Question 1

Which of the following would NOT be classified as a current asset on a classified balance sheet?

Accepted Answer

A)  Investment securities (trading) 
B)  Short-term investments 
C)  Intangible assets 
D)  Prepaid expenses 
A)  Investment securities (trading) 
B)  Short-term investments 
C)  Intangible assets 
D)  Prepaid expenses

Question 2

Heartland Company reported liabilities totaling $1,230,000 as of December 31,2014.The following information relates to those liabilities:
   After considering these items,what should be the total of Heartland' reported liabilities?

Accepted Answer

The answer of Heartland Company reported liabilities totaling $1,230,000 as...

Question 3

Which of the following is an appropriate computation for return on investment?

Accepted Answer

A)  Net income divided by sales 
B)  Net income divided by total assets 
C)  Sales divided by total assets 
D)  Sales divided by stockholders' equity 
A)  Net income divided by sales 
B)  Net income divided by total assets 
C)  Sales divided by total assets 
D)  Sales divided by stockholders' equity

Question 4

Helena Co.began operations on January 1,2014,with $100,000 from the issuance of stock and borrowed funds of $15,000.Net income for 2014 was $5,000 and Helena paid a $400 cash dividend on December 15.No additional activities affected owners' equity in 2014.At December 31,2014,Helena's liabilities had increased to $18,800.In Helena's December 31,2014,balance sheet,total assets should be reported at

Accepted Answer

A)  $119,600. 
B)  $120,000. 
C)  $123,400. 
D)  $138,400. 
A)  $119,600. 
B)  $120,000. 
C)  $123,400. 
D)  $138,400.

Question 5

The following data were taken from the financial statements of Howard Corporation for the year ended December 31,2014:   What was Howard's rate of return on assets for 2014?

Accepted Answer

A)  5 percent 
B)  6 percent 
C)  20 percent 
D)  24 percent 
A)  5 percent 
B)  6 percent 
C)  20 percent 
D)  24 percent

Question 6

In relation to a set of 2015 basic financial statements,a subsequent event is one that

Accepted Answer

A)  occurs before the 2015 financial statements are issued. 
B)  involves uncertainty as to possible gain or loss that will ultimately be resolved in 2016 or later. 
C)  occurs after the 2015 financial statements are issued. 
D)  requires an appropriate adjusting entry to be made as of the end of 2015. 
A)  occurs before the 2015 financial statements are issued. 
B)  involves uncertainty as to possible gain or loss that will ultimately be resolved in 2016 or later. 
C)  occurs after the 2015 financial statements are issued. 
D)  requires an appropriate adjusting entry to be made as of the end of 2015.

Question 7

The balance sheet category receivables represents claims to cash.Accounts receivable typically constitutes the largest dollar value of receivables.An estimated allowance for doubtful accounts should be deducted from the gross amount of accounts receivable to arrive at the estimated amount collectible.Plant assets are reported on the balance sheet at their historical cost less any accumulated depreciation.The allowance for doubtful accounts and accumulated depreciation are both termed contra-asset accounts.Which of the following statements regarding these two contra-asset accounts is true?

Accepted Answer

A)  Both result in the valuation of their related asset account at net realizable value. 
B)  Accumulated depreciation deducted from the related asset account shows the unallocated portion of the historical cost of the related asset. 
C)  Accumulated depreciation deducted from the related asset account shows the net realizable value of the related asset. 
D)  Accumulated depreciation deducted from the related asset account shows the current replacement cost of the related asset. 
A)  Both result in the valuation of their related asset account at net realizable value. 
B)  Accumulated depreciation deducted from the related asset account shows the unallocated portion of the historical cost of the related asset. 
C)  Accumulated depreciation deducted from the related asset account shows the net realizable value of the related asset. 
D)  Accumulated depreciation deducted from the related asset account shows the current replacement cost of the related asset.

Question 8

The December 31,2014,balance sheet of Giorgio Inc. ,reported total assets of $1,050,000 and total liabilities of $680,000.The following information relates to the year 2015:   The stockholders' equity section of the December 31,2015,balance sheet would report a balance of

Accepted Answer

A)  $400,000. 
B)  $685,000. 
C)  $525,000. 
D)  $835,000. 
A)  $400,000. 
B)  $685,000. 
C)  $525,000. 
D)  $835,000.

Question 9

Sonar Company prepared a draft of its 2014 balance sheet.The draft statement reported total assets of $437,500.Included in this total assets figure were the following items:   At which amount should Sonar' total assets be correctly reported in the December 31,2014,balance sheet?

Accepted Answer

A)  $420,850 
B)  $421,300 
C)  $425,050 
D)  $425,500 
A)  $420,850 
B)  $421,300 
C)  $425,050 
D)  $425,500

Question 10

Treasury stock should be reported

Accepted Answer

A)  as a current asset only if it will be sold within the next year or the operating cycle,whichever is longer. 
B)  as a current asset only if it will be sold within the next year or the operating cycle,whichever is shorter. 
C)  in the Investments and Funds section of the balance sheet. 
D)  as a deduction from total stockholders' equity on the balance sheet. 
A)  as a current asset only if it will be sold within the next year or the operating cycle,whichever is longer. 
B)  as a current asset only if it will be sold within the next year or the operating cycle,whichever is shorter. 
C)  in the Investments and Funds section of the balance sheet. 
D)  as a deduction from total stockholders' equity on the balance sheet.

Question 11

Which of the following would NOT be considered an element of working capital?

Accepted Answer

A)  Investment securities (current) 
B)  Work in process inventories 
C)  Accrued interest on notes payable 
D)  Organization costs 
A)  Investment securities (current) 
B)  Work in process inventories 
C)  Accrued interest on notes payable 
D)  Organization costs

Question 12

Bowman Company reported assets totaling $870,000 as of December 31,2014.The following information relates to those assets:
   After considering the items above,what should be the total of Bowman's reported assets?

Accepted Answer

The answer of Bowman Company reported assets totaling $870,000 as...

Question 13

The operating cycle

Accepted Answer

A)  measures the time elapsed between cash disbursement for inventory and cash collection of the sales price. 
B)  refers to the seasonal variations experienced by business enterprises. 
C)  should be used to classify assets and liabilities as current if it is less than one year. 
D)  cannot exceed one year. 
A)  measures the time elapsed between cash disbursement for inventory and cash collection of the sales price. 
B)  refers to the seasonal variations experienced by business enterprises. 
C)  should be used to classify assets and liabilities as current if it is less than one year. 
D)  cannot exceed one year.

Question 14

A contingent liability should be recorded when

Accepted Answer

A)  any lawsuit is actually filed against a company. 
B)  it is certain that funds are available to pay the amount of the claim. 
C)  it is probable that a liability has been incurred even though the amount of the loss cannot be reasonably estimated. 
D)  the amount of the loss can be reasonably estimated and it is probable prior to issuance of financial statements that a liability has been incurred. 
A)  any lawsuit is actually filed against a company. 
B)  it is certain that funds are available to pay the amount of the claim. 
C)  it is probable that a liability has been incurred even though the amount of the loss cannot be reasonably estimated. 
D)  the amount of the loss can be reasonably estimated and it is probable prior to issuance of financial statements that a liability has been incurred.

Question 15

In a consolidated balance sheet,the minority interest is reported

Accepted Answer

A)  as part of long-term liabilities. 
B)  between liabilities and stockholders' equity 
C)  as part of stockholders' equity. 
D)  as part of long-term assets. 
A)  as part of long-term liabilities. 
B)  between liabilities and stockholders' equity 
C)  as part of stockholders' equity. 
D)  as part of long-term assets.

Question 16

Which of the following items would normally be excluded from the computation of working capital?

Accepted Answer

A)  Advances from customers for goods that will be shipped three months after the balance sheet date 
B)  The portion of long-term debt that matures six months after the balance sheet date and will be paid from the regular cash account 
C)  Prepaid insurance 
D)  Cash surrender value of life insurance 
A)  Advances from customers for goods that will be shipped three months after the balance sheet date 
B)  The portion of long-term debt that matures six months after the balance sheet date and will be paid from the regular cash account 
C)  Prepaid insurance 
D)  Cash surrender value of life insurance

Question 17

Barron Co.'s current ratio is 2:1.Which of the following transactions would normally increase Barney's current ratio?

Accepted Answer

A)  Purchasing inventory on account 
B)  Borrowing money by signing a long-term note 
C)  Collecting an account receivable 
D)  Purchasing land for cash 
A)  Purchasing inventory on account 
B)  Borrowing money by signing a long-term note 
C)  Collecting an account receivable 
D)  Purchasing land for cash

Question 18

Analysis of a firm's balance sheet provides information on its liquidity,which is the ability to

Accepted Answer

A)  satisfy short-term obligations. 
B)  maintain profitable operations. 
C)  maintain past levels of preferred and common dividends. 
D)  survive a major economic downturn. 
A)  satisfy short-term obligations. 
B)  maintain profitable operations. 
C)  maintain past levels of preferred and common dividends. 
D)  survive a major economic downturn.

Question 19

Which of the following is not true regarding reserves that appear in the equity section of the balance sheet of foreign companies?

Accepted Answer

A)  Reserves represent cash set aside to fund capital projects. 
B)  Reserves are different categories found in the equity section of the balance sheet. 
C)  The balances in reserve accounts can affect an entity's legal ability to pay cash dividends. 
D)  An extensive description of each reserve shown on the balance sheet is provided. 
A)  Reserves represent cash set aside to fund capital projects. 
B)  Reserves are different categories found in the equity section of the balance sheet. 
C)  The balances in reserve accounts can affect an entity's legal ability to pay cash dividends. 
D)  An extensive description of each reserve shown on the balance sheet is provided.

Question 20

Goddard Corporation's trial balance contained the following account balances at December 31,2014:   On Goddard's December 31,2014,balance sheet,the current assets total should be

Accepted Answer

A)  $189,000. 
B)  $201,000. 
C)  $219,000. 
D)  $243,000. 
A)  $189,000. 
B)  $201,000. 
C)  $219,000. 
D)  $243,000.

Exam 3: The Balance Sheet and Notes to the Financial Statements

Which of the following would NOT be classified as a current asset on a classified balance sheet?

Heartland Company reported liabilities totaling $1,230,000 as of December 31,2014.The following information relates to those liabilities: After considering these items,what should be the total of Heartland' reported liabilities?

Which of the following is an appropriate computation for return on investment?

The following data were taken from the financial statements of Howard Corporation for the year ended December 31,2014: What was Howard's rate of return on assets for 2014?

In relation to a set of 2015 basic financial statements,a subsequent event is one that

The December 31,2014,balance sheet of Giorgio Inc. ,reported total assets of $1,050,000 and total liabilities of $680,000.The following information relates to the year 2015: The stockholders' equity section of the December 31,2015,balance sheet would report a balance of

Sonar Company prepared a draft of its 2014 balance sheet.The draft statement reported total assets of $437,500.Included in this total assets figure were the following items: At which amount should Sonar' total assets be correctly reported in the December 31,2014,balance sheet?

Treasury stock should be reported

Which of the following would NOT be considered an element of working capital?

Bowman Company reported assets totaling $870,000 as of December 31,2014.The following information relates to those assets: After considering the items above,what should be the total of Bowman's reported assets?

The operating cycle

A contingent liability should be recorded when

In a consolidated balance sheet,the minority interest is reported

Which of the following items would normally be excluded from the computation of working capital?

Barron Co.'s current ratio is 2:1.Which of the following transactions would normally increase Barney's current ratio?

Analysis of a firm's balance sheet provides information on its liquidity,which is the ability to

Which of the following is not true regarding reserves that appear in the equity section of the balance sheet of foreign companies?

Goddard Corporation's trial balance contained the following account balances at December 31,2014: On Goddard's December 31,2014,balance sheet,the current assets total should be

Financial Reporting

A Review of the Accounting Cycle

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

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