Question 1

In order for information to be relevant, it must be reported on a monthly basis.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following would not be classified as a long-term liability?

Accepted Answer

A) Current maturities of long-term debt 
B) Bonds payable 
C) Mortgage payable 
D) Lease liabilities 
A) Current maturities of long-term debt 
B) Bonds payable 
C) Mortgage payable 
D) Lease liabilities

Question 3

The subtotal net assets is used in

Accepted Answer

A) both GAAP and IFRS. 
B) GAAP but not IFRS. 
C) IFRS but not GAAP. 
D) neither IFRS nor GAAP. 
A) both GAAP and IFRS. 
B) GAAP but not IFRS. 
C) IFRS but not GAAP. 
D) neither IFRS nor GAAP.

Question 4

Working capital is

Accepted Answer

A) calculated by dividing current assets by current liabilities. 
B) used to evaluate a company's liquidity and short-term debt paying ability. 
C) used to evaluate a company's solvency and long-term debt paying ability. 
D) calculated by subtracting current assets from current liabilities. 
A) calculated by dividing current assets by current liabilities. 
B) used to evaluate a company's liquidity and short-term debt paying ability. 
C) used to evaluate a company's solvency and long-term debt paying ability. 
D) calculated by subtracting current assets from current liabilities.

Question 5

N3 Corporation has assets of $4,200,000, common stock of $1,092,000, and retained earnings of $665,000. What are the creditors' claims on their assets?

Accepted Answer

A) $3,773,000 
B) $1,757,000 
C) $2,443,000 
D) $4,627,000 
A) $3,773,000 
B) $1,757,000 
C) $2,443,000 
D) $4,627,000

Question 6

Solvency ratios measure the ability of a company to survive over a short period of time.

Accepted Answer

A) True 
 B)False

Question 7

A liquidity ratio measures the

Accepted Answer

A) income or operating success of a company over a period of time. 
B) ability of a company to survive over a long period of time. 
C) short-term ability of a company to pay its maturing obligations and to meet unexpected needs for cash. 
D) percentage of total financing provided by creditors. 
A) income or operating success of a company over a period of time. 
B) ability of a company to survive over a long period of time. 
C) short-term ability of a company to pay its maturing obligations and to meet unexpected needs for cash. 
D) percentage of total financing provided by creditors.

Question 8

The TNT Company has five plants nationwide that cost $300 million. The current fair value of the plants is $500 million. The plants will be reported as assets at

Accepted Answer

A) $200 million. 
B) $800 million. 
C) $300 million. 
D) $500 million. 
A) $200 million. 
B) $800 million. 
C) $300 million. 
D) $500 million.

Question 9

All of the following are qualities of useful information except

Accepted Answer

A) faithful representation. 
B) materiality. 
C) relevance. 
D) flexibility. 
A) faithful representation. 
B) materiality. 
C) relevance. 
D) flexibility.

Question 10

Under IFRS

Accepted Answer

A) comparative prior-period information must be presented, but financial statements need not be provided annually. 
B) comparative prior-period information must be presented, and financial statements must be provided annually. 
C) comparative prior-period information is not required, but financial statements need not be provided annually. 
D) comparative prior-period information is not required, but financial statements must be provided annually. 
A) comparative prior-period information must be presented, but financial statements need not be provided annually. 
B) comparative prior-period information must be presented, and financial statements must be provided annually. 
C) comparative prior-period information is not required, but financial statements need not be provided annually. 
D) comparative prior-period information is not required, but financial statements must be provided annually.

Question 11

K2 Corporation has assets of $3,600,000, common stock of $936,000, and retained earnings of $570,000. What are the creditors' claims on their assets?

Accepted Answer

A) $3,234,000 
B) $1,506,000 
C) $2,094,000 
D) $3,966,000 
A) $3,234,000 
B) $1,506,000 
C) $2,094,000 
D) $3,966,000

Question 12

Earnings available to common stockholders is equal to

Accepted Answer

A) total revenues 
B) net income + preferred dividends. 
C) preferred dividends - net income. 
D) net income - preferred dividends. 
A) total revenues 
B) net income + preferred dividends. 
C) preferred dividends - net income. 
D) net income - preferred dividends.

Question 13

The following information is available for Cooke Corporation: $$\begin{array} { | l | c | } 
\hline & \text { (in million) } \
\hline \text { Cash receipts from operating activities } & \$ 780 \
\hline \text { Cash payments from operating activities } & \$ 240 \
\hline \text { Net cash used by investing } & \$ 210 \
\hline \text { Net cash provided by financing } & \$ 750 \
\hline \text { Net increase in cash and equivalents } & ? \
\hline \text { Cash and equivalents at start of year } & \$ 550 \
\hline \text { Cash and equivalents at year-end } & ? \
\hline
\end{array}$$ What is the cash and equivalents amount at year-end?

Accepted Answer

A) $1,090 
B) $530 
C) $1,630 
D) $2,530 
A) $1,090 
B) $530 
C) $1,630 
D) $2,530

Question 14

Solvency ratios measure the short-term ability of the company to pay its maturing obligations.

Accepted Answer

A) True 
 B)False

Question 15

In general, the FASB indicates that most assets must follow the fair value principle.

Accepted Answer

A) True 
 B)False

Question 16

The debt to assets ratio is computed by dividing

Accepted Answer

A) long-term liabilities by total assets. 
B) long-term liabilities by average assets. 
C) total liabilities by total assets. 
D) total liabilities by average assets. 
A) long-term liabilities by total assets. 
B) long-term liabilities by average assets. 
C) total liabilities by total assets. 
D) total liabilities by average assets.

Question 17

Intangible assets are

Accepted Answer

A) listed directly under current assets on the balance sheet. 
B) not listed on the balance sheet because they do not have physical substance. 
C) listed after property, plant, and equipment. 
D) listed as a long-term investment on the balance sheet. 
A) listed directly under current assets on the balance sheet. 
B) not listed on the balance sheet because they do not have physical substance. 
C) listed after property, plant, and equipment. 
D) listed as a long-term investment on the balance sheet.

Question 18

Full disclosure of all important facts aids in overcoming the limitations of accounting information.

Accepted Answer

A) True 
 B)False

Question 19

Consistent use of the same accounting principles and methods is necessary for meaningful analysis of trends within a company.

Accepted Answer

A) True 
 B)False

Question 20

GAAP stands for generally accepted accounting procedures.

Accepted Answer

A) True 
 B)False

Exam 2: A Further Look at Financial Statements

In order for information to be relevant, it must be reported on a monthly basis.

Which of the following would not be classified as a long-term liability?

The subtotal net assets is used in

Working capital is

N3 Corporation has assets of $4,200,000, common stock of $1,092,000, and retained earnings of $665,000. What are the creditors' claims on their assets?

Solvency ratios measure the ability of a company to survive over a short period of time.

A liquidity ratio measures the

The TNT Company has five plants nationwide that cost $300 million. The current fair value of the plants is $500 million. The plants will be reported as assets at

All of the following are qualities of useful information except

Under IFRS

K2 Corporation has assets of $3,600,000, common stock of $936,000, and retained earnings of $570,000. What are the creditors' claims on their assets?

Earnings available to common stockholders is equal to

Solvency ratios measure the short-term ability of the company to pay its maturing obligations.

In general, the FASB indicates that most assets must follow the fair value principle.

The debt to assets ratio is computed by dividing

Intangible assets are

Full disclosure of all important facts aids in overcoming the limitations of accounting information.

Consistent use of the same accounting principles and methods is necessary for meaningful analysis of trends within a company.

GAAP stands for generally accepted accounting procedures.

Introduction to Financial Statements

The Accounting Information System

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Activity-Based Costing

Cost-Volume-Profit

Cost-Volume-Profit Analysis: Additional Issues

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

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