Question 1

Current assets divided by current liabilities is known as the

Accepted Answer

A) profit margin. 
B) current ratio. 
C) working capital. 
D) capital structure. 
A) profit margin. 
B) current ratio. 
C) working capital. 
D) capital structure.

Question 2

The lower-of-cost-or-market method of accounting for inventories follows the convention of

Accepted Answer

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

Question 3

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 4

The conservatism convention should not be used when the accountant is certain of a particular measure.

Accepted Answer

A) True 
 B)False

Question 5

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 6

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 total amount of working capital for Cane Construction is

Accepted Answer

A) $4,000. 
B) $14,000. 
C) $6,000. 
D) $2,000. 
A) $4,000. 
B) $14,000. 
C) $6,000. 
D) $2,000.

Question 7

__________ is the quality that different knowledgeable and independent observers could reach concensus that a particular depiction is a faithful representation.

Accepted Answer

A) Verifiability. 
B) Consistency. 
C) Comparability. 
D) Neutrality. 
A) Verifiability. 
B) Consistency. 
C) Comparability. 
D) Neutrality.

Question 8

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

Accepted Answer

A) 0.46. 
B) 0.67. 
C) 2.18. 
D) 0.33. 
A) 0.46. 
B) 0.67. 
C) 2.18. 
D) 0.33.

Question 9

In accounting,$1,000 is generally considered the dividing line between material and immaterial amounts.

Accepted Answer

A) True 
 B)False

Question 10

The term owner's equity is preferred over the term net worth because most assets are carried at original cost rather than at current value.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements best describes predictive value?

Accepted Answer

A) Helps capital providers make decisions about future actions. 
B) Provides all information necessary for a reliable decision. 
C) Enables users to identify similarities and differences. 
D) Enables users to comprehend the meaning of the information. 
A) Helps capital providers make decisions about future actions. 
B) Provides all information necessary for a reliable decision. 
C) Enables users to identify similarities and differences. 
D) Enables users to comprehend the meaning of the information.

Question 12

Bill Pierce owns several ice cream shops all within 50 miles of his home.He has plans to expand the number of shops he owns.This planned expansion will require a large bank loan.Bill has always done his own accounting work and has prepared a set of financial statements for each of the past five years of operations to present to the bank.Because some periods were more profitable than others,Bill attempted to streamline his earnings by switching depreciation and inventory valuation methods frequently.This created the appearance that his company earnings were very consistent over the years.Discuss the merits of Bill's financial statements with regard to his streamlining decisions.

Accepted Answer

Bill's attempt to streamline his earning

Question 13

A practical decision to expense a $120 printer rather than record it as property,plant,and equipment and depreciate it probably is made on the basis of the convention of

Accepted Answer

A) conservatism. 
B) consistency. 
C) materiality. 
D) full disclosure. 
A) conservatism. 
B) consistency. 
C) materiality. 
D) full disclosure.

Question 14

Faithful representation is comprised of all of the following except

Accepted Answer

A) Verifiability 
B) Completeness 
C) Neutrality 
D) Free from error 
A) Verifiability 
B) Completeness 
C) Neutrality 
D) Free from error

Question 15

An investment is classified as short term or long term based on

Accepted Answer

A) whether the investment can be sold immediately. 
B) the length of time the investor expects to hold it. 
C) the purpose for which it is held. 
D) the dollar amount of the investment. 
A) whether the investment can be sold immediately. 
B) the length of time the investor expects to hold it. 
C) the purpose for which it is held. 
D) the dollar amount of the investment.

Question 16

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 17

Illegal acts of a small dollar amount can be ignored because they are immaterial.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Contributed capital is shown on a corporate balance sheet as two amounts: the par value of the issued stock and retained earnings.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

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

Current assets divided by current liabilities is known as the

The lower-of-cost-or-market method of accounting for inventories follows the convention of

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 conservatism convention should not be used when the accountant is certain of a particular measure.

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.

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 total amount of working capital for Cane Construction is

__________ is the quality that different knowledgeable and independent observers could reach concensus that a particular depiction is a faithful representation.

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

In accounting,$1,000 is generally considered the dividing line between material and immaterial amounts.

The term owner's equity is preferred over the term net worth because most assets are carried at original cost rather than at current value.

Which of the following statements best describes predictive value?

A practical decision to expense a $120 printer rather than record it as property,plant,and equipment and depreciate it probably is made on the basis of the convention of

Faithful representation is comprised of all of the following except

An investment is classified as short term or long term based on

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

Illegal acts of a small dollar amount can be ignored because they are immaterial.

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

Contributed capital is shown on a corporate balance sheet as two amounts: the par value of the issued stock and retained earnings.

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

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Supplement: Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

Filters

Exam 5: Foundations of Financial Reporting and the Classified Balance Sheet

Current assets divided by current liabilities is known as the

The lower-of-cost-or-market method of accounting for inventories follows the convention of

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 conservatism convention should not be used when the accountant is certain of a particular measure.

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.

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 total amount of working capital for Cane Construction is

__________ is the quality that different knowledgeable and independent observers could reach concensus that a particular depiction is a faithful representation.

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

In accounting,$1,000 is generally considered the dividing line between material and immaterial amounts.

The term owner's equity is preferred over the term net worth because most assets are carried at original cost rather than at current value.

Which of the following statements best describes predictive value?

A practical decision to expense a $120 printer rather than record it as property,plant,and equipment and depreciate it probably is made on the basis of the convention of

Faithful representation is comprised of all of the following except

An investment is classified as short term or long term based on

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

Illegal acts of a small dollar amount can be ignored because they are immaterial.

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

Contributed capital is shown on a corporate balance sheet as two amounts: the par value of the issued stock and retained earnings.

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

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Supplement: Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

Filters