Question 1

Accounting information is relevant to business decisions because it

Accepted Answer

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

Question 2

Valuing assets at their fair value rather than at their cost is inconsistent with the

Accepted Answer

A) economic entity assumption. 
B) historical cost principle. 
C) periodicity assumption. 
D) full disclosure principle. 
A) economic entity assumption. 
B) historical cost principle. 
C) periodicity assumption. 
D) full disclosure principle.

Question 3

Full disclosure of all important facts aids in overcoming the limitations of accounting information.

Accepted Answer

A) True 
 B)False

Question 4

Free cash flow is net cash provided by operating activities less capital expenditures.

Accepted Answer

A) True 
 B)False

Question 5

An intangible asset

Accepted Answer

A) derives its value from the rights and privileges it provides the owner. 
B) is worthless because it has no physical substance. 
C) is converted into a tangible asset during the operating cycle. 
D) cannot be classified on the balance sheet because it lacks physical substance. 
A) derives its value from the rights and privileges it provides the owner. 
B) is worthless because it has no physical substance. 
C) is converted into a tangible asset during the operating cycle. 
D) cannot be classified on the balance sheet because it lacks physical substance.

Question 6

The debt to assets ratio is a

Accepted Answer

A) liquidity ratio. 
B) profitability ratio. 
C) solvency ratio. 
D) None of the answer choices is correct. 
A) liquidity ratio. 
B) profitability ratio. 
C) solvency ratio. 
D) None of the answer choices is correct.

Question 7

It is not true that current assets are resources that are expected to be

Accepted Answer

A) realized in cash within one year. 
B) sold within one year. 
C) consumed within one year. 
D) acquired within one year. 
A) realized in cash within one year. 
B) sold within one year. 
C) consumed within one year. 
D) acquired within one year.

Question 8

In the statement of cash flows, net cash provided by operating activities indicates the cash-generating capability of the company's operations.

Accepted Answer

A) True 
 B)False

Question 9

The economic entity assumption states that economic events

Accepted Answer

A) of different entities can be combined if all the entities are corporations. 
B) must be reported to the Securities and Exchange Commission. 
C) of a sole proprietorship cannot be distinguished from the personal economic events of its owners. 
D) of every entity can be separately identified and accounted for. 
A) of different entities can be combined if all the entities are corporations. 
B) must be reported to the Securities and Exchange Commission. 
C) of a sole proprietorship cannot be distinguished from the personal economic events of its owners. 
D) of every entity can be separately identified and accounted for.

Question 10

Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment.

Accepted Answer

A) $1,029,000 
B) $774,000 
C) $834,000 
D) $564,000 
A) $1,029,000 
B) $774,000 
C) $834,000 
D) $564,000

Question 11

Use the following data to determine the total dollar amount of assets to be classified as current assets.

Accepted Answer

A) $801,000 
B) $336,000 
C) $546,000 
D) -$546,000 
A) $801,000 
B) $336,000 
C) $546,000 
D) -$546,000

Question 12

Bathlinks Corporation has a debt to assets ratio of 73%.This tells the user of Bathlinks's financial statements that

Accepted Answer

A) Bathlinks is getting a 27% return on its assets. 
B) there is a risk that Bathlinks cannot pay its debts as they come due. 
C) 73% of the assets are financed by the stockholders. 
D) based on this measure, the user should not invest in Bathlinks. 
A) Bathlinks is getting a 27% return on its assets. 
B) there is a risk that Bathlinks cannot pay its debts as they come due. 
C) 73% of the assets are financed by the stockholders. 
D) based on this measure, the user should not invest in Bathlinks.

Question 13

A short-term creditor is primarily interested in the __________ of the borrower.

Accepted Answer

A) liquidity 
B) profitability 
C) consistency 
D) solvency 
A) liquidity 
B) profitability 
C) consistency 
D) solvency

Question 14

For 2022, Kuhl Co.reported net income of $36,000, net sales $400,000, and average shares outstanding of 16,000.No preferred dividends were paid.Earnings per share is

Accepted Answer

A) $2.25 
B) $0.44 
C) $25.00 
D) $0.09 
A) $2.25 
B) $0.44 
C) $25.00 
D) $0.09

Question 15

Kingery Corporation has current assets of $1,800,000 and current liabilities of $750,000.If they issue $150,000 of new stock, what will their new current ratio be? (rounded)

Accepted Answer

A) 2.6:1 
B) 2.1:1 
C) 2.2:1 
D) 2.4:1 
A) 2.6:1 
B) 2.1:1 
C) 2.2:1 
D) 2.4:1

Question 16

In 2022, Grider Corporation had cash receipts of $56,000 and cash disbursements of $32,000.Grider's cash balance at December 31, 2022 was $78,000.What was Grider's January 1, 2022 cash balance?

Accepted Answer

A) $54,000 
B) $70,000 
C) $110,000 
D) $102,000 
A) $54,000 
B) $70,000 
C) $110,000 
D) $102,000

Question 17

The two fundamental qualities of useful information are

Accepted Answer

A) relevance and faithful representation. 
B) verifiability and timeliness. 
C) comparability and flexibility. 
D) understandability and consistency. 
A) relevance and faithful representation. 
B) verifiability and timeliness. 
C) comparability and flexibility. 
D) understandability and consistency.

Question 18

On a classified balance sheet, companies usually list current assets

Accepted Answer

A) in alphabetical order. 
B) with the largest dollar amounts first. 
C) in the order in which they are expected to be converted into cash. 
D) in the order of acquisition. 
A) in alphabetical order. 
B) with the largest dollar amounts first. 
C) in the order in which they are expected to be converted into cash. 
D) in the order of acquisition.

Question 19

An item is considered material if

Accepted Answer

A) it does not cost a lot of money. 
B) it is of a tangible good. 
C) its size is likely to influence the decision of an investor or creditor. 
D) the cost of reporting the item is greater than its benefits. 
A) it does not cost a lot of money. 
B) it is of a tangible good. 
C) its size is likely to influence the decision of an investor or creditor. 
D) the cost of reporting the item is greater than its benefits.

Question 20

Both investors and creditors have an interest in a company's ability to generate favorable cash flows.

Accepted Answer

A) True 
 B)False

Accounting information is relevant to business decisions because it

Valuing assets at their fair value rather than at their cost is inconsistent with the

Full disclosure of all important facts aids in overcoming the limitations of accounting information.

Free cash flow is net cash provided by operating activities less capital expenditures.

An intangible asset

The debt to assets ratio is a

It is not true that current assets are resources that are expected to be

In the statement of cash flows, net cash provided by operating activities indicates the cash-generating capability of the company's operations.

The economic entity assumption states that economic events

Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment.

Use the following data to determine the total dollar amount of assets to be classified as current assets.

Bathlinks Corporation has a debt to assets ratio of 73%.This tells the user of Bathlinks's financial statements that

A short-term creditor is primarily interested in the __________ of the borrower.

For 2022, Kuhl Co.reported net income of $36,000, net sales $400,000, and average shares outstanding of 16,000.No preferred dividends were paid.Earnings per share is

Kingery Corporation has current assets of $1,800,000 and current liabilities of $750,000.If they issue $150,000 of new stock, what will their new current ratio be? (rounded)

In 2022, Grider Corporation had cash receipts of $56,000 and cash disbursements of $32,000.Grider's cash balance at December 31, 2022 was $78,000.What was Grider's January 1, 2022 cash balance?

The two fundamental qualities of useful information are

On a classified balance sheet, companies usually list current assets

An item is considered material if

Both investors and creditors have an interest in a company's ability to generate favorable cash flows.

Introduction to Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

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Exam 2: A Further Look at Financial Statements

Accounting information is relevant to business decisions because it

Valuing assets at their fair value rather than at their cost is inconsistent with the

Full disclosure of all important facts aids in overcoming the limitations of accounting information.

Free cash flow is net cash provided by operating activities less capital expenditures.

An intangible asset

The debt to assets ratio is a

It is not true that current assets are resources that are expected to be

In the statement of cash flows, net cash provided by operating activities indicates the cash-generating capability of the company's operations.

The economic entity assumption states that economic events

Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment.

Use the following data to determine the total dollar amount of assets to be classified as current assets.

Bathlinks Corporation has a debt to assets ratio of 73%.This tells the user of Bathlinks's financial statements that

A short-term creditor is primarily interested in the __________ of the borrower.

For 2022, Kuhl Co.reported net income of $36,000, net sales $400,000, and average shares outstanding of 16,000.No preferred dividends were paid.Earnings per share is

Kingery Corporation has current assets of $1,800,000 and current liabilities of $750,000.If they issue $150,000 of new stock, what will their new current ratio be? (rounded)

In 2022, Grider Corporation had cash receipts of $56,000 and cash disbursements of $32,000.Grider's cash balance at December 31, 2022 was $78,000.What was Grider's January 1, 2022 cash balance?

The two fundamental qualities of useful information are

On a classified balance sheet, companies usually list current assets

An item is considered material if

Both investors and creditors have an interest in a company's ability to generate favorable cash flows.

Introduction to Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

Filters