Question 1

Which of the following is true?

Accepted Answer

A) An extraordinary gain would increase income before taxes. 
B) Discontinued operations would be shown as a component of continuing operations on the income statement. 
C) Discontinued operations are shown on the income statement net of income tax effects. 
D) Results from discontinued operations may be used to predict future company results. 
A) An extraordinary gain would increase income before taxes. 
B) Discontinued operations would be shown as a component of continuing operations on the income statement. 
C) Discontinued operations are shown on the income statement net of income tax effects. 
D) Results from discontinued operations may be used to predict future company results.

Question 2

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 issued common stock at a price in excess of par value.
Revenues_____
Assets_____
Stockholders' equity_____
Return on assets ratio_____
Transaction 2: A company recorded depreciation expense at year-end.
Net income_____
Assets_____
Stockholders' equity_____
Asset turnover ratio_____

Accepted Answer

The answer of Determine the effect of the following transactions...

Question 3

For accounting information to be useful,it must be which of the following?

Accepted Answer

A) It must be consistent and comparable. 
B) It must be relevant and reliable. 
C) It must be comparable and reliable. 
D) It must be relevant and consistent. 
A) It must be consistent and comparable. 
B) It must be relevant and reliable. 
C) It must be comparable and reliable. 
D) It must be relevant and consistent.

Question 4

Which of the following statements correctly describe the effect of accruing interest revenue at year-end?

Accepted Answer

A) Income from operations increases. 
B) The net profit margin ratio does not change. 
C) The asset turnover ratio increases. 
D) The return on assets ratio is affected. 
A) Income from operations increases. 
B) The net profit margin ratio does not change. 
C) The asset turnover ratio increases. 
D) The return on assets ratio is affected.

Question 5

Which of the following would not be added to net income in the determination of net cash flow from operations?

Accepted Answer

A) An increase in accounts payable. 
B) A decrease in accounts receivable. 
C) A decrease in prepaid expenses. 
D) An increase in inventory. 
A) An increase in accounts payable. 
B) A decrease in accounts receivable. 
C) A decrease in prepaid expenses. 
D) An increase in inventory.

Question 6

The return on assets ratio will increase when sales increase.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is an objective of the external audit of a company's financial statements?

Accepted Answer

A) To provide a forecast of the company's future earnings. 
B) To assure no fraud has been committed by the company's management. 
C) To provide credibility and assurance that the financial statement information conforms with generally accepted accounting principles in all material respects. 
D) To detect all accounting errors made by the accounting system and employees. 
A) To provide a forecast of the company's future earnings. 
B) To assure no fraud has been committed by the company's management. 
C) To provide credibility and assurance that the financial statement information conforms with generally accepted accounting principles in all material respects. 
D) To detect all accounting errors made by the accounting system and employees.

Question 8

Intangible assets are reported on the balance sheet as a noncurrent asset and include goodwill.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following would not be included within the operations section of a cash flow statement?

Accepted Answer

A) Cash paid for research and development. 
B) Cash paid for insurance. 
C) Cash paid for interest expense. 
D) Cash paid to legalize a patent. 
A) Cash paid for research and development. 
B) Cash paid for insurance. 
C) Cash paid for interest expense. 
D) Cash paid to legalize a patent.

Question 10

Which of the following are the criteria used to determine whether an item is extraordinary?

Accepted Answer

A) It is unusual in nature and occurs frequently. 
B) It is unusual in nature and occurs infrequently. 
C) It is unusual in nature or occurs infrequently. 
D) It is infrequent in occurrence only. 
A) It is unusual in nature and occurs frequently. 
B) It is unusual in nature and occurs infrequently. 
C) It is unusual in nature or occurs infrequently. 
D) It is infrequent in occurrence only.

Question 11

Which of the following tasks does the Financial Accounting Standards Board (FASB)perform?

Accepted Answer

A) Overseeing the work of the Securities & Exchange Commission (SE
C) . 
B) Overseeing the work of the Public Company Accounting Oversight Board (PCAO
B) . 
C) The responsibility for protecting investors and maintaining the integrity of the securities markets. 
D) The development of generally accepted accounting principles. 
A) Overseeing the work of the Securities & Exchange Commission (SE
C) . 
B) Overseeing the work of the Public Company Accounting Oversight Board (PCAO
B) . 
C) The responsibility for protecting investors and maintaining the integrity of the securities markets. 
D) The development of generally accepted accounting principles.

Question 12

The Securities and Exchange Commission's (SEC)report that is required to be filed if any special event occurs is which of the following?

Accepted Answer

A) Form 10K 
B) Form 8K 
C) Form 10Q 
D) Form 8Q 
A) Form 10K 
B) Form 8K 
C) Form 10Q 
D) Form 8Q

Question 13

At the beginning of 2011,Jeffrey Company disposed of a segment of its business and incurred a pretax loss of $40,000 on the disposal.In the same year,a flood caused $15,000 of damages to the building.The flood damage qualified as an extraordinary item.Income from continuing operations before taxes was $100,000 for 2011 and a 20% tax rate applied to all of the items above.Prepare a partial income statement starting with income from continuing operations before taxes for the year ending 2011 and concluding with net income.

Accepted Answer

Income from continuing operations before

Question 14

Which of the following would most likely increase the net profit margin ratio?

Accepted Answer

A) An increase in the unit selling price. 
B) A decrease in the overall sales volume. 
C) An increase in operating expenses. 
D) An increase in cost of goods sold. 
A) An increase in the unit selling price. 
B) A decrease in the overall sales volume. 
C) An increase in operating expenses. 
D) An increase in cost of goods sold.

Question 15

Which of the following statements is false when a company sells inventory costing $900 for $1,500 cash?

Accepted Answer

A) Current assets increase $600. 
B) Gross profit increases $1,500. 
C) Stockholders' equity increases $600. 
D) Net sales increases $1,500. 
A) Current assets increase $600. 
B) Gross profit increases $1,500. 
C) Stockholders' equity increases $600. 
D) Net sales increases $1,500.

Question 16

Inventories are reported on the balance sheet as a current asset.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following transactions will decrease both the return on assets ratio and the asset turnover ratio?

Accepted Answer

A) Purchasing land by signing a note payable. 
B) Accruing interest expense at year-end. 
C) Accruing interest revenue at year-end. 
D) Collecting cash from an account receivable. 
A) Purchasing land by signing a note payable. 
B) Accruing interest expense at year-end. 
C) Accruing interest revenue at year-end. 
D) Collecting cash from an account receivable.

Question 18

A company issued 1,000 shares of $10 par value common stock in exchange for $15,000.Which of the following correctly describes the impact of this transaction on the financial statements?

Accepted Answer

A) A $15,000 gain is reported on the income statement. 
B) Contributed capital in the amount of $10,000 is reported on the balance sheet. 
C) Common stock is reported on the balance sheet at $15,000. 
D) Additional paid-in capital of $5,000 is reported on the balance sheet. 
A) A $15,000 gain is reported on the income statement. 
B) Contributed capital in the amount of $10,000 is reported on the balance sheet. 
C) Common stock is reported on the balance sheet at $15,000. 
D) Additional paid-in capital of $5,000 is reported on the balance sheet.

Question 19

Recent stock price information is a financial statement disclosure.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements regarding international financial reporting standards (IFRS)is false?

Accepted Answer

A) The reporting of extraordinary items is prohibited. 
B) Property, plant, and equipment can be reported on the balance sheet at either fair value or historical cost. 
C) The last-in first-out inventory method is permitted. 
D) Inventory write-downs are permitted. 
A) The reporting of extraordinary items is prohibited. 
B) Property, plant, and equipment can be reported on the balance sheet at either fair value or historical cost. 
C) The last-in first-out inventory method is permitted. 
D) Inventory write-downs are permitted.

Which of the following is true?

For accounting information to be useful,it must be which of the following?

Which of the following statements correctly describe the effect of accruing interest revenue at year-end?

Which of the following would not be added to net income in the determination of net cash flow from operations?

The return on assets ratio will increase when sales increase.

Which of the following is an objective of the external audit of a company's financial statements?

Intangible assets are reported on the balance sheet as a noncurrent asset and include goodwill.

Which of the following would not be included within the operations section of a cash flow statement?

Which of the following are the criteria used to determine whether an item is extraordinary?

Which of the following tasks does the Financial Accounting Standards Board (FASB)perform?

The Securities and Exchange Commission's (SEC)report that is required to be filed if any special event occurs is which of the following?

Which of the following would most likely increase the net profit margin ratio?

Which of the following statements is false when a company sells inventory costing $900 for $1,500 cash?

Inventories are reported on the balance sheet as a current asset.

Which of the following transactions will decrease both the return on assets ratio and the asset turnover ratio?

A company issued 1,000 shares of $10 par value common stock in exchange for $15,000.Which of the following correctly describes the impact of this transaction on the financial statements?

Recent stock price information is a financial statement disclosure.

Which of the following statements regarding international financial reporting standards (IFRS)is false?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Balance Sheet

Operating Decisions and the Income Statement

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; Natural Resources; and Intangibles

Reporting and Interpreting Liabilities

Reporting and Interpreting Bonds

Reporting and Interpreting Owners Equity

Reporting and Interpreting Investments in Other Corporations

Statement of Cash Flows

Analyzing Financial Statements

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Exam 5: Communicating and Interpreting Accounting Information

Which of the following is true?

For accounting information to be useful,it must be which of the following?

Which of the following statements correctly describe the effect of accruing interest revenue at year-end?

Which of the following would not be added to net income in the determination of net cash flow from operations?

The return on assets ratio will increase when sales increase.

Which of the following is an objective of the external audit of a company's financial statements?

Intangible assets are reported on the balance sheet as a noncurrent asset and include goodwill.

Which of the following would not be included within the operations section of a cash flow statement?

Which of the following are the criteria used to determine whether an item is extraordinary?

Which of the following tasks does the Financial Accounting Standards Board (FASB)perform?

The Securities and Exchange Commission's (SEC)report that is required to be filed if any special event occurs is which of the following?

Which of the following would most likely increase the net profit margin ratio?

Which of the following statements is false when a company sells inventory costing $900 for $1,500 cash?

Inventories are reported on the balance sheet as a current asset.

Which of the following transactions will decrease both the return on assets ratio and the asset turnover ratio?

A company issued 1,000 shares of $10 par value common stock in exchange for $15,000.Which of the following correctly describes the impact of this transaction on the financial statements?

Recent stock price information is a financial statement disclosure.

Which of the following statements regarding international financial reporting standards (IFRS)is false?

Financial Statements and Business Decisions

Investing and Financing Decisions and the Balance Sheet

Operating Decisions and the Income Statement

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; Natural Resources; and Intangibles

Reporting and Interpreting Liabilities

Reporting and Interpreting Bonds

Reporting and Interpreting Owners Equity

Reporting and Interpreting Investments in Other Corporations

Statement of Cash Flows

Analyzing Financial Statements

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