Question 1

The balance sheet contributes to financial reporting by providing a basis for all of the following except

Accepted Answer

A) computing rates of return. 
B) evaluating the capital structure of the enterprise. 
C) determining the increase in cash due to operations. 
D) assessing the liquidity and financial flexibility of the enterprise. 
A) computing rates of return. 
B) evaluating the capital structure of the enterprise. 
C) determining the increase in cash due to operations. 
D) assessing the liquidity and financial flexibility of the enterprise.

Question 2

The account form and the report form of the balance sheet are both acceptable under GAAP.

Accepted Answer

A) True 
 B)False

Question 3

The statement of cash flows reports only the cash effects of operations during a period and financing transactions.

Accepted Answer

A) True 
 B)False

Question 4

Long-term liabilities include

Accepted Answer

A) obligations not expected to be liquidated within the operating cycle. 
B) obligations payable at some date beyond the operating cycle. 
C) deferred income taxes and most lease obligations. 
D) all of these. 
A) obligations not expected to be liquidated within the operating cycle. 
B) obligations payable at some date beyond the operating cycle. 
C) deferred income taxes and most lease obligations. 
D) all of these.

Question 5

Which of the following would be classified in a different major section of a balance sheet from the others?

Accepted Answer

A) Capital stock 
B) Common stock subscribed 
C) Stock dividend distributable 
D) Stock investment in affiliate 
A) Capital stock 
B) Common stock subscribed 
C) Stock dividend distributable 
D) Stock investment in affiliate

Question 6

Which item below is not a current liability?

Accepted Answer

A) Unearned revenue 
B) Stock dividends distributable 
C) The currently maturing portion of long-term debt 
D) Trade accounts payable 
A) Unearned revenue 
B) Stock dividends distributable 
C) The currently maturing portion of long-term debt 
D) Trade accounts payable

Question 7

In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from

Accepted Answer

A) lending activities. 
B) operating activities. 
C) investing activities. 
D) financing activities. 
A) lending activities. 
B) operating activities. 
C) investing activities. 
D) financing activities.

Question 8

The financial statement which summarizes operating, investing, and financing activities of an entity for a period of time is the

Accepted Answer

A) retained earnings statement. 
B) income statement. 
C) statement of cash flows. 
D) statement of financial position. 
A) retained earnings statement. 
B) income statement. 
C) statement of cash flows. 
D) statement of financial position.

Question 9

Garret Company owns the following investments: $$\begin{array} { l r } 
\text { Trading securities (fair value) } & \$ 60,000 \
\text { Available-for-sale securities (fair value) } & 35,000 \
\text { Held-to-maturity securities (amortized cost) } & 47,000
\end{array}$$ Garret will report investments in its current assets section of

Accepted Answer

A) $0. 
B) exactly $60,000. 
C) $60,000 or an amount greater than $60,000, depending on the circumstances. 
D) exactly $95,000. 
A) $0. 
B) exactly $60,000. 
C) $60,000 or an amount greater than $60,000, depending on the circumstances. 
D) exactly $95,000.

Question 10

When a portion of inventories has been pledged as security on a loan,

Accepted Answer

A) the value of the portion pledged should be subtracted from the debt. 
B) an equal amount of retained earnings should be appropriated. 
C) the fact should be disclosed but the amount of current assets should not be affected. 
D) the cost of the pledged inventories should be transferred from current assets to noncurrent assets. 
A) the value of the portion pledged should be subtracted from the debt. 
B) an equal amount of retained earnings should be appropriated. 
C) the fact should be disclosed but the amount of current assets should not be affected. 
D) the cost of the pledged inventories should be transferred from current assets to noncurrent assets.

Question 11

The stockholders' equity section is usually divided into what three parts?

Accepted Answer

A) Preferred stock, common stock, treasury stock 
B) Preferred stock, common stock, retained earnings 
C) Capital stock, additional paid-in capital, retained earnings 
D) Capital stock, appropriated retained earnings, unappropriated retained earnings 
A) Preferred stock, common stock, treasury stock 
B) Preferred stock, common stock, retained earnings 
C) Capital stock, additional paid-in capital, retained earnings 
D) Capital stock, appropriated retained earnings, unappropriated retained earnings

Question 12

Horton Company owns the following investments: $$\begin{array} { l r } 
\text { Trading securities (fair value) } & \$ 60,000 \
\text { Available-for-sale securities (fair value) } & 35,000 \
\text { Held-to-maturity securities (amortized cost) } & 47,000
\end{array}$$ Horton will report securities in its long-term investments section of

Accepted Answer

A) exactly $95,000. 
B) exactly $107,000. 
C) exactly $142,000. 
D) $82,000 or an amount less than $82,000, depending on the circumstances. 
A) exactly $95,000. 
B) exactly $107,000. 
C) exactly $142,000. 
D) $82,000 or an amount less than $82,000, depending on the circumstances.

Question 13

Financial flexibility measures the ability of an enterprise to take effective actions to alter the amounts and timing of cash flows.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following should be excluded from long-term liabilities?

Accepted Answer

A) Obligations payable at some date beyond the operating cycle 
B) Most pension obligations 
C) Long-term liabilities that mature within the operating cycle and will be paid from a sinking fund 
D) None of these 
A) Obligations payable at some date beyond the operating cycle 
B) Most pension obligations 
C) Long-term liabilities that mature within the operating cycle and will be paid from a sinking fund 
D) None of these

Question 15

One criticism not normally aimed at a balance sheet prepared using current accounting and reporting standards is

Accepted Answer

A) failure to reflect current value information. 
B) the extensive use of separate classifications. 
C) an extensive use of estimates. 
D) failure to include items of financial value that cannot be recorded objectively. 
A) failure to reflect current value information. 
B) the extensive use of separate classifications. 
C) an extensive use of estimates. 
D) failure to include items of financial value that cannot be recorded objectively.

Question 16

The cash debt coverage ratio is computed by dividing net cash provided by operating activities by

Accepted Answer

A) average long-term liabilities. 
B) average total liabilities. 
C) ending long-term liabilities. 
D) ending total liabilities. 
A) average long-term liabilities. 
B) average total liabilities. 
C) ending long-term liabilities. 
D) ending total liabilities.

Question 17

Which of the following should be reported for capital stock?

Accepted Answer

A) The shares authorized 
B) The shares issued 
C) The shares outstanding 
D) All of these 
A) The shares authorized 
B) The shares issued 
C) The shares outstanding 
D) All of these

Question 18

Financial statement readers often assess liquidity by using the current cash debt coverage ratio.

Accepted Answer

A) True 
 B)False

Question 19

Treasury stock should be reported as a(n)

Accepted Answer

A) current asset. 
B) investment. 
C) other asset. 
D) reduction of stockholders' equity. 
A) current asset. 
B) investment. 
C) other asset. 
D) reduction of stockholders' equity.

Question 20

Reese Corp.'s trial balance reflected the following account balances at December 31, 2007: $$\begin{array} { l r } 
\text { Accounts receivable (net) } & \$ 24,000 \
\text { Trading securities } & 6,000 \
\text { Accumulated depreciation on equipment and furniture } & 15,000 \
\text { Cash } & 11,000 \
\text { Inventory } & 30,000 \
\text { Equipment } & 25,000 \
\text { Patent } & 4,000 \
\text { Prepaid expenses } & 2,000 \
\text { Land held for future business site } & 18,000
\end{array}$$ In Reese's December 31, 2007 balance sheet, the current assets total is

Accepted Answer

A) $90,000. 
B) $82,000. 
C) $77,000. 
D) $73,000. 
A) $90,000. 
B) $82,000. 
C) $77,000. 
D) $73,000.

The balance sheet contributes to financial reporting by providing a basis for all of the following except

The account form and the report form of the balance sheet are both acceptable under GAAP.

The statement of cash flows reports only the cash effects of operations during a period and financing transactions.

Long-term liabilities include

Which of the following would be classified in a different major section of a balance sheet from the others?

Which item below is not a current liability?

In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from

The financial statement which summarizes operating, investing, and financing activities of an entity for a period of time is the

Garret Company owns the following investments: Trading securities (fair value) \ 60,000 Available-for-sale securities (fair value) 35,000 Held-to-maturity securities (amortized cost) 47,000 Garret will report investments in its current assets section of

When a portion of inventories has been pledged as security on a loan,

The stockholders' equity section is usually divided into what three parts?

Horton Company owns the following investments: Trading securities (fair value) \ 60,000 Available-for-sale securities (fair value) 35,000 Held-to-maturity securities (amortized cost) 47,000 Horton will report securities in its long-term investments section of

Financial flexibility measures the ability of an enterprise to take effective actions to alter the amounts and timing of cash flows.

Which of the following should be excluded from long-term liabilities?

One criticism not normally aimed at a balance sheet prepared using current accounting and reporting standards is

The cash debt coverage ratio is computed by dividing net cash provided by operating activities by

Which of the following should be reported for capital stock?

Financial statement readers often assess liquidity by using the current cash debt coverage ratio.

Treasury stock should be reported as a(n)

Financial Accounting and Accounting Standards

Conceptual Framework Underlying Financial Accounting

The Accounting Information System

Income Statement and Related Information

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities and Contingencies

Filters

Exam 5: Balance Sheet and Statement of Cash Flows

The balance sheet contributes to financial reporting by providing a basis for all of the following except

The account form and the report form of the balance sheet are both acceptable under GAAP.

The statement of cash flows reports only the cash effects of operations during a period and financing transactions.

Long-term liabilities include

Which of the following would be classified in a different major section of a balance sheet from the others?

Which item below is not a current liability?

In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from

The financial statement which summarizes operating, investing, and financing activities of an entity for a period of time is the

Garret Company owns the following investments: Trading securities (fair value) \ 60,000 Available-for-sale securities (fair value) 35,000 Held-to-maturity securities (amortized cost) 47,000 Garret will report investments in its current assets section of

When a portion of inventories has been pledged as security on a loan,

The stockholders' equity section is usually divided into what three parts?

Horton Company owns the following investments: Trading securities (fair value) \ 60,000 Available-for-sale securities (fair value) 35,000 Held-to-maturity securities (amortized cost) 47,000 Horton will report securities in its long-term investments section of

Financial flexibility measures the ability of an enterprise to take effective actions to alter the amounts and timing of cash flows.

Which of the following should be excluded from long-term liabilities?

One criticism not normally aimed at a balance sheet prepared using current accounting and reporting standards is

The cash debt coverage ratio is computed by dividing net cash provided by operating activities by

Which of the following should be reported for capital stock?

Financial statement readers often assess liquidity by using the current cash debt coverage ratio.

Treasury stock should be reported as a(n)

Financial Accounting and Accounting Standards

Conceptual Framework Underlying Financial Accounting

The Accounting Information System

Income Statement and Related Information

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities and Contingencies

Filters