Question 1

Which of the following should be classified as an intangible asset?

Accepted Answer

A)  Land held for future use 
B)  Natural resources 
C)  Equipment 
D)  Goodwill 
A)  Land held for future use 
B)  Natural resources 
C)  Equipment 
D)  Goodwill

Question 2

An advantage of the single-step income statement over the multistep form is

Accepted Answer

A)  the amount of information it provides. 
B)  its simplicity. 
C)  its comprehensiveness. 
D)  its use in computing ratios. 
A)  the amount of information it provides. 
B)  its simplicity. 
C)  its comprehensiveness. 
D)  its use in computing ratios.

Question 3

Earnings per share are found on which financial statement?

Accepted Answer

A)  Balance sheet 
B)  Income statement 
C)  Statement of cash flows 
D)  Statement of retained earnings 
A)  Balance sheet 
B)  Income statement 
C)  Statement of cash flows 
D)  Statement of retained earnings

Question 4

Which type of account is cost of goods sold?

Accepted Answer

A)  An asset account 
B)  A liability account 
C)  An expense account 
D)  An income account 
A)  An asset account 
B)  A liability account 
C)  An expense account 
D)  An income account

Question 5

Which type of account is gross margin?

Accepted Answer

A)  An income account 
B)  An expense account 
C)  An asset account 
D)  None of these are correct 
A)  An income account 
B)  An expense account 
C)  An asset account 
D)  None of these are correct

Question 6

A merchandiser will earn an operating income of exactly $0 when

Accepted Answer

A)  gross margin equals operating expenses. 
B)  net sales equals cost of goods sold. 
C)  cost of goods sold equals gross margin. 
D)  operating expenses equal net sales. 
A)  gross margin equals operating expenses. 
B)  net sales equals cost of goods sold. 
C)  cost of goods sold equals gross margin. 
D)  operating expenses equal net sales.

Question 7

From the simplified balance sheet and income statement of the business below,compute the following ratios.Assume that the April 30 amounts for total assets and stockholders' equity also represent their average amounts for the period.Round percentages to the nearest whole percent.
a.Profit margin
b.Return on assets
c.Debt to equity
d.Return on equity
e.Asset turnover

Accepted Answer

a.9% ($3,600 ÷ $40,000) 
b.12%

Question 8

Match each definition with the correct term below.
-Net sales

Accepted Answer

A) Information should have direct bearing on a decision. 
B) The quality or accounting information that enables users to comprehend the meaning of the information they receive. 
C) The quality of accounting information that assures users that information as presented can be substantiated. 
D) The accounting convention that requires that once a company has adopted an accounting procedure,it must use it from one period to the next. 
E) The accounting convention that refers to the relative importance of an item or event.
F)The accounting convention that states that when faced with choosing between two equally acceptable procedures or estimates,accountants should choose the one that is least likely to overstate assets and income.
G)Cash and other assets that a company can reasonably expect to convert to cash,sell,or consume within one year or the company's normal operating cycle.
H)Debts that fall due more than one year in the future or beyond the normal operating cycle.
I)The amount that stockholders invest in the business.
J)Gross sales less sales returns and allowances
K)The amount a merchandiser paid for the merchandise it sold during an accounting period.
L)The income from a company's main business. 
A) Information should have direct bearing on a decision. 
B) The quality or accounting information that enables users to comprehend the meaning of the information they receive. 
C) The quality of accounting information that assures users that information as presented can be substantiated. 
D) The accounting convention that requires that once a company has adopted an accounting procedure,it must use it from one period to the next. 
E) The accounting convention that refers to the relative importance of an item or event.
F)The accounting convention that states that when faced with choosing between two equally acceptable procedures or estimates,accountants should choose the one that is least likely to overstate assets and income.
G)Cash and other assets that a company can reasonably expect to convert to cash,sell,or consume within one year or the company's normal operating cycle.
H)Debts that fall due more than one year in the future or beyond the normal operating cycle.
I)The amount that stockholders invest in the business.
J)Gross sales less sales returns and allowances
K)The amount a merchandiser paid for the merchandise it sold during an accounting period.
L)The income from a company's main business.

Question 9

List at least five qualitative characteristics of financial accounting.

Accepted Answer

Relevance 
Faithful

Question 10

Use this balance sheet and income statement for the first year of operations for Layton Novelties,Inc.to answer the following question.Use ending balances whenever average balances are required for computing ratios.     The return on assets for Layton Novelties is

Accepted Answer

A)  40 percent. 
B)  70 percent. 
C)  18 percent. 
D)  66-2/3 percent. 
A)  40 percent. 
B)  70 percent. 
C)  18 percent. 
D)  66-2/3 percent.

Question 11

For a merchandising company,the difference between net sales and cost of goods sold is called gross margin.

Accepted Answer

A) True 
 B)False

Question 12

Use the information from the following multistep income statement to prepare a single-step income statement in proper form.

Accepted Answer

The answer of Use the information from the following multistep...

Question 13

State the definition of a current asset.

Accepted Answer

A current asset is cash or ano

Question 14

Freight paid on goods shipped to customers is classified as a general and administrative expense.

Accepted Answer

A) True 
 B)False

Question 15

Use this information to answer the following question.   The debt to equity ratio is

Accepted Answer

A)  .46. 
B)  .67. 
C)  2.20. 
D)  .33. 
A)  .46. 
B)  .67. 
C)  2.20. 
D)  .33.

Question 16

To which account is the cost of inventory transferred when a product is sold?

Accepted Answer

A)  Sales 
B)  Freight expense 
C)  Gross margin 
D)  Cost of goods sold 
A)  Sales 
B)  Freight expense 
C)  Gross margin 
D)  Cost of goods sold

Question 17

The Retained Earnings portion of a corporation's balance sheet represents the earnings of the corporation less any losses,dividends,or transfers to contributed capital.

Accepted Answer

A) True 
 B)False

Question 18

Match each definition with the correct term below.
-Understandability

Accepted Answer

A) Information should have direct bearing on a decision. 
B) The quality or accounting information that enables users to comprehend the meaning of the information they receive. 
C) The quality of accounting information that assures users that information as presented can be substantiated. 
D) The accounting convention that requires that once a company has adopted an accounting procedure,it must use it from one period to the next. 
E) The accounting convention that refers to the relative importance of an item or event.
F)The accounting convention that states that when faced with choosing between two equally acceptable procedures or estimates,accountants should choose the one that is least likely to overstate assets and income.
G)Cash and other assets that a company can reasonably expect to convert to cash,sell,or consume within one year or the company's normal operating cycle.
H)Debts that fall due more than one year in the future or beyond the normal operating cycle.
I)The amount that stockholders invest in the business.
J)Gross sales less sales returns and allowances
K)The amount a merchandiser paid for the merchandise it sold during an accounting period.
L)The income from a company's main business. 
A) Information should have direct bearing on a decision. 
B) The quality or accounting information that enables users to comprehend the meaning of the information they receive. 
C) The quality of accounting information that assures users that information as presented can be substantiated. 
D) The accounting convention that requires that once a company has adopted an accounting procedure,it must use it from one period to the next. 
E) The accounting convention that refers to the relative importance of an item or event.
F)The accounting convention that states that when faced with choosing between two equally acceptable procedures or estimates,accountants should choose the one that is least likely to overstate assets and income.
G)Cash and other assets that a company can reasonably expect to convert to cash,sell,or consume within one year or the company's normal operating cycle.
H)Debts that fall due more than one year in the future or beyond the normal operating cycle.
I)The amount that stockholders invest in the business.
J)Gross sales less sales returns and allowances
K)The amount a merchandiser paid for the merchandise it sold during an accounting period.
L)The income from a company's main business.

Question 19

The investments category on the balance sheet normally includes investments that are intended to be held for a long period of time.

Accepted Answer

A) True 
 B)False

Question 20

Who is responsible for preparing financial statements?

Accepted Answer

A)  The CPA firm that audits the financial statements 
B)  Management of the company 
C)  A company's accounting department 
D)  The FASB 
A)  The CPA firm that audits the financial statements 
B)  Management of the company 
C)  A company's accounting department 
D)  The FASB

Which of the following should be classified as an intangible asset?

An advantage of the single-step income statement over the multistep form is

Earnings per share are found on which financial statement?

Which type of account is cost of goods sold?

Which type of account is gross margin?

A merchandiser will earn an operating income of exactly $0 when

Match each definition with the correct term below. -Net sales

List at least five qualitative characteristics of financial accounting.

Use this balance sheet and income statement for the first year of operations for Layton Novelties,Inc.to answer the following question.Use ending balances whenever average balances are required for computing ratios. The return on assets for Layton Novelties is

For a merchandising company,the difference between net sales and cost of goods sold is called gross margin.

Use the information from the following multistep income statement to prepare a single-step income statement in proper form.

State the definition of a current asset.

Freight paid on goods shipped to customers is classified as a general and administrative expense.

Use this information to answer the following question. The debt to equity ratio is

To which account is the cost of inventory transferred when a product is sold?

The Retained Earnings portion of a corporation's balance sheet represents the earnings of the corporation less any losses,dividends,or transfers to contributed capital.

Match each definition with the correct term below. -Understandability

The investments category on the balance sheet normally includes investments that are intended to be held for a long period of time.

Who is responsible for preparing financial statements?

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Investments

Filters

Exam 5: Financial Reporting and Analysis

Which of the following should be classified as an intangible asset?

An advantage of the single-step income statement over the multistep form is

Earnings per share are found on which financial statement?

Which type of account is cost of goods sold?

Which type of account is gross margin?

A merchandiser will earn an operating income of exactly $0 when

Match each definition with the correct term below. -Net sales

List at least five qualitative characteristics of financial accounting.

Use this balance sheet and income statement for the first year of operations for Layton Novelties,Inc.to answer the following question.Use ending balances whenever average balances are required for computing ratios. The return on assets for Layton Novelties is

For a merchandising company,the difference between net sales and cost of goods sold is called gross margin.

Use the information from the following multistep income statement to prepare a single-step income statement in proper form.

State the definition of a current asset.

Freight paid on goods shipped to customers is classified as a general and administrative expense.

Use this information to answer the following question. The debt to equity ratio is

To which account is the cost of inventory transferred when a product is sold?

The Retained Earnings portion of a corporation's balance sheet represents the earnings of the corporation less any losses,dividends,or transfers to contributed capital.

Match each definition with the correct term below. -Understandability

The investments category on the balance sheet normally includes investments that are intended to be held for a long period of time.

Who is responsible for preparing financial statements?

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Investments

Filters