Question 1

The asset turnover ratio measures

Accepted Answer

A)  how quickly the company uses assets to pay debt. 
B)  how efficiently assets are used to produce sales. 
C)  the income produced by selling inventory. 
D)  how efficiently equity is used to produce revenue. 
A)  how quickly the company uses assets to pay debt. 
B)  how efficiently assets are used to produce sales. 
C)  the income produced by selling inventory. 
D)  how efficiently equity is used to produce revenue.

Question 2

The convention of materiality has led to an increase in the notes to financial statements.

Accepted Answer

A) True 
 B)False

Question 3

To obtain a slightly more accurate measure of net income, Gabrielli Company has determined that it must hire two full-time accountants. However, if it decides against the hiring, it has followed the convention of

Accepted Answer

A)  full disclosure. 
B)  materiality. 
C)  comparability. 
D)  cost-benefit. 
A)  full disclosure. 
B)  materiality. 
C)  comparability. 
D)  cost-benefit.

Question 4

Dividend income and interest income are examples of nonoperating revenues.

Accepted Answer

A) True 
 B)False

Question 5

Use this information to answer the following question.   The total dollar amount of assets to be classified as property, plant, and equipment is

Accepted Answer

A)  $320,000. 
B)  $240,000. 
C)  $190,000. 
D)  $170,000. 
A)  $320,000. 
B)  $240,000. 
C)  $190,000. 
D)  $170,000.

Question 6

For accounting information to be useful, it must be both relevant and reliable.

Accepted Answer

A) True 
 B)False

Question 7

A company with a profit margin of 6 percent earns six cents profit for every dollar of net sales.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following appears in different sections of the income statement when prepared on a single-step basis and when prepared on a multistep basis?

Accepted Answer

A)  Sales commissions 
B)  Office salaries 
C)  Interest income 
D)  Sales 
A)  Sales commissions 
B)  Office salaries 
C)  Interest income 
D)  Sales

Question 9

Which of the following is not a measure of profitability?

Accepted Answer

A)  Current ratio 
B)  Return on assets 
C)  Return on equity 
D)  Debt to equity ratio 
A)  Current ratio 
B)  Return on assets 
C)  Return on equity 
D)  Debt to equity ratio

Question 10

A corporation's stockholders' equity section of the balance sheet may contain all except

Accepted Answer

A)  T. McDonald, Capital 
B)  Retained earnings 
C)  Additional paid-in capital 
D)  Common stock 
A)  T. McDonald, Capital 
B)  Retained earnings 
C)  Additional paid-in capital 
D)  Common stock

Question 11

The single-step and multistep income statements result in different net income amounts.

Accepted Answer

A) True 
 B)False

Question 12

General-purpose external financial statements are not primarily intended for

Accepted Answer

A)  management. 
B)  investors. 
C)  suppliers of goods and services. 
D)  lending institutions. 
A)  management. 
B)  investors. 
C)  suppliers of goods and services. 
D)  lending institutions.

Question 13

A company with a low debt to equity ratio is in a more vulnerable position during poor economic times than a company with a high debt to equity ratio.

Accepted Answer

A) True 
 B)False

Question 14

Interest paid on bank loans is classified as cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 15

Profit margin and gross margin are the same thing.

Accepted Answer

A) True 
 B)False

Question 16

Use this information to answer the following question.   The total dollar amount of assets to be classified as investments is

Accepted Answer

A)  $168,000. 
B)  $0. 
C)  $112,000. 
D)  $56,000. 
A)  $168,000. 
B)  $0. 
C)  $112,000. 
D)  $56,000.

Question 17

Use this information to answer the following question.   If the income statement were prepared in a multistep form, income from operations would be

Accepted Answer

A)  $48,750. 
B)  $41,250. 
C)  $51,250. 
D)  $42,500. 
A)  $48,750. 
B)  $41,250. 
C)  $51,250. 
D)  $42,500.

Exam 5: Financial Reporting and Analysis

The asset turnover ratio measures

The convention of materiality has led to an increase in the notes to financial statements.

To obtain a slightly more accurate measure of net income, Gabrielli Company has determined that it must hire two full-time accountants. However, if it decides against the hiring, it has followed the convention of

Dividend income and interest income are examples of nonoperating revenues.

Use this information to answer the following question. The total dollar amount of assets to be classified as property, plant, and equipment is

For accounting information to be useful, it must be both relevant and reliable.

A company with a profit margin of 6 percent earns six cents profit for every dollar of net sales.

Which of the following appears in different sections of the income statement when prepared on a single-step basis and when prepared on a multistep basis?

Which of the following is not a measure of profitability?

A corporation's stockholders' equity section of the balance sheet may contain all except

The single-step and multistep income statements result in different net income amounts.

General-purpose external financial statements are not primarily intended for

A company with a low debt to equity ratio is in a more vulnerable position during poor economic times than a company with a high debt to equity ratio.

Interest paid on bank loans is classified as cost of goods sold.

Profit margin and gross margin are the same thing.

Use this information to answer the following question. The total dollar amount of assets to be classified as investments is

Use this information to answer the following question. If the income statement were prepared in a multistep form, income from operations would be

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Completing the Accounting Cycle

The Operating Cycle and Merchandising Operations

Internal Control

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Contributed Capital

Long Term Liabilities

The Corporate Income Statement and the Statement of Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Partnerships

The Changing Business Environment-A Managers Pers

Cost Concepts and Cost Allocation

Costing Systems: Job Order Costing

Costing Systems Process Costing

Activity-Based Systems-Abm and Lean

Cost Behavior Analysis

The Budgeting Process

Performance Management and Evaluation

Standard Costing and Variance Analysis

Short Run Decision Analysis

Capital Investment Analysis

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