Question 1

Financial statements are often audited by management to increase confidence in the statements' reliability.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is a measure of liquidity?

Accepted Answer

A) Return on equity 
B) Return on assets 
C) Working capital 
D) Profit margin 
A) Return on equity 
B) Return on assets 
C) Working capital 
D) Profit margin

Question 3

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

Accepted Answer

A) $125,000. 
B) $95,000. 
C) $60,000. 
D) $40,000. 
A) $125,000. 
B) $95,000. 
C) $60,000. 
D) $40,000.

Question 4

A debt to equity ratio of 0.5 means that one-third of a company's total assets are financed by creditors.

Accepted Answer

A) True 
 B)False

Question 5

A material item is one that is likely to affect a user's decision.

Accepted Answer

A) True 
 B)False

Question 6

Which accounting convention could cause an overload of information for the financial statement user?

Accepted Answer

A) Consistency 
B) Conservatism 
C) Full disclosure 
D) Materiality 
A) Consistency 
B) Conservatism 
C) Full disclosure 
D) Materiality

Question 7

Use this balance sheet and income statement for the first year of operations for Cane Construction to answer the following question.Use ending balances whenever average balances are required for computing ratios.  
  
-The debt to equity ratio for Cane Construction is

Accepted Answer

A) 16-2/3 percent. 
B) 20 percent. 
C) 80 percent. 
D) 83-1/3 percent. 
A) 16-2/3 percent. 
B) 20 percent. 
C) 80 percent. 
D) 83-1/3 percent.

Question 8

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

Accepted Answer

A) $105,000. 
B) $145,000. 
C) $95,000. 
D) $120,000. 
A) $105,000. 
B) $145,000. 
C) $95,000. 
D) $120,000.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Return on assets is a combination of the profit margin and the asset turnover.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not an enhancing qualitative characteristic?

Accepted Answer

A) Verifiability 
B) Timeliness 
C) Understandability 
D) Neutrality 
A) Verifiability 
B) Timeliness 
C) Understandability 
D) Neutrality

Question 12

Use this balance sheet and income statement to answer the following question.Use ending balances whenever average balances are required for computing ratios.  
  
-The profit margin for National Textile is

Accepted Answer

A) 60 percent. 
B) 25 percent. 
C) 20 percent. 
D) 12 percent. 
A) 60 percent. 
B) 25 percent. 
C) 20 percent. 
D) 12 percent.

Question 13

Which of the following would not appear in the owner's equity section of a corporation?

Accepted Answer

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

Question 14

Asset turnover measures how efficiently assets are used to produce revenues.

Accepted Answer

A) True 
 B)False

Question 15

Use this balance sheet and income statement for the first year of operations for Cane Construction to answer the following question.Use ending balances whenever average balances are required for computing ratios.  
  
-The return on equity for Cane Construction is

Accepted Answer

A) 62.5 percent. 
B) 43.2 percent. 
C) 84 percent. 
D) 60 percent. 
A) 62.5 percent. 
B) 43.2 percent. 
C) 84 percent. 
D) 60 percent.

Question 16

The Sarbanes-Oxley Act requires a company to guarantee that its financial statements are 100 percent accurate.

Accepted Answer

A) True 
 B)False

Question 17

The main differences among the balance sheets of the sole proprietorship,the partnership,and the corporation are found in the current assets and current liabilities sections.

Accepted Answer

A) True 
 B)False

Question 18

Match between columns
                        Premises: Prepaid Interest
Interest Expense
Land Held for Future Use
Inventory
Notes Payable (in five years)
Accumulated Depreciation
Common Stock
Depreciation Expense
Trademark
Wages Payable
Revenues Received in Advance

Accepted Answer

The Answer of Plant and equipment and Intangible assets and is...

Question 19

A company with a low asset turnover uses its assets more productively than one with a high asset turnover.

Accepted Answer

A) True 
 B)False

Question 20

The cost-benefit convention holds that the benefits to be gained from providing accounting information should be greater than the costs of providing it.

Accepted Answer

A) True 
 B)False

Exam 4: Foundations of Financial Reporting and the Classified Balance Sheet

Financial statements are often audited by management to increase confidence in the statements' reliability.

Which of the following is a measure of liquidity?

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

A debt to equity ratio of 0.5 means that one-third of a company's total assets are financed by creditors.

A material item is one that is likely to affect a user's decision.

Which accounting convention could cause an overload of information for the financial statement user?

Use this balance sheet and income statement for the first year of operations for Cane Construction to answer the following question.Use ending balances whenever average balances are required for computing ratios. -The debt to equity ratio for Cane Construction is

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

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

Return on assets is a combination of the profit margin and the asset turnover.

Which of the following is not an enhancing qualitative characteristic?

Use this balance sheet and income statement to answer the following question.Use ending balances whenever average balances are required for computing ratios. -The profit margin for National Textile is

Which of the following would not appear in the owner's equity section of a corporation?

Asset turnover measures how efficiently assets are used to produce revenues.

Use this balance sheet and income statement for the first year of operations for Cane Construction to answer the following question.Use ending balances whenever average balances are required for computing ratios. -The return on equity for Cane Construction is

The Sarbanes-Oxley Act requires a company to guarantee that its financial statements are 100 percent accurate.

The main differences among the balance sheets of the sole proprietorship,the partnership,and the corporation are found in the current assets and current liabilities sections.

A company with a low asset turnover uses its assets more productively than one with a high asset turnover.

The cost-benefit convention holds that the benefits to be gained from providing accounting information should be greater than the costs of providing it.

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long-Term Assets

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

Accounting for Investments

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