Question 1

How can a company improve its current ratio?

Accepted Answer

A)  Work with a creditor to reclassify some current debt into long-term debt 
B)  Use cash to reduce current liabilities 
C)  Nothing can ethically be done to improve the current ratio 
D)  Use excess cash to buy new equipment 
A)  Work with a creditor to reclassify some current debt into long-term debt 
B)  Use cash to reduce current liabilities 
C)  Nothing can ethically be done to improve the current ratio 
D)  Use excess cash to buy new equipment

Question 2

The periodicity assumption states

Accepted Answer

A)  the business will remain in operation for the foreseeable future. 
B)  the life of a business can be divided into artificial time periods and that useful reports covering those periods can be prepared. 
C)  every economic entity can be separately identified and accounted for. 
D)  only those things that can be expressed in money are included in the accounting records. 
A)  the business will remain in operation for the foreseeable future. 
B)  the life of a business can be divided into artificial time periods and that useful reports covering those periods can be prepared. 
C)  every economic entity can be separately identified and accounted for. 
D)  only those things that can be expressed in money are included in the accounting records.

Question 3

In 2014 Grider Corporation had cash receipts of $56,000 and cash disbursements of $32,000. Grider's ending cash balance at December 31, 2014 was $88,000. What was Grider's beginning cash balance?

Accepted Answer

A)  $64,000 
B)  $80,000 
C)  $120,000 
D)  $112,000 
A)  $64,000 
B)  $80,000 
C)  $120,000 
D)  $112,000

Question 4

Using the following balance sheet and income statement data, what is the current ratio? $\begin{array}{lrlr}
\text { Current assets } & \$ 16,000 & \text { Net income } & \$ 21,000 \
\text { Current liabilities } & 8,000 & \text { Stockholders' equity } & 39,000 \
\text { Average assets } & 80,000 & \text { Total liabilities } & 21,000\\text { Total assets } 60,000
\end{array}$ Average common shares outstanding was 10,000.

Accepted Answer

A)  2.0 : 1 
B)  2.6 : 1 
C)  0.5 : 1 
D)  2.9 : 1 
A)  2.0 : 1 
B)  2.6 : 1 
C)  0.5 : 1 
D)  2.9 : 1

Question 5

For each of the ratios listed below, indicate by the appropriate code letter, whether it is a liquidity ratio, a profitability ratio, or a solvency ratio.

Accepted Answer

The answer of For each of the ratios listed below,...

Question 6

Use the following data to calculate the current ratio.

Accepted Answer

A)  2.07 : 1 
B)  1.67 : 1 
C)  3.00 : 1 
D)  2.60 : 1 
A)  2.07 : 1 
B)  1.67 : 1 
C)  3.00 : 1 
D)  2.60 : 1

Question 7

Net cash provided by operating activities takes into account that a company must invest in capital expenditures just to maintain its current level of operations.

Accepted Answer

A) True 
 B)False

Question 8

In 2014 Grider Corporation had cash receipts of $35,000 and cash disbursements of $20,000. Grider's ending cash balance at December 31, 2014 was $55,000. What was Grider's beginning cash balance?

Accepted Answer

A)  $40,000 
B)  $50,000 
C)  $75,000 
D)  $70,000 
A)  $40,000 
B)  $50,000 
C)  $75,000 
D)  $70,000

Question 9

The retained earnings statement is more comprehensive than the statement of stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 10

Long-term creditors are usually most interested in evaluating

Accepted Answer

A)  liquidity and profitability. 
B)  consistency and profitability. 
C)  liquidity and solvency. 
D)  consistency and solvency. 
A)  liquidity and profitability. 
B)  consistency and profitability. 
C)  liquidity and solvency. 
D)  consistency and solvency.

Question 11

The economic entity assumption states that assets should be recorded at their cost.

Accepted Answer

A) True 
 B)False

Question 12

Suppose that Morgan Corporation produced and sold 4,800 laptop computers during 2014. It reported $150,000 cash provided by operating activities. In order to maintain production at 4,800 laptops, Morgan invested in $8,600 in equipment. Morgan paid $1,400 in dividends. What is Morgan's free cash flow?

Accepted Answer

A)  $140,000 
B)  $160,000 
C)  $157,000 
D)  $150,000 
A)  $140,000 
B)  $160,000 
C)  $157,000 
D)  $150,000

Question 13

The excess of current assets over current liabilities is called working capital.

Accepted Answer

A) True 
 B)False

Question 14

A major function of management is to provide the accountant with relevant and useful information.

Accepted Answer

A) True 
 B)False

Question 15

A liability is classified as a current liability if it is to be paid within the coming year.

Accepted Answer

A) True 
 B)False

Question 16

The Dobson Company gathered the following condensed data for the year ended December 31, 2014: $\begin{array}{lr}
\text { Cost of goods sold } & \$ 720,000 \
\text { Net sales } & 1,249,000 \
\text { Administrative expenses } & 289,000 \
\text { Interest expense } & 68,000 \
\text { Dividends paid } & 38,000 \
\text { Selling expenses } & 45,000
\end{array}$ Instructions
Prepare an income statement for the year ended December 31, 2014.

Accepted Answer

The answer of The Dobson Company gathered the following condensed...

Question 17

It is not true that current assets are resources that are expected to be

Accepted Answer

A)  realized in cash within one year. 
B)  sold within one year. 
C)  consumed within one year. 
D)  acquired within one year. 
A)  realized in cash within one year. 
B)  sold within one year. 
C)  consumed within one year. 
D)  acquired within one year.

Question 18

Comparative financial statement data for Arthur Corporation and Lancelot Corporation, two competitors, appear below. All balance sheet data are as of December 31, 2014.   Instructions
(a) Comment on the relative profitability of the companies by computing the net income and earnings per share for each company for 2014.
(b) Comment on the relative solvency of the companies by computing the debt to assets ratio and the free cash flow for each company for 2014.

Accepted Answer

(a) Arthur Company appears to be more pr

Question 19

Using the following balance sheet and income statement data, what is the debt to assets ratio? $$\begin{array} { l r l r } 
\text { Current assets } & \$ 7,000 & \text { Net income } & \$ 15,000 \
\text { Current liabilities } & 4,000 & \text { Stockholders' equity } & 21,000 \
\text { Average assets } & 44,000 & \text { Total liabilities } & 9,000 \
\text { Total assets } & 30,000 & &
\end{array}$$ Average common shares outstanding was 10,000.

Accepted Answer

A)  20.5 percent 
B)  30 percent 
C)  33.3 percent 
D)  40.9 percent 
A)  20.5 percent 
B)  30 percent 
C)  33.3 percent 
D)  40.9 percent

Question 20

The advantage of accounting information is that it provides exact and completely reliable measures.

Accepted Answer

A) True 
 B)False

How can a company improve its current ratio?

The periodicity assumption states

In 2014 Grider Corporation had cash receipts of $56,000 and cash disbursements of $32,000. Grider's ending cash balance at December 31, 2014 was $88,000. What was Grider's beginning cash balance?

Using the following balance sheet and income statement data, what is the current ratio? Current assets \ 16,000 Net income \ 21,000 Current liabilities 8,000 Stockholders' equity 39,000 Average assets 80,000 Total liabilities 21,000 Total assets 60,000 Average common shares outstanding was 10,000.

For each of the ratios listed below, indicate by the appropriate code letter, whether it is a liquidity ratio, a profitability ratio, or a solvency ratio.

Use the following data to calculate the current ratio.

Net cash provided by operating activities takes into account that a company must invest in capital expenditures just to maintain its current level of operations.

In 2014 Grider Corporation had cash receipts of $35,000 and cash disbursements of $20,000. Grider's ending cash balance at December 31, 2014 was $55,000. What was Grider's beginning cash balance?

The retained earnings statement is more comprehensive than the statement of stockholders' equity.

Long-term creditors are usually most interested in evaluating

The economic entity assumption states that assets should be recorded at their cost.

The excess of current assets over current liabilities is called working capital.

A major function of management is to provide the accountant with relevant and useful information.

A liability is classified as a current liability if it is to be paid within the coming year.

It is not true that current assets are resources that are expected to be

The advantage of accounting information is that it provides exact and completely reliable measures.

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

How can a company improve its current ratio?

The periodicity assumption states

In 2014 Grider Corporation had cash receipts of $56,000 and cash disbursements of $32,000. Grider's ending cash balance at December 31, 2014 was $88,000. What was Grider's beginning cash balance?

Using the following balance sheet and income statement data, what is the current ratio? Current assets \ 16,000 Net income \ 21,000 Current liabilities 8,000 Stockholders' equity 39,000 Average assets 80,000 Total liabilities 21,000 Total assets 60,000 Average common shares outstanding was 10,000.

For each of the ratios listed below, indicate by the appropriate code letter, whether it is a liquidity ratio, a profitability ratio, or a solvency ratio.

Use the following data to calculate the current ratio.

Net cash provided by operating activities takes into account that a company must invest in capital expenditures just to maintain its current level of operations.

In 2014 Grider Corporation had cash receipts of $35,000 and cash disbursements of $20,000. Grider's ending cash balance at December 31, 2014 was $55,000. What was Grider's beginning cash balance?

The retained earnings statement is more comprehensive than the statement of stockholders' equity.

Long-term creditors are usually most interested in evaluating

The economic entity assumption states that assets should be recorded at their cost.

The excess of current assets over current liabilities is called working capital.

A major function of management is to provide the accountant with relevant and useful information.

A liability is classified as a current liability if it is to be paid within the coming year.

It is not true that current assets are resources that are expected to be

The advantage of accounting information is that it provides exact and completely reliable measures.

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