Question 1

Generally accepted accounting principles

Accepted Answer

A)  are accounting rules formulated by the Internal Revenue Service. 
B)  are sound in theory but rarely used in real life. 
C)  are accounting rules that are recognized as a general guide for financial reporting. 
D)  have eliminated all errors in accounting. 
A)  are accounting rules formulated by the Internal Revenue Service. 
B)  are sound in theory but rarely used in real life. 
C)  are accounting rules that are recognized as a general guide for financial reporting. 
D)  have eliminated all errors in accounting.

Question 2

McKinney Corporation had beginning retained earnings of $2,242,000 and ending retained earnings of $2,499,000. During the year they issued common stock totaling $141,000. No dividends were paid. What was their net income for the year?

Accepted Answer

A)  $257,000 
B)  $116,000 
C)  $398,000 
D)  $323,000 
A)  $257,000 
B)  $116,000 
C)  $398,000 
D)  $323,000

Question 3

Use the following data to determine the total amount of working capital.

Accepted Answer

A)  $240,000 
B)  $390,000 
C)  $130,000 
D)  $180,000 
A)  $240,000 
B)  $390,000 
C)  $130,000 
D)  $180,000

Question 4

Solvency is a company's ability to pay interest as it comes due and to repay the balance of a debt due at its maturity.

Accepted Answer

A) True 
 B)False

Question 5

The economic entity assumption states that assets should be recorded at their cost.

Accepted Answer

A) True 
 B)False

Question 6

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 7

These are selected account balances on December 31, 2014.   What is the total amount of property, plant, and equipment that will appear on the balance sheet?

Accepted Answer

A)  $1,500,000 
B)  $1,300,000 
C)  $1,800,000 
D)  $1,150,000 
A)  $1,500,000 
B)  $1,300,000 
C)  $1,800,000 
D)  $1,150,000

Question 8

Based on the following data, what is the amount of working capital?

Accepted Answer

A)  $274,000 
B)  $322,000 
C)  $360,000 
D)  $316,000 
A)  $274,000 
B)  $322,000 
C)  $360,000 
D)  $316,000

Question 9

What is the order in which assets are generally listed on a classified balance sheet?

Accepted Answer

A)  Current and long-term 
B)  Current; property, plant and equipment; long-term investments; intangibles 
C)  Current; property, plant and equipment; intangibles; long-term investments 
D)  Current; long-term investments; property, plant and equipment, intangibles 
A)  Current and long-term 
B)  Current; property, plant and equipment; long-term investments; intangibles 
C)  Current; property, plant and equipment; intangibles; long-term investments 
D)  Current; long-term investments; property, plant and equipment, intangibles

Question 10

The debt to assets ratio measures the percentage of assets financed by creditors.

Accepted Answer

A) True 
 B)False

Question 11

Using the following balance sheet and income statement data, what is the debt to assets ratio?   Average common shares outstanding was 10,000.

Accepted Answer

A)  26 percent 
B)  13 percent 
C)  65 percent 
D)  35 percent 
A)  26 percent 
B)  13 percent 
C)  65 percent 
D)  35 percent

Question 12

Which measure would a long-term creditor be least interested in reviewing?

Accepted Answer

A)  Free cash flow 
B)  Debt to assets ratio 
C)  Current ratio 
D)  Solvency measure 
A)  Free cash flow 
B)  Debt to assets ratio 
C)  Current ratio 
D)  Solvency measure

Question 13

For accounting purposes, business transactions should be kept separate from the personal transactions of the stockholders of the business.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A)  $0 
B)  $350,000 
C)  $170,000 
D)  $310,000 
A)  $0 
B)  $350,000 
C)  $170,000 
D)  $310,000

Question 15

Which accounting assumption requires that only those things that can be expressed in dollar values are included in the accounting records?

Accepted Answer

A)  monetary unit assumption. 
B)  historical cost principle. 
C)  periodicity assumption. 
D)  full disclosure principle. 
A)  monetary unit assumption. 
B)  historical cost principle. 
C)  periodicity assumption. 
D)  full disclosure principle.

Question 16

Use the following data to calculate the current ratio.

Accepted Answer

A)  2.07 : 1 
B)  1.67 : 1 
C)  3.00 : 1 
D)  2.60 : 1 
A)  2.07 : 1 
B)  1.67 : 1 
C)  3.00 : 1 
D)  2.60 : 1

Question 17

(Ethics)
Many bonus plans are based upon the attainment of some specified short-term goal. For example, sales personnel at Metal Crafters are given a bonus of 5% of the amount by which their sales exceed $100,000. Sometimes the attainment of these goals is achieved by methods detrimental to the long-term needs of the company. Sales representative Sara Crown, for example, finds herself tempted to court certain customers that place large orders, even though she knows they may not be able to pay. She complains that the bonus system itself is unethical.
Required:
Is a bonus system like the one at Metal Crafters unethical? Explain.

Accepted Answer

The bonus system described is not necess

Question 18

Earnings per share measures the net income earned on each share of common stock.

Accepted Answer

A) True 
 B)False

Question 19

The economic entity assumption is that a company will remain in operations for the foreseeable future.

Accepted Answer

A) True 
 B)False

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

Generally accepted accounting principles

McKinney Corporation had beginning retained earnings of $2,242,000 and ending retained earnings of $2,499,000. During the year they issued common stock totaling $141,000. No dividends were paid. What was their net income for the year?

Use the following data to determine the total amount of working capital.

Solvency is a company's ability to pay interest as it comes due and to repay the balance of a debt due at its maturity.

The economic entity assumption states that assets should be recorded at their cost.

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

These are selected account balances on December 31, 2014. What is the total amount of property, plant, and equipment that will appear on the balance sheet?

Based on the following data, what is the amount of working capital?

What is the order in which assets are generally listed on a classified balance sheet?

The debt to assets ratio measures the percentage of assets financed by creditors.

Using the following balance sheet and income statement data, what is the debt to assets ratio? Average common shares outstanding was 10,000.

Which measure would a long-term creditor be least interested in reviewing?

For accounting purposes, business transactions should be kept separate from the personal transactions of the stockholders of the business.

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

Which accounting assumption requires that only those things that can be expressed in dollar values are included in the accounting records?

Use the following data to calculate the current ratio.

Earnings per share measures the net income earned on each share of common stock.

The economic entity assumption is that a company will remain in operations for the foreseeable future.

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

Time Value of Money

Filters

Exam 2: A Further Look at Financial Statements

Generally accepted accounting principles

McKinney Corporation had beginning retained earnings of $2,242,000 and ending retained earnings of $2,499,000. During the year they issued common stock totaling $141,000. No dividends were paid. What was their net income for the year?

Use the following data to determine the total amount of working capital.

Solvency is a company's ability to pay interest as it comes due and to repay the balance of a debt due at its maturity.

The economic entity assumption states that assets should be recorded at their cost.

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

These are selected account balances on December 31, 2014. What is the total amount of property, plant, and equipment that will appear on the balance sheet?

Based on the following data, what is the amount of working capital?

What is the order in which assets are generally listed on a classified balance sheet?

The debt to assets ratio measures the percentage of assets financed by creditors.

Using the following balance sheet and income statement data, what is the debt to assets ratio? Average common shares outstanding was 10,000.

Which measure would a long-term creditor be least interested in reviewing?

For accounting purposes, business transactions should be kept separate from the personal transactions of the stockholders of the business.

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

Which accounting assumption requires that only those things that can be expressed in dollar values are included in the accounting records?

Use the following data to calculate the current ratio.

Earnings per share measures the net income earned on each share of common stock.

The economic entity assumption is that a company will remain in operations for the foreseeable future.

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

Time Value of Money

Filters