Question 1

Determining, if an item is material to the users of financial statements requires professional judgement.

Accepted Answer

A) True 
 B)False

Question 2

Earnings per share is calculated by dividing

Accepted Answer

A)  profit margin by the weighted average number of common shares. 
B)  net earnings by weighted average shareholders' equity. 
C)  profit margin by weighted average shareholders' equity. 
D)  net earnings by the weighted average number of common shares. 
A)  profit margin by the weighted average number of common shares. 
B)  net earnings by weighted average shareholders' equity. 
C)  profit margin by weighted average shareholders' equity. 
D)  net earnings by the weighted average number of common shares.

Question 3

In the indirect method, the operating activities section starts with profit computed under the accrual concept and then makes adjustments to it.

Accepted Answer

A) True 
 B)False

Question 4

If accounting information has confirmatory value, it

Accepted Answer

A)  is prepared on an annual basis. 
B)  has been verified by external audit. 
C)  confirms or corrects prior expectations. 
D)  is neutral in its representations. 
A)  is prepared on an annual basis. 
B)  has been verified by external audit. 
C)  confirms or corrects prior expectations. 
D)  is neutral in its representations.

Question 5

The two qualitative characteristics that are defined in terms of what influences or makes a difference to a decision maker are

Accepted Answer

A)  faithful representation and materiality. 
B)  comparability and timeliness. 
C)  relevance and understandability. 
D)  materiality and relevance. 
A)  faithful representation and materiality. 
B)  comparability and timeliness. 
C)  relevance and understandability. 
D)  materiality and relevance.

Question 6

Which of the following would appear in the current asset section of a classified statement of financial position?

Accepted Answer

A)  Accumulated depreciation. 
B)  Bonds payable. 
C)  Prepaid expenses. 
D)  Intangible assets. 
A)  Accumulated depreciation. 
B)  Bonds payable. 
C)  Prepaid expenses. 
D)  Intangible assets.

Question 7

The following alphabetical listing shows all of the account balances taken from the unadjusted trial balance at December 31, 20C, the end of the first month in business for Virginia Graphics Corporation:
Virginia Graphics Corporation Unadjusted Trial Balance December 31, 20C   The note payable above was for $10,000 borrowed on December 1, 20C at the start of the business. The note and interest at 12% are to be repaid on June 30, 19E. The office equipment was acquired on December 1, 20C. It has an estimated life of 4 years with no salvage value. The company uses straight-line depreciation. The Unearned Fees resulted from $1,300 collected in advance from a new customer, Richmond Company, on December 10, 20C. By December 31, 20C, services amounting to
$1,000 had been provided to Richmond Company. The company expects to pay income taxes of 10% on pretax profit.
Virginia Graphics needs help in preparing its financial statements for its first month in business. Sinc you are taking an accounting course, your neighbour, the owner of Virginia Graphics, has asked you to help.
Required:
1. Prepare the necessary adjusting journal entries based on the information provided above. (You nee not include explanations).
2. Prepare an income statement.
3. Explain the effect on the income statement if the adjustment for interest expense had not been made.

Accepted Answer

@#IMG-DLM& @#IMG-DLM& 3. Interest expense (and tot

Question 8

Materiality and relevance are both defined in terms of what influences or makes a difference to a decision maker.

Accepted Answer

A) True 
 B)False

Question 9

"Toys 4 U" is a retail toy store that has branched out into selling clothes and products for children an babies. The following are selected figures from their income statement and statement of financial position (in millions):
   Compute the following ratios for 2012, 2011 and 2010:
   (5) Write a short essay explaining what has happened to the return on equity for "Toys 4 U" and discuss the causes of changes in the ratio for the three years.

Accepted Answer

(1) -.012 in 2012, .044 in 2011, .043 in

Question 10

What amount of current assets would appear on the statement of financial position?

Accepted Answer

A)  $26,200. 
B)  $56,200. 
C)  $24,000. 
D)  $56,600. 
A)  $26,200. 
B)  $56,200. 
C)  $24,000. 
D)  $56,600.

Question 11

The users of accounting information are decision makers such as investors, creditors, and analysis experts who provide financial advice.

Accepted Answer

A) True 
 B)False

Question 12

Liabilities are generally classified on a statement of financial position as

Accepted Answer

A)  tangible liabilities and intangible liabilities. 
B)  small liabilities and large liabilities. 
C)  present liabilities and future liabilities. 
D)  current liabilities and non-current liabilities. 
A)  tangible liabilities and intangible liabilities. 
B)  small liabilities and large liabilities. 
C)  present liabilities and future liabilities. 
D)  current liabilities and non-current liabilities.

Question 13

Asset turnover measures which of the following?

Accepted Answer

A)  the sales revenue generated by efficient management of assets 
B)  the profit generated by efficient management of assets 
C)  how quickly we liquidate our inventory 
D)  the ability to earn profit for the shareholders 
A)  the sales revenue generated by efficient management of assets 
B)  the profit generated by efficient management of assets 
C)  how quickly we liquidate our inventory 
D)  the ability to earn profit for the shareholders

Question 14

Which of the following statements is true?

Accepted Answer

A)  Accumulated depreciation is a contra account in the income statement. 
B)  The current ratio is current assets divided by current liabilities. 
C)  Book value of a building is the cost less the current year's depreciation. 
D)  Retained earnings is the accumulated profit plus the accumulated dividends paid. 
A)  Accumulated depreciation is a contra account in the income statement. 
B)  The current ratio is current assets divided by current liabilities. 
C)  Book value of a building is the cost less the current year's depreciation. 
D)  Retained earnings is the accumulated profit plus the accumulated dividends paid.

Question 15

Morales, Inc. reported the following December 31 amounts in its financial statements in (millions):
   Compute the following for the current year:

Accepted Answer

(1) .1 (19.0/190.0)

Question 16

Independent auditors are advisors who analyze financial and other economic information to formulate forecasts and stock recommendations.

Accepted Answer

A) True 
 B)False

Question 17

The two fundamental qualitative characteristics are relevance and timeliness.

Accepted Answer

A) True 
 B)False

Question 18

Financing activities involve

Accepted Answer

A)  lending money. 
B)  issuing debt. 
C)  acquiring investments. 
D)  acquiring long-lived assets. 
A)  lending money. 
B)  issuing debt. 
C)  acquiring investments. 
D)  acquiring long-lived assets.

Question 19

Which of the following is an example of a typical institutional investor?

Accepted Answer

A)  The mutual funds managed by Nesbitt Burns. 
B)  The officers of IntraWest who own shares in the company. 
C)  Employees who participate in a stock option plan and own shares of IntraWest. 
D)  Individuals who buy shares of IntraWest from their brokers. 
A)  The mutual funds managed by Nesbitt Burns. 
B)  The officers of IntraWest who own shares in the company. 
C)  Employees who participate in a stock option plan and own shares of IntraWest. 
D)  Individuals who buy shares of IntraWest from their brokers.

Question 20

Which of the following will cause an increase in net profit margin, asset turnover and financial leverage as long as expenses do not grow faster than revenue?

Accepted Answer

A)  An increase in profit 
B)  A decrease in average total assets 
C)  An increase in sales volume 
D)  A decrease in total liabilities 
A)  An increase in profit 
B)  A decrease in average total assets 
C)  An increase in sales volume 
D)  A decrease in total liabilities

Determining, if an item is material to the users of financial statements requires professional judgement.

Earnings per share is calculated by dividing

In the indirect method, the operating activities section starts with profit computed under the accrual concept and then makes adjustments to it.

If accounting information has confirmatory value, it

The two qualitative characteristics that are defined in terms of what influences or makes a difference to a decision maker are

Which of the following would appear in the current asset section of a classified statement of financial position?

Materiality and relevance are both defined in terms of what influences or makes a difference to a decision maker.

What amount of current assets would appear on the statement of financial position?

The users of accounting information are decision makers such as investors, creditors, and analysis experts who provide financial advice.

Liabilities are generally classified on a statement of financial position as

Asset turnover measures which of the following?

Which of the following statements is true?

Morales, Inc. reported the following December 31 amounts in its financial statements in (millions): Compute the following for the current year:

Independent auditors are advisors who analyze financial and other economic information to formulate forecasts and stock recommendations.

The two fundamental qualitative characteristics are relevance and timeliness.

Financing activities involve

Which of the following is an example of a typical institutional investor?

Which of the following will cause an increase in net profit margin, asset turnover and financial leverage as long as expenses do not grow faster than revenue?

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

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

Determining, if an item is material to the users of financial statements requires professional judgement.

Earnings per share is calculated by dividing

In the indirect method, the operating activities section starts with profit computed under the accrual concept and then makes adjustments to it.

If accounting information has confirmatory value, it

The two qualitative characteristics that are defined in terms of what influences or makes a difference to a decision maker are

Which of the following would appear in the current asset section of a classified statement of financial position?

Materiality and relevance are both defined in terms of what influences or makes a difference to a decision maker.

What amount of current assets would appear on the statement of financial position?

The users of accounting information are decision makers such as investors, creditors, and analysis experts who provide financial advice.

Liabilities are generally classified on a statement of financial position as

Asset turnover measures which of the following?

Which of the following statements is true?

Morales, Inc. reported the following December 31 amounts in its financial statements in (millions): Compute the following for the current year:

Independent auditors are advisors who analyze financial and other economic information to formulate forecasts and stock recommendations.

The two fundamental qualitative characteristics are relevance and timeliness.

Financing activities involve

Which of the following is an example of a typical institutional investor?

Which of the following will cause an increase in net profit margin, asset turnover and financial leverage as long as expenses do not grow faster than revenue?

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