Question 1

Which of the following statements is false when a company sells inventory costing $900 for $1,500 cash?

Accepted Answer

A) Current assets increase $600. 
B) Gross profit increases $1,500. 
C) Stockholders' equity increases $600. 
D) Net sales increases $1,500. 
A) Current assets increase $600. 
B) Gross profit increases $1,500. 
C) Stockholders' equity increases $600. 
D) Net sales increases $1,500.

Question 2

Information disclosed in a balance sheet about shares of common stock includes the number of shares that are:

Accepted Answer

A) Authorized and Issued. 
B) Issued and Outstanding. 
C) Authorized, Issued, and Outstanding. 
D) Authorized, Issued, Outstanding, and Not Outstanding. 
A) Authorized and Issued. 
B) Issued and Outstanding. 
C) Authorized, Issued, and Outstanding. 
D) Authorized, Issued, Outstanding, and Not Outstanding.

Question 3

Independent auditors are advisors who analyze financial statements and other economic information to formulate forecasts and stock recommendations.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following would not be reported in the operating activities section of the statement of cash flows, which has been prepared using the indirect method?

Accepted Answer

A) Sales on account which have not yet been collected. 
B) Net income. 
C) Cash paid for income taxes. 
D) Depreciation expense. 
A) Sales on account which have not yet been collected. 
B) Net income. 
C) Cash paid for income taxes. 
D) Depreciation expense.

Question 5

Which of the following statements regarding international financial reporting standards (IFRS) is false?

Accepted Answer

A) Common stock is titled as share capital. 
B) Property, plant, and equipment can be reported on the balance sheet at either fair value or historical cost. 
C) The last-in first-out (LIFO) inventory method is permitted. 
D) Development costs are capitalizeD.The last-in first-out inventory (LIFO) method is prohibited under IFRS. 
A) Common stock is titled as share capital. 
B) Property, plant, and equipment can be reported on the balance sheet at either fair value or historical cost. 
C) The last-in first-out (LIFO) inventory method is permitted. 
D) Development costs are capitalizeD.The last-in first-out inventory (LIFO) method is prohibited under IFRS.

Question 6

In which of the following classifications would cash dividend payments to stockholders be reported in the statement of cash flows?

Accepted Answer

A) Operating activities. 
B) Financing activities. 
C) Investing activities. 
D) Stockholder activities. 
A) Operating activities. 
B) Financing activities. 
C) Investing activities. 
D) Stockholder activities.

Question 7

The Callie Company has provided the following information: Operating expenses were $231,000;
Cost of goods sold was $376,000;
Net sales were $940,000;
Interest expense was $32,000;
Gain on sale of a building was $76,000;
Income tax expense was $151,000.
What was Callie's gross profit?

Accepted Answer

A) $564,000. 
B) $188,000. 
C) $333,000. 
D) $232,000. 
A) $564,000. 
B) $188,000. 
C) $333,000. 
D) $232,000.

Question 8

Marino Company has provided the following information: Net sales, $480,000
Net income, $24,000
Average total assets, $200,000
What is Marino's total asset turnover?

Accepted Answer

A) 12.0 
B) 8.33 
C) 0.42 
D) 2.4 
A) 12.0 
B) 8.33 
C) 0.42 
D) 2.4

Question 9

The Willie Company has provided the following information: Operating expenses were $345,000;
Income from operations was $415,000;
Net sales were $1,100,000;
Interest expense was $71,000;
Loss from sale of investments was $87,000;
Income tax expense was $58,000.
What was Willie's income before taxes?

Accepted Answer

A) $344,000. 
B) $199,000. 
C) $257,000. 
D) $286,000. 
A) $344,000. 
B) $199,000. 
C) $257,000. 
D) $286,000.

Question 10

Harley Company has provided the following selected financial information.   What is Harley's 2016 total asset turnover (rounded)?

Accepted Answer

A) 2.38 
B) 2.25 
C) 0.132 
D) 2.65 
A) 2.38 
B) 2.25 
C) 0.132 
D) 2.65

Question 11

Brimmel Corp. has provided the following information: Sales were $780,000;
Cost of goods sold was $429,000;
Net income was $195,000.
What was Brimmel's gross profit percentage?

Accepted Answer

A) 55% 
B) 45% 
C) 62% 
D) 222% 
A) 55% 
B) 45% 
C) 62% 
D) 222%

Question 12

The primary responsibility for the information in a corporation's financial statements lies with the chief executive officer (CEO) and the chief financial officer (CFO).

Accepted Answer

A) True 
 B)False

Question 13

On January 1, 2016 Gucci Brothers Inc. had a $500,000 credit balance in retained earnings and $600,000 balance in common stock. During 2016, the company earned net income of $100,000, declared a dividend of $15,000, and issued additional stock for $25,000. What is total stockholders' equity on December 31, 2016?

Accepted Answer

A) $1,100,000. 
B) $1,210,000. 
C) $1,225,000. 
D) $1,240,000. 
A) $1,100,000. 
B) $1,210,000. 
C) $1,225,000. 
D) $1,240,000.

Question 14

Sales by major product category is a required financial statement disclosure.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements regarding earnings per share is false?

Accepted Answer

A) It is reported on the income statement. 
B) It increases when net income increases. 
C) It is calculated using the average number of common shares outstanding during the period. 
D) It would not be affected by additional shares of common stock issued during the year. 
A) It is reported on the income statement. 
B) It increases when net income increases. 
C) It is calculated using the average number of common shares outstanding during the period. 
D) It would not be affected by additional shares of common stock issued during the year.

Question 16

The Willie Company has provided the following information: Operating expenses were $345,000;
Income from operations was $415,000;
Net sales were $1,100,000;
Interest expense was $71,000;
Loss from sale of investments was $87,000;
Income tax expense was $58,000.
What was Willie's nonoperating income (expense)?

Accepted Answer

A) ($71,000). 
B) ($158,000). 
C) $216,000. 
D) $257,000. 
A) ($71,000). 
B) ($158,000). 
C) $216,000. 
D) $257,000.

Question 17

Which of the following statements does not accurately describe the effect of the sale of inventory at a profit on the financial statements?

Accepted Answer

A) Income from operations and current assets both increase. 
B) Operating income and gross profit both increase. 
C) Net income and earnings per share both increase. 
D) Current assets do not change and stockholders' equity increases. 
A) Income from operations and current assets both increase. 
B) Operating income and gross profit both increase. 
C) Net income and earnings per share both increase. 
D) Current assets do not change and stockholders' equity increases.

Question 18

Which of the following statements regarding international financial reporting standards (IFRS) is false?

Accepted Answer

A) Research and development costs are expensed. 
B) Research costs are expensed and development costs are capitalized. 
C) Cash payments for interest are reported on the cash flow statement as either an operating or financing cash flow. 
D) Reversal of inventory write-downs is permitteD.Development costs are capitalized under IFRS. 
A) Research and development costs are expensed. 
B) Research costs are expensed and development costs are capitalized. 
C) Cash payments for interest are reported on the cash flow statement as either an operating or financing cash flow. 
D) Reversal of inventory write-downs is permitteD.Development costs are capitalized under IFRS.

Question 19

Harley Company has provided the following selected financial information.   What is Harley's 2016 return on assets (rounded)?

Accepted Answer

A) 12.5% 
B) 13.2% 
C) 16.0% 
D) 25.0% 
A) 12.5% 
B) 13.2% 
C) 16.0% 
D) 25.0%

Question 20

Which of the following best describes operating income?

Accepted Answer

A) It includes the results of discontinued operations. 
B) It is before operating expenses. 
C) It is sales minus cost of goods sold and income tax expense. 
D) It is net sales minus cost of goods sold and operating expenses. 
A) It includes the results of discontinued operations. 
B) It is before operating expenses. 
C) It is sales minus cost of goods sold and income tax expense. 
D) It is net sales minus cost of goods sold and operating expenses.

Which of the following statements is false when a company sells inventory costing $900 for $1,500 cash?

Information disclosed in a balance sheet about shares of common stock includes the number of shares that are:

Independent auditors are advisors who analyze financial statements and other economic information to formulate forecasts and stock recommendations.

Which of the following would not be reported in the operating activities section of the statement of cash flows, which has been prepared using the indirect method?

Which of the following statements regarding international financial reporting standards (IFRS) is false?

In which of the following classifications would cash dividend payments to stockholders be reported in the statement of cash flows?

The Callie Company has provided the following information: Operating expenses were $231,000; Cost of goods sold was $376,000; Net sales were $940,000; Interest expense was $32,000; Gain on sale of a building was $76,000; Income tax expense was $151,000. What was Callie's gross profit?

Marino Company has provided the following information: Net sales, $480,000 Net income, $24,000 Average total assets, $200,000 What is Marino's total asset turnover?

The Willie Company has provided the following information: Operating expenses were $345,000; Income from operations was $415,000; Net sales were $1,100,000; Interest expense was $71,000; Loss from sale of investments was $87,000; Income tax expense was $58,000. What was Willie's income before taxes?

Harley Company has provided the following selected financial information. What is Harley's 2016 total asset turnover (rounded)?

Brimmel Corp. has provided the following information: Sales were $780,000; Cost of goods sold was $429,000; Net income was $195,000. What was Brimmel's gross profit percentage?

The primary responsibility for the information in a corporation's financial statements lies with the chief executive officer (CEO) and the chief financial officer (CFO).

Sales by major product category is a required financial statement disclosure.

Which of the following statements regarding earnings per share is false?

Which of the following statements does not accurately describe the effect of the sale of inventory at a profit on the financial statements?

Which of the following statements regarding international financial reporting standards (IFRS) is false?

Harley Company has provided the following selected financial information. What is Harley's 2016 return on assets (rounded)?

Which of the following best describes operating income?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments, Financial Statements, and the Quality of Earnings

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

PPA: Reporting and Interpreting Investments in Other Corporations

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Exam 5: Communicating and Interpreting Accounting Information

Which of the following statements is false when a company sells inventory costing $900 for $1,500 cash?

Information disclosed in a balance sheet about shares of common stock includes the number of shares that are:

Independent auditors are advisors who analyze financial statements and other economic information to formulate forecasts and stock recommendations.

Which of the following would not be reported in the operating activities section of the statement of cash flows, which has been prepared using the indirect method?

Which of the following statements regarding international financial reporting standards (IFRS) is false?

In which of the following classifications would cash dividend payments to stockholders be reported in the statement of cash flows?

The Callie Company has provided the following information: Operating expenses were $231,000; Cost of goods sold was $376,000; Net sales were $940,000; Interest expense was $32,000; Gain on sale of a building was $76,000; Income tax expense was $151,000. What was Callie's gross profit?

Marino Company has provided the following information: Net sales, $480,000 Net income, $24,000 Average total assets, $200,000 What is Marino's total asset turnover?

Harley Company has provided the following selected financial information. What is Harley's 2016 total asset turnover (rounded)?

Brimmel Corp. has provided the following information: Sales were $780,000; Cost of goods sold was $429,000; Net income was $195,000. What was Brimmel's gross profit percentage?

The primary responsibility for the information in a corporation's financial statements lies with the chief executive officer (CEO) and the chief financial officer (CFO).

Sales by major product category is a required financial statement disclosure.

Which of the following statements regarding earnings per share is false?

Which of the following statements does not accurately describe the effect of the sale of inventory at a profit on the financial statements?

Which of the following statements regarding international financial reporting standards (IFRS) is false?

Harley Company has provided the following selected financial information. What is Harley's 2016 return on assets (rounded)?

Which of the following best describes operating income?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments, Financial Statements, and the Quality of Earnings

Reporting and Interpreting Sales Revenue, Receivables, and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Property, Plant, and Equipment; Intangibles; and Natural Resources

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

PPA: Reporting and Interpreting Investments in Other Corporations

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