Question 1

Financial leverage measures which of the following?

Accepted Answer

A)  the profit generated for every dollar of investment by the shareholders 
B)  the ability to convert sales dollars to profit 
C)  how many dollars of assets are employed for each dollar of shareholders' investment 
D)  the sales revenue generated by effective asset management 
A)  the profit generated for every dollar of investment by the shareholders 
B)  the ability to convert sales dollars to profit 
C)  how many dollars of assets are employed for each dollar of shareholders' investment 
D)  the sales revenue generated by effective asset management

Question 2

A supplier to a company would be most interested in the

Accepted Answer

A)  price-earnings ratio. 
B)  cash total debt coverage. 
C)  current ratio. 
D)  earnings per share. 
A)  price-earnings ratio. 
B)  cash total debt coverage. 
C)  current ratio. 
D)  earnings per share.

Question 3

Which of the following statements is not true?

Accepted Answer

A)  For accounting information to be relevant, it must have timeliness. 
B)  Relevant accounting information must be capable of making a difference in a user's decision. 
C)  Comparability means using different accounting principles from year to year within a company. 
D)  Faithful representation means information must be neutral, complete, and free from material error. 
A)  For accounting information to be relevant, it must have timeliness. 
B)  Relevant accounting information must be capable of making a difference in a user's decision. 
C)  Comparability means using different accounting principles from year to year within a company. 
D)  Faithful representation means information must be neutral, complete, and free from material error.

Question 4

Complete the following statement of financial position by entering the appropriate amounts in the blanks provided.

Accepted Answer

A. $44,000.
B. $10,0

Question 5

Return on equity (ROE) primarily measures which of the following?

Accepted Answer

A)  The ability to earn profit for the common shareholders 
B)  The ability to earn profit for the preferred shareholders 
C)  The ability to generate revenue while holding assets steady 
D)  The ability to generate sufficient profit on total assets 
A)  The ability to earn profit for the common shareholders 
B)  The ability to earn profit for the preferred shareholders 
C)  The ability to generate revenue while holding assets steady 
D)  The ability to generate sufficient profit on total assets

Question 6

The dollar amount of net property, plant and equipment is:

Accepted Answer

A)  $210,000 
B)  $180,000 
C)  $350,000 
D)  $80,000 
A)  $210,000 
B)  $180,000 
C)  $350,000 
D)  $80,000

Question 7

Which of the following is an example of accumulated other comprehensive income?

Accepted Answer

A)  rent revenue 
B)  loss on disposal of equipment 
C)  unrealized gains on security investments 
D)  interest income 
A)  rent revenue 
B)  loss on disposal of equipment 
C)  unrealized gains on security investments 
D)  interest income

Question 8

A disadvantage of the indirect method of reporting cash flows from operating activities is that the difference between the net amount of cash flows from operating activities and net earnings is not emphasized.

Accepted Answer

A) True 
 B)False

Question 9

Financial analysts, using modern information technology to gather and analyze information about companies, competitors, the economy and even population trends, make predictions about future company profitability which form the basis of their buy, hold, or sell recommendations.

Accepted Answer

A) True 
 B)False

Question 10

Accounting information should be neutral in order to enhance:

Accepted Answer

A)  comparability. 
B)  faithful representation. 
C)  materiality. 
D)  understandability. 
A)  comparability. 
B)  faithful representation. 
C)  materiality. 
D)  understandability.

Question 11

Harris Company issued 10,000 shares of its common shares for cash. The journal entry to record the share issue would include

Accepted Answer

A)  a debit to Retained Earnings. 
B)  a credit to Common Shares. 
C)  a debit to Common Shares. 
D)  a credit to Cash. 
A)  a debit to Retained Earnings. 
B)  a credit to Common Shares. 
C)  a debit to Common Shares. 
D)  a credit to Cash.

Question 12

A complete set of financial statements for most businesses includes only the following: statement of earnings, statement of financial position, and statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 13

The dollar amount of current assets is:

Accepted Answer

A)  $40,000 
B)  $196,000 
C)  $26,000 
D)  $25,000 
A)  $40,000 
B)  $196,000 
C)  $26,000 
D)  $25,000

Question 14

The cash flow statement will not report the

Accepted Answer

A)  sources of cash in the current period. 
B)  change in the cash balance for the current period. 
C)  uses of cash in the current period. 
D)  amount of cheques outstanding at the end of the period. 
A)  sources of cash in the current period. 
B)  change in the cash balance for the current period. 
C)  uses of cash in the current period. 
D)  amount of cheques outstanding at the end of the period.

Question 15

The conceptual framework of accounting begins with

Accepted Answer

A)  qualitative characteristics. 
B)  the going concern assumption. 
C)  elements of financial statements. 
D)  the objective of financing reporting. 
A)  qualitative characteristics. 
B)  the going concern assumption. 
C)  elements of financial statements. 
D)  the objective of financing reporting.

Question 16

What is the primary purpose of hiring a public accounting firm to examine the financial statements of the company?

Accepted Answer

A)  To detect all accounting errors made by the accounting system and employees. 
B)  To provide credibility that the financial information conforms with international financial reporting standards in all material respects. 
C)  To assure no fraud has been committed by the company's management. 
D)  To detect fraud committed by employees. 
A)  To detect all accounting errors made by the accounting system and employees. 
B)  To provide credibility that the financial information conforms with international financial reporting standards in all material respects. 
C)  To assure no fraud has been committed by the company's management. 
D)  To detect fraud committed by employees.

Question 17

In order for accounting information to be relevant, it must

Accepted Answer

A)  help predict future economic events or confirm prior expectations. 
B)  have very little cost. 
C)  be used by a lot of different organizations. 
D)  be verifiable. 
A)  help predict future economic events or confirm prior expectations. 
B)  have very little cost. 
C)  be used by a lot of different organizations. 
D)  be verifiable.

Question 18

On the multiple step income statement, which of the following is an example of a non-operating (other) expense?

Accepted Answer

A)  depreciation expense 
B)  selling expense 
C)  research and development costs 
D)  interest expense 
A)  depreciation expense 
B)  selling expense 
C)  research and development costs 
D)  interest expense

Question 19

Inventories and prepaid expenses are classified as long-term investments.

Accepted Answer

A) True 
 B)False

Question 20

We calculate return on equity (ROE) by dividing net earnings by average shareholders' equity.

Accepted Answer

A) True 
 B)False

Financial leverage measures which of the following?

A supplier to a company would be most interested in the

Which of the following statements is not true?

Complete the following statement of financial position by entering the appropriate amounts in the blanks provided.

Return on equity (ROE) primarily measures which of the following?

The dollar amount of net property, plant and equipment is:

Which of the following is an example of accumulated other comprehensive income?

A disadvantage of the indirect method of reporting cash flows from operating activities is that the difference between the net amount of cash flows from operating activities and net earnings is not emphasized.

Financial analysts, using modern information technology to gather and analyze information about companies, competitors, the economy and even population trends, make predictions about future company profitability which form the basis of their buy, hold, or sell recommendations.

Accounting information should be neutral in order to enhance:

Harris Company issued 10,000 shares of its common shares for cash. The journal entry to record the share issue would include

A complete set of financial statements for most businesses includes only the following: statement of earnings, statement of financial position, and statement of cash flows.

The dollar amount of current assets is:

The cash flow statement will not report the

The conceptual framework of accounting begins with

What is the primary purpose of hiring a public accounting firm to examine the financial statements of the company?

In order for accounting information to be relevant, it must

On the multiple step income statement, which of the following is an example of a non-operating (other) expense?

Inventories and prepaid expenses are classified as long-term investments.

We calculate return on equity (ROE) by dividing net earnings by average shareholders' equity.

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

Communicating and Interpreting Accounting Information

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

Reporting and Interpreting Investments in Other Corporations

Filters

Exam 6: Reporting and Interpreting Sales Revenue, Receivables, and Cash

Financial leverage measures which of the following?

A supplier to a company would be most interested in the

Which of the following statements is not true?

Complete the following statement of financial position by entering the appropriate amounts in the blanks provided.

Return on equity (ROE) primarily measures which of the following?

The dollar amount of net property, plant and equipment is:

Which of the following is an example of accumulated other comprehensive income?

A disadvantage of the indirect method of reporting cash flows from operating activities is that the difference between the net amount of cash flows from operating activities and net earnings is not emphasized.

Financial analysts, using modern information technology to gather and analyze information about companies, competitors, the economy and even population trends, make predictions about future company profitability which form the basis of their buy, hold, or sell recommendations.

Accounting information should be neutral in order to enhance:

Harris Company issued 10,000 shares of its common shares for cash. The journal entry to record the share issue would include

A complete set of financial statements for most businesses includes only the following: statement of earnings, statement of financial position, and statement of cash flows.

The dollar amount of current assets is:

The cash flow statement will not report the

The conceptual framework of accounting begins with

What is the primary purpose of hiring a public accounting firm to examine the financial statements of the company?

In order for accounting information to be relevant, it must

On the multiple step income statement, which of the following is an example of a non-operating (other) expense?

Inventories and prepaid expenses are classified as long-term investments.

We calculate return on equity (ROE) by dividing net earnings by average shareholders' equity.

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

Communicating and Interpreting Accounting Information

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

Reporting and Interpreting Investments in Other Corporations

Filters