Question 1

Which of the following is the least likely consideration that management uses when deciding whether to pay a dividend?

Accepted Answer

A)  Does the company have more cash than it has opportunities? 
B)  Is the company's average number of common shares outstanding decreasing? 
C)  Does the company have uses for cash that will increase its value? 
D)  What are the company's cash needs? 
A)  Does the company have more cash than it has opportunities? 
B)  Is the company's average number of common shares outstanding decreasing? 
C)  Does the company have uses for cash that will increase its value? 
D)  What are the company's cash needs?

Question 2

Information presented in a clear and concise fashion so that users can comprehend its meaning is an application of

Accepted Answer

A)  consistency. 
B)  timeliness. 
C)  verifiability. 
D)  understandability. 
A)  consistency. 
B)  timeliness. 
C)  verifiability. 
D)  understandability.

Question 3

Which of the following organizations issues accounting standards for countries outside the United States?

Accepted Answer

A)  SEC 
B)  GAAP 
C)  IASB 
D)  FASB 
A)  SEC 
B)  GAAP 
C)  IASB 
D)  FASB

Question 4

It is assumed that the activities of Ford Motor company can be distinguished from those of General Motors because of the

Accepted Answer

A)  going concern assumption. 
B)  economic entity assumption. 
C)  monetary unit assumption. 
D)  periodicity assumption. 
A)  going concern assumption. 
B)  economic entity assumption. 
C)  monetary unit assumption. 
D)  periodicity assumption.

Question 5

If Morris Corporation has a negative $131 million free cash flow, which of the following statements is most likely true?

Accepted Answer

A)  Morris' capital expenditures plus its cash dividends are less than its cash provided by operations. 
B)  This free cash flow indicates that Morris is in good shape to repay its long-term obligations when they come due. 
C)  This free cash flow indicates that Morris presents good cash generating ability to retire stock. 
D)  Morris' cash provided by operations is less than its cash dividends plus capital expenditures. 
A)  Morris' capital expenditures plus its cash dividends are less than its cash provided by operations. 
B)  This free cash flow indicates that Morris is in good shape to repay its long-term obligations when they come due. 
C)  This free cash flow indicates that Morris presents good cash generating ability to retire stock. 
D)  Morris' cash provided by operations is less than its cash dividends plus capital expenditures.

Question 6

What is the order in which assets are generally listed on a classified balance sheet?

Accepted Answer

A)  Current and long-term 
B)  Current; property, plant and equipment; long-term investments; intangibles 
C)  Current; property, plant and equipment; intangibles; long-term investments 
D)  Current; long-term investments; property, plant and equipment, intangibles 
A)  Current and long-term 
B)  Current; property, plant and equipment; long-term investments; intangibles 
C)  Current; property, plant and equipment; intangibles; long-term investments 
D)  Current; long-term investments; property, plant and equipment, intangibles

Question 7

Accounting information is relevant to business decisions because it

Accepted Answer

A)  has been verified by external audit. 
B)  is prepared on an annual basis. 
C)  confirms prior expectations. 
D)  is neutral in its representations. 
A)  has been verified by external audit. 
B)  is prepared on an annual basis. 
C)  confirms prior expectations. 
D)  is neutral in its representations.

Question 8

The assumption that requires only those things that can be expressed in money are included in the accounting records is the

Accepted Answer

A)  economic entity assumption. 
B)  monetary unit assumption. 
C)  going concern assumption. 
D)  periodicity assumption. 
A)  economic entity assumption. 
B)  monetary unit assumption. 
C)  going concern assumption. 
D)  periodicity assumption.

Question 9

An intangible asset

Accepted Answer

A)  derives its value from the rights and privileges it provides the owner. 
B)  is worthless because it has no physical substance. 
C)  is converted into a tangible asset during the operating cycle. 
D)  cannot be classified on the balance sheet because it lacks physical substance. 
A)  derives its value from the rights and privileges it provides the owner. 
B)  is worthless because it has no physical substance. 
C)  is converted into a tangible asset during the operating cycle. 
D)  cannot be classified on the balance sheet because it lacks physical substance.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Use the following data to determine the total amount of working capital.

Accepted Answer

A)  $130,000 
B)  $120,000 
C)  $80,000 
D)  $210,000 
A)  $130,000 
B)  $120,000 
C)  $80,000 
D)  $210,000

Question 12

Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment.

Accepted Answer

A)  $270,000 
B)  $250,000 
C)  $180,000 
D)  $210,000 
A)  $270,000 
B)  $250,000 
C)  $180,000 
D)  $210,000

Question 13

The retained earnings statement describes the changes in retained earnings during the period.

Accepted Answer

A) True 
 B)False

Question 14

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 15

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 16

Issuing new shares of common stock will

Accepted Answer

A)  increase retained earnings. 
B)  decrease retained earnings. 
C)  increase common stock. 
D)  decrease common stock. 
A)  increase retained earnings. 
B)  decrease retained earnings. 
C)  increase common stock. 
D)  decrease common stock.

Question 17

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 18

Consistency in accounting means that a company uses the same generally accepted accounting principles from one accounting period to the next accounting period.

Accepted Answer

A) True 
 B)False

Question 19

Materiality is a company-specific aspect of faithful representation.

Accepted Answer

A) True 
 B)False

Question 20

Which accounting assumption assumes that an enterprise will continue in operation long enough to carry out its existing objectives and commitments?

Accepted Answer

A)  Monetary unit assumption 
B)  Economic entity assumption 
C)  Periodicity assumption 
D)  Going concern assumption 
A)  Monetary unit assumption 
B)  Economic entity assumption 
C)  Periodicity assumption 
D)  Going concern assumption

Which of the following is the least likely consideration that management uses when deciding whether to pay a dividend?

Information presented in a clear and concise fashion so that users can comprehend its meaning is an application of

Which of the following organizations issues accounting standards for countries outside the United States?

It is assumed that the activities of Ford Motor company can be distinguished from those of General Motors because of the

If Morris Corporation has a negative $131 million free cash flow, which of the following statements is most likely true?

What is the order in which assets are generally listed on a classified balance sheet?

Accounting information is relevant to business decisions because it

The assumption that requires only those things that can be expressed in money are included in the accounting records is the

An intangible asset

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

Use the following data to determine the total amount of working capital.

Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment.

The retained earnings statement describes the changes in retained earnings during the period.

All of the following are qualities of useful information except

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

Issuing new shares of common stock will

Working capital is

Consistency in accounting means that a company uses the same generally accepted accounting principles from one accounting period to the next accounting period.

Materiality is a company-specific aspect of faithful representation.

Which accounting assumption assumes that an enterprise will continue in operation long enough to carry out its existing objectives and commitments?

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

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Exam 2: A Further Look at Financial Statements

Which of the following is the least likely consideration that management uses when deciding whether to pay a dividend?

Information presented in a clear and concise fashion so that users can comprehend its meaning is an application of

Which of the following organizations issues accounting standards for countries outside the United States?

It is assumed that the activities of Ford Motor company can be distinguished from those of General Motors because of the

If Morris Corporation has a negative $131 million free cash flow, which of the following statements is most likely true?

What is the order in which assets are generally listed on a classified balance sheet?

Accounting information is relevant to business decisions because it

The assumption that requires only those things that can be expressed in money are included in the accounting records is the

An intangible asset

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

Use the following data to determine the total amount of working capital.

Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment.

The retained earnings statement describes the changes in retained earnings during the period.

All of the following are qualities of useful information except

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

Issuing new shares of common stock will

Working capital is

Consistency in accounting means that a company uses the same generally accepted accounting principles from one accounting period to the next accounting period.

Materiality is a company-specific aspect of faithful representation.

Which accounting assumption assumes that an enterprise will continue in operation long enough to carry out its existing objectives and commitments?

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

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