Question 1

An intangible asset has no physical existence and no life.

Accepted Answer

A) True 
 B)False

Question 2

Panmar Inc.is preparing a statement of stockholders' equity for 2019.On January 1,2019,Panmar started the year with a $200,000 credit balance in its retained earnings account.During 2019,the company earned net income of $140,000.Panmar declared dividends of $80,000 and paid $50,000 of those dividends.Also,the company received cash of $100,000 for additional shares of common stock issued and then paid $30,000 to repurchase shares of common stock.What is the balance in retained earnings on December 31,2019?

Accepted Answer

A) $260,000. 
B) $290,000. 
C) $330,000. 
D) $390,000. 
A) $260,000. 
B) $290,000. 
C) $330,000. 
D) $390,000.

Question 3

The Willie Company has provided the following information: Operating expenses were $345,000;
Income from operations was $415,000;
Net sales were $1,100,000;
Interest expense was $71,000;
Loss from sale of investments was $87,000;
Income tax expense was $58,000.
-
What was Willie's net income?

Accepted Answer

A) $373,000. 
B) $328,000. 
C) $199,000. 
D) ($156,000). 
A) $373,000. 
B) $328,000. 
C) $199,000. 
D) ($156,000).

Question 4

Sales by major product category is a required financial statement disclosure.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements is false when a company sells inventory costing $700 for $1,200 cash and operating expenses are $200?

Accepted Answer

A) Cost of goods sold is $700. 
B) Gross profit is $500. 
C) Stockholders' equity increases by net income of $300. 
D) Net sales increase $500. 
A) Cost of goods sold is $700. 
B) Gross profit is $500. 
C) Stockholders' equity increases by net income of $300. 
D) Net sales increase $500.

Question 6

The audit committee of the board of directors is responsible for maintaining the integrity of a company's financial statements and financial reporting.

Accepted Answer

A) True 
 B)False

Question 7

Denmark Inc.is preparing a statement of stockholders' equity for 2019.On January 1,2019,Denmark started the year with a $100,000 credit balance in its retained earnings account.During 2019,the company earned net income of $70,000 and declared dividends of $10,000.Also,the company received cash of $15,000 as an additional investment by its owners.What is the balance in retained earnings on December 31,2019?

Accepted Answer

A) $100,000. 
B) $170,000. 
C) $175,000. 
D) $160,000. 
A) $100,000. 
B) $170,000. 
C) $175,000. 
D) $160,000.

Question 8

Net sales plus cost of goods sold is reported on the income statement as income from continuing operations.

Accepted Answer

A) True 
 B)False

Question 9

External users of accounting information include decision makers such as investors,creditors,and financial analysts.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following results in an increase in the return on assets ratio?

Accepted Answer

A) A decrease in the total asset turnover ratio. 
B) An increase in the net profit margin ratio. 
C) Purchasing a building by signing a long-term mortgage payable. 
D) Using cash to purchase land. 
A) A decrease in the total asset turnover ratio. 
B) An increase in the net profit margin ratio. 
C) Purchasing a building by signing a long-term mortgage payable. 
D) Using cash to purchase land.

Question 11

Harley Company has provided the following selected financial information.  
- What is Harley's 2019 return on assets (rounded)?

Accepted Answer

A) 12.5% 
B) 13.2% 
C) 16.0% 
D) 25.0% 
A) 12.5% 
B) 13.2% 
C) 16.0% 
D) 25.0%

Question 12

Determine the effect of the following transactions on the identified financial statement components and ratios.Code your answers as follows:
A: If the transaction results in an increase in the financial statement component or ratio.
B: If the transaction results in a decrease in the financial statement component or ratio.
C: If the transaction does not affect the financial statement component or ratio.
Transaction 1: A company acquired land by signing a long-term note payable.
Property,plant,and equipment _____
Total asset turnover ratio _____
Net profit margin ratio _____
Return on assets ratio _____
Transaction 2: Cash was used to pay a current liability.
Net income _____
Total asset turnover ratio _____
Net profit margin ratio _____
Return on assets ratio _____

Accepted Answer

Transaction 1: A company acquired land b

Question 13

The return on assets ratio may increase when sales increase.

Accepted Answer

A) True 
 B)False

Question 14

Describe the return on assets ratio and the DuPont approach for calculating return on assets.

Accepted Answer

The return on assets ratio is calculated

Question 15

Financial analysts utilize a company's financial reports to assist them in making earnings forecasts and earnings per share projections.

Accepted Answer

A) True 
 B)False

Question 16

Ridgetop Corporation reported the following amounts on its balance sheet at December 31,2019:
   On January 1,2019,total assets were $2,000,000,total liabilities were $1,200,000 and total stockholders' equity was $800,000.
Calculate Ridgetop's return on assets.

Accepted Answer

$100,000 ÷ ($2,000,0

Question 17

The return on assets ratio is calculated by dividing operating income by average total assets.

Accepted Answer

A) True 
 B)False

Question 18

The form 10-Q contains an unaudited set of quarterly financial statements.

Accepted Answer

A) True 
 B)False

Question 19

A company has paid cash to repurchase its common stock that was previously issued.Where will this cash flow be reported on the statement of cash flows?

Accepted Answer

A) Operating activities. 
B) Financing activities. 
C) Investing activities. 
D) Stockholder activities. 
A) Operating activities. 
B) Financing activities. 
C) Investing activities. 
D) Stockholder activities.

Question 20

Preparers of the statement of cash flow must choose the direct or indirect method for each classification category on the statement.

Accepted Answer

A) True 
 B)False

An intangible asset has no physical existence and no life.

The Willie Company has provided the following information: Operating expenses were $345,000; Income from operations was $415,000; Net sales were $1,100,000; Interest expense was $71,000; Loss from sale of investments was $87,000; Income tax expense was $58,000. - What was Willie's net income?

Sales by major product category is a required financial statement disclosure.

Which of the following statements is false when a company sells inventory costing $700 for $1,200 cash and operating expenses are $200?

The audit committee of the board of directors is responsible for maintaining the integrity of a company's financial statements and financial reporting.

Net sales plus cost of goods sold is reported on the income statement as income from continuing operations.

External users of accounting information include decision makers such as investors,creditors,and financial analysts.

Which of the following results in an increase in the return on assets ratio?

Harley Company has provided the following selected financial information. - What is Harley's 2019 return on assets (rounded)?

The return on assets ratio may increase when sales increase.

Describe the return on assets ratio and the DuPont approach for calculating return on assets.

Financial analysts utilize a company's financial reports to assist them in making earnings forecasts and earnings per share projections.

Ridgetop Corporation reported the following amounts on its balance sheet at December 31,2019: On January 1,2019,total assets were $2,000,000,total liabilities were $1,200,000 and total stockholders' equity was $800,000. Calculate Ridgetop's return on assets.

The return on assets ratio is calculated by dividing operating income by average total assets.

The form 10-Q contains an unaudited set of quarterly financial statements.

A company has paid cash to repurchase its common stock that was previously issued.Where will this cash flow be reported on the statement of cash flows?

Preparers of the statement of cash flow must choose the direct or indirect method for each classification category on the statement.

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

Reporting and Interpreting Sales Revenue,receivables,and Cash

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

Exam 5: Communicating and Interpreting Accounting Information

An intangible asset has no physical existence and no life.

The Willie Company has provided the following information: Operating expenses were $345,000; Income from operations was $415,000; Net sales were $1,100,000; Interest expense was $71,000; Loss from sale of investments was $87,000; Income tax expense was $58,000. - What was Willie's net income?

Sales by major product category is a required financial statement disclosure.

Which of the following statements is false when a company sells inventory costing $700 for $1,200 cash and operating expenses are $200?

The audit committee of the board of directors is responsible for maintaining the integrity of a company's financial statements and financial reporting.

Net sales plus cost of goods sold is reported on the income statement as income from continuing operations.

External users of accounting information include decision makers such as investors,creditors,and financial analysts.

Which of the following results in an increase in the return on assets ratio?

Harley Company has provided the following selected financial information. - What is Harley's 2019 return on assets (rounded)?

The return on assets ratio may increase when sales increase.

Describe the return on assets ratio and the DuPont approach for calculating return on assets.

Financial analysts utilize a company's financial reports to assist them in making earnings forecasts and earnings per share projections.

Ridgetop Corporation reported the following amounts on its balance sheet at December 31,2019: On January 1,2019,total assets were $2,000,000,total liabilities were $1,200,000 and total stockholders' equity was $800,000. Calculate Ridgetop's return on assets.

The return on assets ratio is calculated by dividing operating income by average total assets.

The form 10-Q contains an unaudited set of quarterly financial statements.

A company has paid cash to repurchase its common stock that was previously issued.Where will this cash flow be reported on the statement of cash flows?

Preparers of the statement of cash flow must choose the direct or indirect method for each classification category on the statement.

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

Reporting and Interpreting Sales Revenue,receivables,and Cash

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