Question 1

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 2

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 3

In preparing a statement of cash flows, sale of treasury stock at an amount greater than cost would be classified as a(n)

Accepted Answer

A)  operating activity. 
B)  financing activity. 
C)  extraordinary activity. 
D)  investing activity. 
A)  operating activity. 
B)  financing activity. 
C)  extraordinary activity. 
D)  investing activity.

Question 4

The basis for classifying assets as current or noncurrent is conversion to cash within

Accepted Answer

A)  the accounting cycle or one year, whichever is shorter. 
B)  the operating cycle or one year, whichever is longer. 
C)  the accounting cycle or one year, whichever is longer. 
D)  the operating cycle or one year, whichever is shorter. 
A)  the accounting cycle or one year, whichever is shorter. 
B)  the operating cycle or one year, whichever is longer. 
C)  the accounting cycle or one year, whichever is longer. 
D)  the operating cycle or one year, whichever is shorter.

Question 5

A company excludes from the current assets section, the amount of cash restricted for purposes other than payment of current obligations or for use in current operations.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is a current asset?

Accepted Answer

A)  Cash surrender value of a life insurance policy of which the company is the beneficiary. 
B)  Investment in equity securities for the purpose of controlling the issuing company. 
C)  Cash designated for the purchase of tangible fixed assets. 
D)  Trade installment receivables normally collectible in 18 months. 
A)  Cash surrender value of a life insurance policy of which the company is the beneficiary. 
B)  Investment in equity securities for the purpose of controlling the issuing company. 
C)  Cash designated for the purchase of tangible fixed assets. 
D)  Trade installment receivables normally collectible in 18 months.

Question 7

One significant difference between a balance sheet prepared using IFRS rather than U.S. GAAP is that long-term tangible assets may be reported at fair value rather than historical cost.

Accepted Answer

A) True 
 B)False

Question 8

The statement of cash flows provides answers to all of the following questions except

Accepted Answer

A)  where did the cash come from during the period? 
B)  what was the cash used for during the period? 
C)  what is the impact of inflation on the cash balance at the end of the year? 
D)  what was the change in the cash balance during the period? 
A)  where did the cash come from during the period? 
B)  what was the cash used for during the period? 
C)  what is the impact of inflation on the cash balance at the end of the year? 
D)  what was the change in the cash balance during the period?

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

The cash debt coverage 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 11

Which of the following is not a method of disclosing pertinent information?

Accepted Answer

A)  Supporting schedules 
B)  Parenthetical explanations 
C)  Cross reference and contra items 
D)  All of these are methods of disclosing pertinent information. 
A)  Supporting schedules 
B)  Parenthetical explanations 
C)  Cross reference and contra items 
D)  All of these are methods of disclosing pertinent information.

Question 12

The amount of time that is expected to elapse until an asset is realized or otherwise converted into cash is referred to as

Accepted Answer

A)  solvency. 
B)  financial flexibility. 
C)  liquidity. 
D)  exchangeability. 
A)  solvency. 
B)  financial flexibility. 
C)  liquidity. 
D)  exchangeability.

Question 13

Which of the following best exemplifies a contingency that is reported in the notes to the financial statements?

Accepted Answer

A)  Losses from potential future lawsuits 
B)  Loss from a lawsuit settled out of court prior to the end of the fiscal year 
C)  Warranty claims on future sales 
D)  Estimated loss from an ongoing lawsuit 
A)  Losses from potential future lawsuits 
B)  Loss from a lawsuit settled out of court prior to the end of the fiscal year 
C)  Warranty claims on future sales 
D)  Estimated loss from an ongoing lawsuit

Question 14

The statement of cash flows helps meet the objective of financial reporting, which is to assess all of the following except the

Accepted Answer

A)  amount of future cash flows. 
B)  source of future cash flows. 
C)  timing of future cash flows. 
D)  uncertainty of future cash flows. 
A)  amount of future cash flows. 
B)  source of future cash flows. 
C)  timing of future cash flows. 
D)  uncertainty of future cash flows.

Question 15

Making and collecting loans and disposing of property, plant, and equipment are

Accepted Answer

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

Question 16

Statement of cash flows ratios.
Financial statements for Hilton Company are presented below:   At the beginning of 2014, Accounts Payable amounted to $12,000 and Bonds Payable was $20,000.

Instructions
Calculate the following for Hilton Company: 
a. Current cash debt coverage
b. Cash debt coverage
c. Free cash flow
d. Explain the purpose of free cash flow analysis.

Accepted Answer

@#IMG-DLM& d. Free cash flow is net cash provided

Question 17

Balance sheet presentation.Given the following account information for Leong Corporation, prepare a balance sheet in report form for the company as of December 31, 2014. All accounts have normal balances.

Accepted Answer

@#IMG-DLM& *$341,400 - $53,040 - $8,000 - $2,400 -

Question 18

A measure of a company's financial flexibility is the

Accepted Answer

A)  cash debt coverage. 
B)  current cash debt coverage. 
C)  free cash flow. 
D)  cash debt coverage and free cash flow. 
A)  cash debt coverage. 
B)  current cash debt coverage. 
C)  free cash flow. 
D)  cash debt coverage and free cash flow.

Question 19

__________ ratios measure how effectively a company uses its assets.

Accepted Answer

A)  Liquidity 
B)  Activity 
C) Profitability 
D)  Coverage 
A)  Liquidity 
B)  Activity 
C) Profitability 
D)  Coverage

Question 20

Fulton Company owns the following investments:   Fulton will report investments in its current assets section of

Accepted Answer

A)  $0. 
B)  exactly $140,000. 
C)  $140,000 or an amount greater than $140,000, depending on the circumstances. 
D)  exactly $210,000. 
A)  $0. 
B)  exactly $140,000. 
C)  $140,000 or an amount greater than $140,000, depending on the circumstances. 
D)  exactly $210,000.

Exam 5: Balance Sheet and Statement of Cash Flows

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

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

In preparing a statement of cash flows, sale of treasury stock at an amount greater than cost would be classified as a(n)

The basis for classifying assets as current or noncurrent is conversion to cash within

A company excludes from the current assets section, the amount of cash restricted for purposes other than payment of current obligations or for use in current operations.

Which of the following is a current asset?

One significant difference between a balance sheet prepared using IFRS rather than U.S. GAAP is that long-term tangible assets may be reported at fair value rather than historical cost.

The statement of cash flows provides answers to all of the following questions except

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

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

Which of the following is not a method of disclosing pertinent information?

The amount of time that is expected to elapse until an asset is realized or otherwise converted into cash is referred to as

Which of the following best exemplifies a contingency that is reported in the notes to the financial statements?

The statement of cash flows helps meet the objective of financial reporting, which is to assess all of the following except the

Making and collecting loans and disposing of property, plant, and equipment are

Balance sheet presentation.Given the following account information for Leong Corporation, prepare a balance sheet in report form for the company as of December 31, 2014. All accounts have normal balances.

A measure of a company's financial flexibility is the

__________ ratios measure how effectively a company uses its assets.

Fulton Company owns the following investments: Fulton will report investments in its current assets section of

Financial Accounting and Accounting Standards

Conceptual Framework for Financial Reporting

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

Long-Term Liabilities

Stockholders Equity

Dilutive Securities and Earnings Per Share

Investments

Revenue Recognition

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Full Disclosure in Financial Reporting

Appendix

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