triangle components.
Question 2:
The Sarbanes-Oxley Act primarily requires corporations to:
A. Reduce employee salaries
B. Maintain strong internal control systems with continuous monitoring
C. Eliminate external audits
D. Increase product pricing
Correct Answer: B. Maintain strong internal control systems with continuous
monitoring
Rationale: The Sarbanes-Oxley Act was established to improve corporate
accountability by requiring companies to maintain effective internal controls and
ensure financial transparency. It also involves oversight by auditors. The other options
are unrelated to its purpose.
,2026/2027
Question 3:
Accounts receivable are reported on the balance sheet at:
A. Historical cost
B. Net realizable value
C. Market value
D. Replacement cost
Correct Answer: B. Net realizable value
Rationale: Accounts receivable are reported at net realizable value, which is the
expected cash to be collected after deducting allowances for doubtful accounts. Other
valuation methods do not reflect expected collectible amounts.
Question 4:
The allowance for doubtful accounts is reported on the balance sheet as:
A. An addition to assets
B. A deduction from accounts receivable
C. A liability
D. Revenue reduction
Correct Answer: B. A deduction from accounts receivable
Rationale: The allowance for doubtful accounts reduces gross receivables to reflect
expected uncollectible amounts. It is a contra-asset account, not a liability or revenue
adjustment.
Question 5:
Which statement about national credit cards is incorrect?
A. Merchants receive cash from credit card companies
B. Credit card sales reduce cash handling risks
C. Retailers receive more cash than cash sales
D. Credit cards involve service fees
Correct Answer: C. Retailers receive more cash than cash sales
Rationale: Retailers actually receive less due to processing fees. The other statements
are correct advantages or characteristics of credit card transactions.
Question 6:
, 2026/2027
A note receivable is best described as:
A. Informal credit agreement
B. Formal written promise to pay with interest
C. Oral agreement
D. Expense account
Correct Answer: B. Formal written promise to pay with interest
Rationale: A note receivable is a legally binding document requiring repayment of
principal plus interest, unlike accounts receivable which are informal.
Question 7:
Accounts receivable are recognized when:
A. Cash is received
B. Goods are ordered
C. Service is provided on credit
D. Payment is delayed
Correct Answer: C. Service is provided on credit
Rationale: Revenue and receivables are recognized when services are performed on
account, even if cash is not yet received.
Question 8:
On maturity, a 90-day note receivable will include:
A. Only principal
B. Principal minus interest
C. Principal plus accrued interest
D. Only interest
Correct Answer: C. Principal plus accrued interest
Rationale: At maturity, the borrower repays both principal and interest accumulated
over the 90-day period.
Question 9:
Which is NOT a basic issue in accounting for notes receivable?
ACG 2021 Accounting Principles Final
Exam Study Guide 2026/2027 for Florida
International University (FIU) – Detailed
Review, Test Bank Practice, and Quiz
Preparation Manual
Question 1:
Which of the following best describes the three main factors that contribute to
fraudulent activity in an organization?
A. Pressure, opportunity, and rationalization
B. Supervision, control, and auditing
C. Error, negligence, and oversight
D. Policy, procedure, and compliance
Correct Answer: A. Pressure, opportunity, and rationalization
Rationale: Fraud occurs when an individual experiences financial or personal pressure,
identifies an opportunity due to weak internal controls, and justifies the dishonest
behavior through rationalization. The other options describe organizational processes
but not the fraud triangle components.
Question 2:
The Sarbanes-Oxley Act primarily requires corporations to:
A. Reduce employee salaries
B. Maintain strong internal control systems with continuous monitoring
C. Eliminate external audits
D. Increase product pricing
Correct Answer: B. Maintain strong internal control systems with continuous
monitoring
Rationale: The Sarbanes-Oxley Act was established to improve corporate
accountability by requiring companies to maintain effective internal controls and
ensure financial transparency. It also involves oversight by auditors. The other options
are unrelated to its purpose.
,2026/2027
Question 3:
Accounts receivable are reported on the balance sheet at:
A. Historical cost
B. Net realizable value
C. Market value
D. Replacement cost
Correct Answer: B. Net realizable value
Rationale: Accounts receivable are reported at net realizable value, which is the
expected cash to be collected after deducting allowances for doubtful accounts. Other
valuation methods do not reflect expected collectible amounts.
Question 4:
The allowance for doubtful accounts is reported on the balance sheet as:
A. An addition to assets
B. A deduction from accounts receivable
C. A liability
D. Revenue reduction
Correct Answer: B. A deduction from accounts receivable
Rationale: The allowance for doubtful accounts reduces gross receivables to reflect
expected uncollectible amounts. It is a contra-asset account, not a liability or revenue
adjustment.
Question 5:
Which statement about national credit cards is incorrect?
A. Merchants receive cash from credit card companies
B. Credit card sales reduce cash handling risks
C. Retailers receive more cash than cash sales
D. Credit cards involve service fees
Correct Answer: C. Retailers receive more cash than cash sales
Rationale: Retailers actually receive less due to processing fees. The other statements
are correct advantages or characteristics of credit card transactions.
Question 6:
, 2026/2027
A note receivable is best described as:
A. Informal credit agreement
B. Formal written promise to pay with interest
C. Oral agreement
D. Expense account
Correct Answer: B. Formal written promise to pay with interest
Rationale: A note receivable is a legally binding document requiring repayment of
principal plus interest, unlike accounts receivable which are informal.
Question 7:
Accounts receivable are recognized when:
A. Cash is received
B. Goods are ordered
C. Service is provided on credit
D. Payment is delayed
Correct Answer: C. Service is provided on credit
Rationale: Revenue and receivables are recognized when services are performed on
account, even if cash is not yet received.
Question 8:
On maturity, a 90-day note receivable will include:
A. Only principal
B. Principal minus interest
C. Principal plus accrued interest
D. Only interest
Correct Answer: C. Principal plus accrued interest
Rationale: At maturity, the borrower repays both principal and interest accumulated
over the 90-day period.
Question 9:
Which is NOT a basic issue in accounting for notes receivable?
