TCA 321 TEST #1 QUESTIONS WITH VERIFIED SOLUTIONS LATEST UPDATE 2026

TCA 321 TEST #1 QUESTIONS WITH VERIFIED SOLUTIONS LATEST UPDATE 2026 The income statement is for a point in time. - Answers False Which is not a current liability? a. Prepaid Marketing b. Advance Deposits c. Current portion of long-term debt d. Accounts payable - Answers Prepaid Marketing In accounting what the company owns is called ___________? a. Liabilities b. Assets c. Owners Equity d. Stuff - Answers Assets In a hotel department, what is generally the largest expense to a firm? a. Amenities Expense b. Cost of Goods Sold c. Payroll Expense d. Sales Tax - Answers Payroll Expense Food cost of good sold is listed on which section of an income statement? a. Undistributed Expenses b. Departmental (Direct) Expenses c. Fixed Charges d. Revenue - Answers Departmental (Direct) Expenses Which of the following branches of accounting is often limited to preparing and distributing financial reports? a. Managerial Accounting b. Auditing c. Financial Accounting d. Cost Accounting - Answers Financial Accounting Which of the following statements about accrual basis accounting is true? a. Accrual basis accounting is used only by small hospitality businesses. b. Accrual basis accounting generally requires that several adjusting entries be recorded at the end of the accounting period. c. Accrual basis accounting is reflected on the statement of cash flows. d.Accrual basis accounting allows a business to show greater profits than cash basis accounting. - Answers Accrual basis accounting generally requires that several adjusting entries be recorded at the end of the accounting period. Which of the following financial statements reflects the financial position of the hospitality operation for a period of time? a. Income Statement b. Balance Sheet c. Statement of Cash Flows d. Statement of Retained Earnings/Owners Equity e. A, C, and D f. A and c g. All of the above - Answers A, C, and D Which branch of accounting is concerned with revenues, expenses, assets, and liabilities? a. Auditing b. Cost c. Tax d. Managerial e. Financial - Answers Financial The hotel building would be classified on a firm's balance sheet as: a. an investment. b. a current liability. c. other assets. d. property and equipment. - Answers property and equipment. What does paid occupancy percentage measure? a. the proportion of available rooms that has actually been sold b. the proportion of total rooms that is actually available for sale c. the amount of revenue generated per available room d. the number of rooms available - Answers the proportion of available rooms that has actually been sold Which of the following types of ratios reveals the ability of a hospitality business to meet its long-term obligations? a. Liquidity Ratios b. Activity ratios c. Profitabilty Ratios d. Solvency Ratios - Answers Solvency Ratios Which type of income statement analysis sets total revenue at 100%? a. Horizontal analysis b. Base year analysis c. Ratio analysis d. Vertical analysis - Answers Vertical analysis If your company has assets of $1,000,000 and owners equity of $280,000, how much in liabilities does it have? a. $1,000,000 b. $280,000 c. $720,000 d. $1,280,000 - Answers $720,000 Which type of financial statement analysis sets all accounts for a beginning period at 100%? a. Ratio analysis b. Vertical analysis c. Base year analysis d. Horizontal analysis - Answers Base year analysis Which of the following statements about ratio analysis is true? a. A and D b. Managers, creditors, and investors have the same purposes in using ratio analysis. c. Ratios are always expressed as percentages. d. Ratio analysis determines the causes of variances between planned goals and actual results. e. As part of a loan agreement, creditors may require hospitality businesses to maintain specific ratio standards. - Answers As part of a loan agreement, creditors may require hospitality businesses to maintain specific ratio standards. At the end of Year 1, the income statement for the Roadside Inn showed net income at $50,000. At the end of Year 2, the income statement showed $100,000 in net income. A comparative analysis of the income statements would show the relative difference between the two years as: a. $20,000 b. 100% c. $50,000 d. 50% - Answers 100% Which of the following would be found on a hotel's income statement under Undistributed Operating Expenses? a. Front Desk Payroll b. Income Before Taxes c. Insurance d. Administrative and General Expenses e. Rooms revenue - Answers Administrative and General Expenses At the end of 2012, the balance sheet for your company showed inventory of $120,000 and total assets of $2,500,000. At the end of 2013, the balance sheet showed $140,000 in inventory and total assets of $2,800,000. A horizontal analysis of the balance sheet would show the realtive difference of what for inventory? a. $300,000 b. 5% c. 16.67% d. $20,000 - Answers 16.67% What is the fundamental accounting equation? a. Liabilities = Assets + Owners Equity b. Assets = Liabilities + Owners Equity c. Assets = Liabilities d. Assets = Liabilities - Owners Equity - Answers Assets = Liabilities + Owners Equity In which of the following forms of business organization do all owners have limited liability for the debts of the business? a. Sole Proprietorship b. Partnership c. Limited Partnership d. Corporation - Answers Corporation Which accounting principle requires that companies provide sufficient financial information to users beyond just financial statements? a. Materiality b. Matching c. Footnote