Question 1

The use of fair value to report assets

Accepted Answer

A)  is not allowed under GAAP or IFRS. 
B)  is required by GAAP and IFRS. 
C)  is increasing under GAAP and IFRS, but GAAP has adopted it more broadly. 
D)  is increasing under GAAP and IFRS, but IFRS has adopted it more broadly. 
A)  is not allowed under GAAP or IFRS. 
B)  is required by GAAP and IFRS. 
C)  is increasing under GAAP and IFRS, but GAAP has adopted it more broadly. 
D)  is increasing under GAAP and IFRS, but IFRS has adopted it more broadly.

Question 2

The going concern assumption is that the business will continue in operation long enough to carry out its existing objectives and commitments.

Accepted Answer

A) True 
 B)False

Question 3

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 4

Use the following data to determine the total dollar amount of assets to be classified as current assets.

Accepted Answer

A)  $195,000 
B)  $125,000 
C)  $285,000 
D)  $165,000 
A)  $195,000 
B)  $125,000 
C)  $285,000 
D)  $165,000

Question 5

N3 Corporation has assets of $3,000,000, common stock of $780,000, and retained earnings of $475,000. What are the creditors' claims on their assets?

Accepted Answer

A)  $2,695,000 
B)  $1,255,000 
C)  $1,745,000 
D)  $3,305,000 
A)  $2,695,000 
B)  $1,255,000 
C)  $1,745,000 
D)  $3,305,000

Question 6

Most companies that follow IFRS present balance sheet (statement of financial position) information in this order.

Accepted Answer

A)  current assets; investments; property; plant and equipment; intangible assets; current liabilities; long term liabilities; owners' equity. 
B)  intangible assets; property; plant and equipment; investments; current assets; current liabilities; owners' equity; long term liabilities. 
C)  current assets; noncurrent assets; current liabilities; noncurrent liabilities; equity. 
D)  noncurrent assets; current assets; equity; noncurrent liabilities; current liabilities. 
A)  current assets; investments; property; plant and equipment; intangible assets; current liabilities; long term liabilities; owners' equity. 
B)  intangible assets; property; plant and equipment; investments; current assets; current liabilities; owners' equity; long term liabilities. 
C)  current assets; noncurrent assets; current liabilities; noncurrent liabilities; equity. 
D)  noncurrent assets; current assets; equity; noncurrent liabilities; current liabilities.

Question 7

Cost constraint weighs the cost that companies incur to provide a type of information against its benefit to financial statement users.

Accepted Answer

A) True 
 B)False

Question 8

Different companies using the same accounting principles is an application of

Accepted Answer

A)  consistency. 
B)  materiality. 
C)  full disclosure. 
D)  comparability. 
A)  consistency. 
B)  materiality. 
C)  full disclosure. 
D)  comparability.

Question 9

Characteristics associated with faithfully representative accounting information are

Accepted Answer

A)  verifiable and timely. 
B)  verifiable and neutral. 
C)  complete and neutral. 
D)  relevance and verifiable. 
A)  verifiable and timely. 
B)  verifiable and neutral. 
C)  complete and neutral. 
D)  relevance and verifiable.

Question 10

Using the following balance sheet and income statement data, what is the total amount of working capital? $\begin{array}{lrlr}
\text { Current assets } & \$ 7,000 & \text { Net income } & \$ 15,000 \
\text { Current liabilities } & 4,000 & \text { Stockholders' equity } & 21,000 \
\text { Average assets } & 44,000 & \text { Total liabilities } & 9,000\\text { Total assets } \quad 30,000
\end{array}$ Average common shares outstanding was 10,000.

Accepted Answer

A)  $7,000 
B)  $5,000 
C)  $3,000 
D)  $2,000 
A)  $7,000 
B)  $5,000 
C)  $3,000 
D)  $2,000

Question 11

On a classified balance sheet, short-term investments are classified as

Accepted Answer

A)  an intangible asset. 
B)  property, plant, and equipment. 
C)  a current asset. 
D)  a long-term investment. 
A)  an intangible asset. 
B)  property, plant, and equipment. 
C)  a current asset. 
D)  a long-term investment.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Generally accepted accounting principles are rules and practices that are recognized as a general guide for financial reporting purposes.

Accepted Answer

A) True 
 B)False

Question 14

These are selected account balances on December 31, 2014. $$\begin{array} { l r } 
\text { Land } & \$ 100,000 \
\text { Land (held for future use) } & 150,000 \
\text { Buildings } & 800,000 \
\text { Inventory } & 200,000 \
\text { Equipment } & 450,000 \
\text { Furniture } & 100,000 \
\text { Accumulated Depreciation } & 300,000
\end{array}$$ What is the total amount of property, plant, and equipment that will appear on the balance sheet?

Accepted Answer

A)  $1,500,000 
B)  $1,300,000 
C)  $1,800,000 
D)  $1,150,000 
A)  $1,500,000 
B)  $1,300,000 
C)  $1,800,000 
D)  $1,150,000

Question 15

Which statement about long-term investments is not true?

Accepted Answer

A)  They will be held for more than one year. 
B)  They are not currently used in the operation of the business. 
C)  They include investments in stock of other companies and land held for future use. 
D)  They do not include long-term notes receivable. 
A)  They will be held for more than one year. 
B)  They are not currently used in the operation of the business. 
C)  They include investments in stock of other companies and land held for future use. 
D)  They do not include long-term notes receivable.

Question 16

A measure of profitability is the

Accepted Answer

A)  current ratio. 
B)  debt to assets ratio. 
C)  earnings per share. 
D)  working capital. 
A)  current ratio. 
B)  debt to assets ratio. 
C)  earnings per share. 
D)  working capital.

Question 17

Use the following data to determine the total dollar amount of assets to be classified as current assets.

Accepted Answer

A)  $534,000 
B)  $224,000 
C)  $364,000 
D)  $304,000 
A)  $534,000 
B)  $224,000 
C)  $364,000 
D)  $304,000

Question 18

Which measure would a long-term creditor be least interested in reviewing?

Accepted Answer

A)  Free cash flow 
B)  Debt to assets ratio 
C)  Current ratio 
D)  Solvency measure 
A)  Free cash flow 
B)  Debt to assets ratio 
C)  Current ratio 
D)  Solvency measure

Question 19

The operating cycle of a company is the average time that is required to go from cash to

Accepted Answer

A)  sales in producing revenues. 
B)  cash in producing revenues. 
C)  inventory in producing revenues. 
D)  accounts receivable in producing revenues. 
A)  sales in producing revenues. 
B)  cash in producing revenues. 
C)  inventory in producing revenues. 
D)  accounts receivable in producing revenues.

Question 20

Which of the following is not considered an asset?

Accepted Answer

A)  Equipment 
B)  Dividends 
C)  Accounts receivable 
D)  Inventory 
A)  Equipment 
B)  Dividends 
C)  Accounts receivable 
D)  Inventory

The use of fair value to report assets

The going concern assumption is that the business will continue in operation long enough to carry out its existing objectives and commitments.

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

Use the following data to determine the total dollar amount of assets to be classified as current assets.

N3 Corporation has assets of $3,000,000, common stock of $780,000, and retained earnings of $475,000. What are the creditors' claims on their assets?

Most companies that follow IFRS present balance sheet (statement of financial position) information in this order.

Cost constraint weighs the cost that companies incur to provide a type of information against its benefit to financial statement users.

Different companies using the same accounting principles is an application of

Characteristics associated with faithfully representative accounting information are

On a classified balance sheet, short-term investments are classified as

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

Generally accepted accounting principles are rules and practices that are recognized as a general guide for financial reporting purposes.

Which statement about long-term investments is not true?

A measure of profitability is the

Use the following data to determine the total dollar amount of assets to be classified as current assets.

Which measure would a long-term creditor be least interested in reviewing?

The operating cycle of a company is the average time that is required to go from cash to

Which of the following is not considered an asset?

Introduction to Financial Statements

The Accounting Information System

Accrual Accounting Concepts

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

Understanding Investments and Acquisitions in Accounting

Filters

Exam 2: A Further Look at Financial Statements

The use of fair value to report assets

The going concern assumption is that the business will continue in operation long enough to carry out its existing objectives and commitments.

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

Use the following data to determine the total dollar amount of assets to be classified as current assets.

N3 Corporation has assets of $3,000,000, common stock of $780,000, and retained earnings of $475,000. What are the creditors' claims on their assets?

Most companies that follow IFRS present balance sheet (statement of financial position) information in this order.

Cost constraint weighs the cost that companies incur to provide a type of information against its benefit to financial statement users.

Different companies using the same accounting principles is an application of

Characteristics associated with faithfully representative accounting information are

On a classified balance sheet, short-term investments are classified as

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

Generally accepted accounting principles are rules and practices that are recognized as a general guide for financial reporting purposes.

Which statement about long-term investments is not true?

A measure of profitability is the

Use the following data to determine the total dollar amount of assets to be classified as current assets.

Which measure would a long-term creditor be least interested in reviewing?

The operating cycle of a company is the average time that is required to go from cash to

Which of the following is not considered an asset?

Introduction to Financial Statements

The Accounting Information System

Accrual Accounting Concepts

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

Understanding Investments and Acquisitions in Accounting

Filters