Question 1

Which of the following is not true about an ESOP?

Accepted Answer

A)  An ESOP will reduce the amount of voting stock in the hands of employees. 
B)  An ESOP must be a permanent trusted plan for the exclusive benefit of the employees. 
C)  The plan participants become eligible for favorable taxation of distributions from the plan. 
D)  Commercial lending institutions, insurance companies, and mutual funds are permitted an exclusion from income for 50% of the interest received on loans used to finance an ESOP's acquisition of company stock. 
E)  An ESOP may reduce the potential of an unfriendly takeover. 
A)  An ESOP will reduce the amount of voting stock in the hands of employees. 
B)  An ESOP must be a permanent trusted plan for the exclusive benefit of the employees. 
C)  The plan participants become eligible for favorable taxation of distributions from the plan. 
D)  Commercial lending institutions, insurance companies, and mutual funds are permitted an exclusion from income for 50% of the interest received on loans used to finance an ESOP's acquisition of company stock. 
E)  An ESOP may reduce the potential of an unfriendly takeover.

Question 2

A sole proprietorship form of business has only one owner.

Accepted Answer

A) True 
 B)False

Question 3

When a firm repurchases its own stock and retires it, the stock is called treasury stock.

Accepted Answer

A) True 
 B)False

Question 4

Long-term investments, usually stocks and bonds of other companies, are often held to maintain a business relationship or exercise control.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not a problem inherent in balance sheet presentation?

Accepted Answer

A)  Most assets are valued at cost. 
B)  Varying methods are used for asset valuation. 
C)  Not all items of value to the firm are included as assets. 
D)  Liabilities related to contingencies may not appear on the balance sheet. 
E)  The owners' interest will be indicated. 
A)  Most assets are valued at cost. 
B)  Varying methods are used for asset valuation. 
C)  Not all items of value to the firm are included as assets. 
D)  Liabilities related to contingencies may not appear on the balance sheet. 
E)  The owners' interest will be indicated.

Question 6

The balance sheet reports:

Accepted Answer

A)  the assets, liabilities, gains, and losses for a period of time 
B)  the changes in assets, liabilities, and equity for a period of time 
C)  the assets, expenses, and liabilities as of a certain date 
D)  the probable future benefits, probable future sacrifices, and residual interest for a period of time 
E)  the financial condition of an accounting entity as of a particular date 
A)  the assets, liabilities, gains, and losses for a period of time 
B)  the changes in assets, liabilities, and equity for a period of time 
C)  the assets, expenses, and liabilities as of a certain date 
D)  the probable future benefits, probable future sacrifices, and residual interest for a period of time 
E)  the financial condition of an accounting entity as of a particular date

Question 7

Drama Products Inc.has issued redeemable preferred stock.For analysis purposes, these securities are best classified as:

Accepted Answer

A)  marketable securities 
B)  long-term investments 
C)  long-term debt 
D)  paid-in capital 
E)  retained earnings 
A)  marketable securities 
B)  long-term investments 
C)  long-term debt 
D)  paid-in capital 
E)  retained earnings

Question 8

There are many alternative titles for the statement of stockholders' equity.The most frequently used alternative title is the statement of shareholders' equity.

Accepted Answer

A) True 
 B)False

Question 9

The Internal Revenue Code penalizes borrowing for an ESOP.

Accepted Answer

A) True 
 B)False

Question 10

Under IFRS, reserves may result from upward revaluations of properties and investments.

Accepted Answer

A) True 
 B)False

Question 11

IFRS require a standard format for the balance sheet.

Accepted Answer

A) True 
 B)False

Question 12

Current assets are listed on the balance sheet in order of liquidity.

Accepted Answer

A) True 
 B)False

Question 13

Treasury stock is best classified as:

Accepted Answer

A)  a current asset 
B)  a long-term investment 
C)  a contra liability 
D)  a reduction of stockholders' equity 
E)  a reduction of retained earnings 
A)  a current asset 
B)  a long-term investment 
C)  a contra liability 
D)  a reduction of stockholders' equity 
E)  a reduction of retained earnings

Question 14

Which of the following is not a proper use of notes?

Accepted Answer

A)  To describe the nature and effect of a change in accounting principle, such as from FIFO to LIFO. 
B)  To indicate the basis for asset valuation. 
C)  To indicate the method of depreciation. 
D)  To correct an improper financial statement presentation. 
E)  To describe a firm's debt. 
A)  To describe the nature and effect of a change in accounting principle, such as from FIFO to LIFO. 
B)  To indicate the basis for asset valuation. 
C)  To indicate the method of depreciation. 
D)  To correct an improper financial statement presentation. 
E)  To describe a firm's debt.

Question 15

Minority interest reflects the ownership of minority shareholders in the equity of consolidated subsidiaries that are less than wholly owned.

Accepted Answer

A) True 
 B)False

Question 16

In a period of rising prices, LIFO usually results in a realistic cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 17

Generally accepted accounting principles and the Internal Revenue Code of tax law require that the same depreciation method be used for both the financial statements and the federal tax return.

Accepted Answer

A) True 
 B)False

Question 18

Ownership of debt instruments of the government and other companies that can be readily converted to cash are best reported as:

Accepted Answer

A)  long-term investments 
B)  cash 
C)  marketable securities 
D)  intangibles 
E)  inventory of near-cash items 
A)  long-term investments 
B)  cash 
C)  marketable securities 
D)  intangibles 
E)  inventory of near-cash items

Question 19

Noncontrolling interest should be presented at the bottom of stockholders equity.

Accepted Answer

A) True 
 B)False

Question 20

The current liability section of the balance sheet should include:

Accepted Answer

A)  buildings 
B)  goodwill 
C)  land held for speculation purposes 
D)  accounts payable 
E)  none of the answers are correct 
A)  buildings 
B)  goodwill 
C)  land held for speculation purposes 
D)  accounts payable 
E)  none of the answers are correct

Which of the following is not true about an ESOP?

A sole proprietorship form of business has only one owner.

When a firm repurchases its own stock and retires it, the stock is called treasury stock.

Long-term investments, usually stocks and bonds of other companies, are often held to maintain a business relationship or exercise control.

Which of the following is not a problem inherent in balance sheet presentation?

The balance sheet reports:

Drama Products Inc.has issued redeemable preferred stock.For analysis purposes, these securities are best classified as:

There are many alternative titles for the statement of stockholders' equity.The most frequently used alternative title is the statement of shareholders' equity.

The Internal Revenue Code penalizes borrowing for an ESOP.

Under IFRS, reserves may result from upward revaluations of properties and investments.

IFRS require a standard format for the balance sheet.

Current assets are listed on the balance sheet in order of liquidity.

Treasury stock is best classified as:

Which of the following is not a proper use of notes?

Minority interest reflects the ownership of minority shareholders in the equity of consolidated subsidiaries that are less than wholly owned.

In a period of rising prices, LIFO usually results in a realistic cost of goods sold.

Generally accepted accounting principles and the Internal Revenue Code of tax law require that the same depreciation method be used for both the financial statements and the federal tax return.

Ownership of debt instruments of the government and other companies that can be readily converted to cash are best reported as:

Noncontrolling interest should be presented at the bottom of stockholders equity.

The current liability section of the balance sheet should include:

Introduction to Financial Reporting

Introduction to Financial Statements and Other Financial Reporting Topics

Income Statement

Basics of Analysis

Liquidity of Short-Term Assets; Related Debt-Paying Ability

Long-Term Debt-Paying Ability

Profitability

For the Investor

Statement of Cash Flows

Expanded Analysis

Special Industries: Banks, Utilities, Oil and Gas, Transportation, Insurance, Real Estate Companies

Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations

Filters

Exam 3: Balance Sheet

Which of the following is not true about an ESOP?

A sole proprietorship form of business has only one owner.

When a firm repurchases its own stock and retires it, the stock is called treasury stock.

Long-term investments, usually stocks and bonds of other companies, are often held to maintain a business relationship or exercise control.

Which of the following is not a problem inherent in balance sheet presentation?

The balance sheet reports:

Drama Products Inc.has issued redeemable preferred stock.For analysis purposes, these securities are best classified as:

There are many alternative titles for the statement of stockholders' equity.The most frequently used alternative title is the statement of shareholders' equity.

The Internal Revenue Code penalizes borrowing for an ESOP.

Under IFRS, reserves may result from upward revaluations of properties and investments.

IFRS require a standard format for the balance sheet.

Current assets are listed on the balance sheet in order of liquidity.

Treasury stock is best classified as:

Which of the following is not a proper use of notes?

Minority interest reflects the ownership of minority shareholders in the equity of consolidated subsidiaries that are less than wholly owned.

In a period of rising prices, LIFO usually results in a realistic cost of goods sold.

Generally accepted accounting principles and the Internal Revenue Code of tax law require that the same depreciation method be used for both the financial statements and the federal tax return.

Ownership of debt instruments of the government and other companies that can be readily converted to cash are best reported as:

Noncontrolling interest should be presented at the bottom of stockholders equity.

The current liability section of the balance sheet should include:

Introduction to Financial Reporting

Introduction to Financial Statements and Other Financial Reporting Topics

Income Statement

Basics of Analysis

Liquidity of Short-Term Assets; Related Debt-Paying Ability

Long-Term Debt-Paying Ability

Profitability

For the Investor

Statement of Cash Flows

Expanded Analysis

Special Industries: Banks, Utilities, Oil and Gas, Transportation, Insurance, Real Estate Companies

Personal Financial Statements and Accounting for Governments and Not-For-Profit Organizations

Filters