Question 1

The asset turnover ratio equals

Accepted Answer

A) revenues divided by average total assets. 
B) average total assets divided by net income. 
C) average total assets divided by total liabilities. 
D) net income divided by average total assets. 
A) revenues divided by average total assets. 
B) average total assets divided by net income. 
C) average total assets divided by total liabilities. 
D) net income divided by average total assets.

Question 2

A debt to equity ratio of 1.0 means that half of the company's assets are financed by creditors.

Accepted Answer

A) True 
 B)False

Question 3

The use of the lower-of-cost-or-market method for inventory is an application of the convention of conservatism.

Accepted Answer

A) True 
 B)False

Question 4

A company should classify land held for a planned manufacturing facility as

Accepted Answer

A) an intangible asset. 
B) an investment. 
C) a current asset. 
D) property,plant,and equipment. 
A) an intangible asset. 
B) an investment. 
C) a current asset. 
D) property,plant,and equipment.

Question 5

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 current ratio for Cane Construction is

Accepted Answer

A) 1.75. 
B) 0.57. 
C) 1.4. 
D) 2.0. 
A) 1.75. 
B) 0.57. 
C) 1.4. 
D) 2.0.

Question 6

The conventions of consistency and conservatism require that financial statements present all the information relevant to users' understanding of the statements.

Accepted Answer

A) True 
 B)False

Question 7

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 8

All of the following must certify that a public company's financial statements are accurate,complete,and not misleading,except for the

Accepted Answer

A) chief financial officer. 
B) director of human resources. 
C) chief executive officer. 
D) independent auditor. 
A) chief financial officer. 
B) director of human resources. 
C) chief executive officer. 
D) independent auditor.

Question 9

The profit margin and asset turnover ratios are important measures,but they have a limitation.Describe these limitations and discuss the ratio that can be used to overcome these deficiencies.

Accepted Answer

The profit margin ratio does not conside

Question 10

The debt to equity ratio equals

Accepted Answer

A) owner's equity divided by total liabilities. 
B) owner's equity divided by long-term liabilities. 
C) total liabilities divided by owner's equity. 
D) current liabilities divided by average owner's equity. 
A) owner's equity divided by total liabilities. 
B) owner's equity divided by long-term liabilities. 
C) total liabilities divided by owner's equity. 
D) current liabilities divided by average owner's equity.

Question 11

Which of the following accounts is most likely to appear on the balance sheet as a current liability?

Accepted Answer

A) Accumulated Depreciation 
B) Bonds Payable 
C) Mortgage Payable 
D) Wages Payable 
A) Accumulated Depreciation 
B) Bonds Payable 
C) Mortgage Payable 
D) Wages Payable

Question 12

Accounting information should make a difference to the outcome of a decision,according to the qualitative characteristic of

Accepted Answer

A) faithful representation. 
B) relevance. 
C) consistency. 
D) understandability. 
A) faithful representation. 
B) relevance. 
C) consistency. 
D) understandability.

Question 13

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

Accepted Answer

A) 67 percent. 
B) 75 percent. 
C) 25 percent. 
D) 33-1/3 percent. 
A) 67 percent. 
B) 75 percent. 
C) 25 percent. 
D) 33-1/3 percent.

Question 14

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 15

Using the following amounts taken from the balance sheet and income statement of a business,compute the measures listed below.After each answer,write "L" if it is a measure of liquidity or "P" if it is a measure of profitability.Round to two decimal places.
   a.Current ratio
b.Return on equity
c.Return on assets
d.Working capital

Accepted Answer

a.1.5 L ($30,000 F1F1F1S1F1F1

Question 16

Use this balance sheet and income statement to answer the following question.Use ending balances whenever average balances are required for computing ratios.     The total amount of working capital for National Textile is

Accepted Answer

A) $2,000. 
B) $6,000. 
C) $4,000. 
D) $30,000. 
A) $2,000. 
B) $6,000. 
C) $4,000. 
D) $30,000.

Question 17

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

Accepted Answer

A) $252,000. 
B) $238,000. 
C) $294,000. 
D) $406,000. 
A) $252,000. 
B) $238,000. 
C) $294,000. 
D) $406,000.

Question 18

Which of the following should be classified as a current asset?

Accepted Answer

A) Supplies 
B) Trademark 
C) Equipment 
D) Land held for future use 
A) Supplies 
B) Trademark 
C) Equipment 
D) Land held for future use

Question 19

The accounting convention that is most responsible for the increase in the number of notes to financial statements is

Accepted Answer

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

Question 20

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 profit margin for Cane Construction is

Accepted Answer

A) 30 percent. 
B) 75 percent. 
C) 60 percent. 
D) 27 percent. 
A) 30 percent. 
B) 75 percent. 
C) 60 percent. 
D) 27 percent.

The asset turnover ratio equals

A debt to equity ratio of 1.0 means that half of the company's assets are financed by creditors.

The use of the lower-of-cost-or-market method for inventory is an application of the convention of conservatism.

A company should classify land held for a planned manufacturing facility as

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 current ratio for Cane Construction is

The conventions of consistency and conservatism require that financial statements present all the information relevant to users' understanding of the statements.

Which of the following is not a measure of profitability?

All of the following must certify that a public company's financial statements are accurate,complete,and not misleading,except for the

The profit margin and asset turnover ratios are important measures,but they have a limitation.Describe these limitations and discuss the ratio that can be used to overcome these deficiencies.

The debt to equity ratio equals

Which of the following accounts is most likely to appear on the balance sheet as a current liability?

Accounting information should make a difference to the outcome of a decision,according to the qualitative characteristic of

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

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

Use this balance sheet and income statement to answer the following question.Use ending balances whenever average balances are required for computing ratios. The total amount of working capital for National Textile is

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

Which of the following should be classified as a current asset?

The accounting convention that is most responsible for the increase in the number of notes to financial statements is

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 profit margin for Cane Construction is

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

The asset turnover ratio equals

A debt to equity ratio of 1.0 means that half of the company's assets are financed by creditors.

The use of the lower-of-cost-or-market method for inventory is an application of the convention of conservatism.

A company should classify land held for a planned manufacturing facility as

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 current ratio for Cane Construction is

The conventions of consistency and conservatism require that financial statements present all the information relevant to users' understanding of the statements.

Which of the following is not a measure of profitability?

All of the following must certify that a public company's financial statements are accurate,complete,and not misleading,except for the

The profit margin and asset turnover ratios are important measures,but they have a limitation.Describe these limitations and discuss the ratio that can be used to overcome these deficiencies.

The debt to equity ratio equals

Which of the following accounts is most likely to appear on the balance sheet as a current liability?

Accounting information should make a difference to the outcome of a decision,according to the qualitative characteristic of

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

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

Use this balance sheet and income statement to answer the following question.Use ending balances whenever average balances are required for computing ratios. The total amount of working capital for National Textile is

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

Which of the following should be classified as a current asset?

The accounting convention that is most responsible for the increase in the number of notes to financial statements is

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 profit margin for Cane Construction is

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