Question 1

Which of the following is not reported as an operating expense on the income statement?

Accepted Answer

A) Administrative expenses. 
B) Research and development expense. 
C) Interest expense. 
D) Selling expenses. 
A) Administrative expenses. 
B) Research and development expense. 
C) Interest expense. 
D) Selling expenses.

Question 2

Which of the following is not a responsibility of the chief executive officer (CEO) and the chief financial officer (CFO)?

Accepted Answer

A) Overseeing the financial statement external audit. 
B) Ensuring the accuracy and completeness of all reports provided to the Securities & Exchange Commission (SE
C) . 
C) The certification of the strength of the internal control system. 
D) The disclosure to the auditor committee of any frauds they are aware of. 
A) Overseeing the financial statement external audit. 
B) Ensuring the accuracy and completeness of all reports provided to the Securities & Exchange Commission (SE
C) . 
C) The certification of the strength of the internal control system. 
D) The disclosure to the auditor committee of any frauds they are aware of.

Question 3

Which of the following is an objective of the external audit of a company's financial statements?

Accepted Answer

A) To provide a forecast of the company's future earnings. 
B) To assure no fraud has been committed by the company's management. 
C) To provide credibility that the financial statements are fairly presented. 
D) To detect all accounting errors made by the accounting system and employees. 
A) To provide a forecast of the company's future earnings. 
B) To assure no fraud has been committed by the company's management. 
C) To provide credibility that the financial statements are fairly presented. 
D) To detect all accounting errors made by the accounting system and employees.

Question 4

Determine the effect of the following transactions on the financial statements components identified. Code your answers as follows:
A: If the transaction results in an increase in the financial statement component or ratio.
B: If the transaction results in a decrease in the financial statement component or ratio.
C: If the transaction does not affect the financial statement component or ratio.
Transaction 1: A company sold inventory for an amount greater than its cost.
Gross profit _____
Current assets _____
Stockholders' equity _____
Transaction 2: Advertising expense was recorded but has yet to be paid for.
Net income _____
Gross Profit _____
Stockholders' equity _____

Accepted Answer

Transaction 1: A company sold inventory

Question 5

In what order are cash flow activities presented on the statement of cash flows?

Accepted Answer

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

Question 6

Which of the following is true about gross profit (gross margin)?

Accepted Answer

A) It is net sales minus operating expenses. 
B) It is net sales minus cost of goods sold. 
C) It is the same as income from continuing operations. 
D) It is net sales minus cost of goods sold and operating expenses. 
A) It is net sales minus operating expenses. 
B) It is net sales minus cost of goods sold. 
C) It is the same as income from continuing operations. 
D) It is net sales minus cost of goods sold and operating expenses.

Question 7

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

Accepted Answer

A) 75% 
B) 12% 
C) 42% 
D) 5% 
A) 75% 
B) 12% 
C) 42% 
D) 5%

Question 8

Which of the following would not be classified as a current asset?

Accepted Answer

A) Accounts receivable. 
B) Goodwill. 
C) Inventories. 
D) Non-trade receivables. 
A) Accounts receivable. 
B) Goodwill. 
C) Inventories. 
D) Non-trade receivables.

Question 9

Anjou Company had 10,000 shares of common stock outstanding at December 31, 2015 and 14,000 shares of common stock outstanding at December 31, 2016. Anjou had sales of $3,600,000 in 2016 and net income of $280,000 in 2016. What is Anjou's earnings per share reported for 2016?

Accepted Answer

A) $7.78 
B) $9.36 
C) $20.00 
D) $23.33 
A) $7.78 
B) $9.36 
C) $20.00 
D) $23.33

Question 10

The Securities & Exchange Commission (SEC) oversees the work of the Financial Accounting Standards Board (FASB).

Accepted Answer

A) True 
 B)False

Question 11

The following information was taken from the income statement and balance sheet of The Mickey Company for the years 2016 and 2017:   Requirements:
Compute the following ratios for 2017: 
A.Net profit margin
B.Total asset turnover
C.Return on assets

Accepted Answer

A. Net profit margin ($2,345 ÷ $30,752)

Question 12

Which of the following would not be included within the operating activities section of a cash flow statement?

Accepted Answer

A) Cash paid for research and development. 
B) Cash paid for insurance. 
C) Cash paid for interest expense. 
D) Cash paid to acquire a patent. 
A) Cash paid for research and development. 
B) Cash paid for insurance. 
C) Cash paid for interest expense. 
D) Cash paid to acquire a patent.

Question 13

Kryton Corp. has provided the following information: Gross profit was $620,000;
Cost of goods sold was $380,000;
Net income was $400,000.
What was Kryton's gross profit percentage?

Accepted Answer

A) 40% 
B) 61.3% 
C) 62% 
D) 155% 
A) 40% 
B) 61.3% 
C) 62% 
D) 155%

Question 14

An intangible asset has no physical existence and no life.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is true?

Accepted Answer

A) A decrease in net income decreases both the net profit margin ratio and the total asset turnover ratio. 
B) An increase in average total assets results in a decrease in both the total asset turnover ratio and the net profit margin ratio. 
C) A decrease in average total assets results in an increase in the total asset turnover ratio and a decrease in the net profit margin ratio. 
D) An increase in net income increases both the net profit margin ratio and the return on assets ratio. 
A) A decrease in net income decreases both the net profit margin ratio and the total asset turnover ratio. 
B) An increase in average total assets results in a decrease in both the total asset turnover ratio and the net profit margin ratio. 
C) A decrease in average total assets results in an increase in the total asset turnover ratio and a decrease in the net profit margin ratio. 
D) An increase in net income increases both the net profit margin ratio and the return on assets ratio.

Question 16

For the year ending December 31, 2016, the accounts of Jackson Corporation showed the following balances:   Requirement:
Determine the components of stockholders' equity as of December 31, 2016.

Accepted Answer

Common stock: $550,000 = $500,

Question 17

Which of the following would not be included on an income statement?

Accepted Answer

A) Accumulated depreciation. 
B) Insurance expense. 
C) Cost of goods sold. 
D) Discontinued operations. 
A) Accumulated depreciation. 
B) Insurance expense. 
C) Cost of goods sold. 
D) Discontinued operations.

Question 18

The gross profit percentage decreases when operating expenses increase.

Accepted Answer

A) True 
 B)False

Question 19

Information on all contractual agreements is included in notes as a financial statement disclosure.

Accepted Answer

A) True 
 B)False

Question 20

Net sales plus cost of goods sold is reported on the income statement as income from continuing operations.

Accepted Answer

A) True 
 B)False

Which of the following is not reported as an operating expense on the income statement?

Which of the following is not a responsibility of the chief executive officer (CEO) and the chief financial officer (CFO)?

Which of the following is an objective of the external audit of a company's financial statements?

In what order are cash flow activities presented on the statement of cash flows?

Which of the following is true about gross profit (gross margin)?

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

Which of the following would not be classified as a current asset?

Anjou Company had 10,000 shares of common stock outstanding at December 31, 2015 and 14,000 shares of common stock outstanding at December 31, 2016. Anjou had sales of $3,600,000 in 2016 and net income of $280,000 in 2016. What is Anjou's earnings per share reported for 2016?

The Securities & Exchange Commission (SEC) oversees the work of the Financial Accounting Standards Board (FASB).

The following information was taken from the income statement and balance sheet of The Mickey Company for the years 2016 and 2017: Requirements: Compute the following ratios for 2017: A.Net profit margin B.Total asset turnover C.Return on assets

Which of the following would not be included within the operating activities section of a cash flow statement?

Kryton Corp. has provided the following information: Gross profit was $620,000; Cost of goods sold was $380,000; Net income was $400,000. What was Kryton's gross profit percentage?

An intangible asset has no physical existence and no life.

Which of the following statements is true?

For the year ending December 31, 2016, the accounts of Jackson Corporation showed the following balances: Requirement: Determine the components of stockholders' equity as of December 31, 2016.

Which of the following would not be included on an income statement?

The gross profit percentage decreases when operating expenses increase.

Information on all contractual agreements is included in notes as a financial statement disclosure.

Net sales plus cost of goods sold is reported on the income statement as income from continuing operations.

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 is not reported as an operating expense on the income statement?

Which of the following is not a responsibility of the chief executive officer (CEO) and the chief financial officer (CFO)?

Which of the following is an objective of the external audit of a company's financial statements?

In what order are cash flow activities presented on the statement of cash flows?

Which of the following is true about gross profit (gross margin)?

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

Which of the following would not be classified as a current asset?

Anjou Company had 10,000 shares of common stock outstanding at December 31, 2015 and 14,000 shares of common stock outstanding at December 31, 2016. Anjou had sales of $3,600,000 in 2016 and net income of $280,000 in 2016. What is Anjou's earnings per share reported for 2016?

The Securities & Exchange Commission (SEC) oversees the work of the Financial Accounting Standards Board (FASB).

The following information was taken from the income statement and balance sheet of The Mickey Company for the years 2016 and 2017: Requirements: Compute the following ratios for 2017: A.Net profit margin B.Total asset turnover C.Return on assets

Which of the following would not be included within the operating activities section of a cash flow statement?

Kryton Corp. has provided the following information: Gross profit was $620,000; Cost of goods sold was $380,000; Net income was $400,000. What was Kryton's gross profit percentage?

An intangible asset has no physical existence and no life.

Which of the following statements is true?

For the year ending December 31, 2016, the accounts of Jackson Corporation showed the following balances: Requirement: Determine the components of stockholders' equity as of December 31, 2016.

Which of the following would not be included on an income statement?

The gross profit percentage decreases when operating expenses increase.

Information on all contractual agreements is included in notes as a financial statement disclosure.

Net sales plus cost of goods sold is reported on the income statement as income from continuing operations.

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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