Question 1

The asset turnover ratio measures

Accepted Answer

A)  how quickly the company uses assets to pay debt. 
B)  how efficiently assets are used to produce sales. 
C)  the income produced by selling inventory. 
D)  how efficiently equity is used to produce revenue. 
A)  how quickly the company uses assets to pay debt. 
B)  how efficiently assets are used to produce sales. 
C)  the income produced by selling inventory. 
D)  how efficiently equity is used to produce revenue.

Question 2

The convention of consistency pertains to the use of the same accounting principles by all firms.

Accepted Answer

A) True 
 B)False

Question 3

Bill Pierce owns several ice cream shops all within 50 miles of his home.He has plans to expand greatly the number of shops he owns.This planned expansion will require a large bank loan.Bill has always done his own accounting work and has prepared a set of financial statements for each of the past five years of operations to present to the bank.Because some periods were more profitable than others,Bill attempted to streamline his earnings by switching depreciation and inventory valuation methods frequently.This created the appearance that his company earnings were very consistent over the years.Discuss the merits of Bill's financial statements with regard to his streamlining decisions.

Accepted Answer

Bill's attempt to streamline his earning

Question 4

All the following are qualitative characteristics of accounting information except

Accepted Answer

A)  flexibility. 
B)  comparability. 
C)  verifiability. 
D)  relevance. 
A)  flexibility. 
B)  comparability. 
C)  verifiability. 
D)  relevance.

Question 5

Patents would appear in which section of the balance sheet?

Accepted Answer

A)  Contributed capital 
B)  Property,plant,and equipment 
C)  Current liabilities 
D)  Intangible assets 
A)  Contributed capital 
B)  Property,plant,and equipment 
C)  Current liabilities 
D)  Intangible assets

Question 6

Which of the following accounts is not classified as a selling expense on the income statement?

Accepted Answer

A)  Freight-out expense 
B)  Advertising expense 
C)  Sales salaries expense 
D)  Interest expense 
A)  Freight-out expense 
B)  Advertising expense 
C)  Sales salaries expense 
D)  Interest expense

Question 7

Interest expense on a mortgage would be classified on a multistep income statement under the heading

Accepted Answer

A)  cost of goods sold 
B)  selling expenses. 
C)  operating expenses 
D)  other revenues and expenses. 
A)  cost of goods sold 
B)  selling expenses. 
C)  operating expenses 
D)  other revenues and expenses.

Question 8

The qualitative characteristic of faithful representation contains all the following features except

Accepted Answer

A)  complete. 
B)  verifiability. 
C)  neutral. 
D)  free from material error. 
A)  complete. 
B)  verifiability. 
C)  neutral. 
D)  free from material error.

Question 9

Which of the following appears on the balance sheet?

Accepted Answer

A)  Rent income 
B)  Depreciation expense 
C)  Net sales 
D)  Merchandise inventory 
A)  Rent income 
B)  Depreciation expense 
C)  Net sales 
D)  Merchandise inventory

Question 10

To understand accounting information,users must be familiar with the accounting conventions,or rules of thumb,used in preparing financial statements.

Accepted Answer

A) True 
 B)False

Question 11

A cash flow yield of 2.5 times is considered better than one of 2.0 times.

Accepted Answer

A) True 
 B)False

Question 12

The accounting convention that is most responsible for the increase in the number of notes to financial statements is

Accepted Answer

A)  materiality. 
B)  full disclosure. 
C)  consistency. 
D)  conservatism. 
A)  materiality. 
B)  full disclosure. 
C)  consistency. 
D)  conservatism.

Question 13

An advantage of accounting information is that it provides exact and completely reliable measures.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not a measure of profitability?

Accepted Answer

A)  Profit margin 
B)  Return on assets 
C)  Return on equity 
D)  Debt to equity ratio 
A)  Profit margin 
B)  Return on assets 
C)  Return on equity 
D)  Debt to equity ratio

Question 15

For accounting information to be useful,it must be both relevant and reliable.

Accepted Answer

A) True 
 B)False

Question 16

Return on assets measures how efficiently assets are used to produce sales.

Accepted Answer

A) True 
 B)False

Question 17

If net cash flows from operating activities were $187,000,net income were $50,000,and net sales were $600,000,the cash flow yield would equal (Round amounts to one decimal place)

Accepted Answer

A)  0.3 times. 
B)  3.2 times. 
C)  3.7 times. 
D)  12.0 times. 
A)  0.3 times. 
B)  3.2 times. 
C)  3.7 times. 
D)  12.0 times.

Question 18

The main difference among the balance sheets of the sole proprietorship,the partnership,and the corporation is found in the liabilities section.

Accepted Answer

A) True 
 B)False

Question 19

On the income statement of a merchandising company,net income is the amount by which net sales exceed operating expenses.

Accepted Answer

A) True 
 B)False

Question 20

Gross margin equals the difference between net sales and

Accepted Answer

A)  income taxes. 
B)  income before income taxes. 
C)  operating expenses. 
D)  cost of goods sold. 
A)  income taxes. 
B)  income before income taxes. 
C)  operating expenses. 
D)  cost of goods sold.

The asset turnover ratio measures

The convention of consistency pertains to the use of the same accounting principles by all firms.

All the following are qualitative characteristics of accounting information except

Patents would appear in which section of the balance sheet?

Which of the following accounts is not classified as a selling expense on the income statement?

Interest expense on a mortgage would be classified on a multistep income statement under the heading

The qualitative characteristic of faithful representation contains all the following features except

Which of the following appears on the balance sheet?

To understand accounting information,users must be familiar with the accounting conventions,or rules of thumb,used in preparing financial statements.

A cash flow yield of 2.5 times is considered better than one of 2.0 times.

The accounting convention that is most responsible for the increase in the number of notes to financial statements is

An advantage of accounting information is that it provides exact and completely reliable measures.

Which of the following is not a measure of profitability?

For accounting information to be useful,it must be both relevant and reliable.

Return on assets measures how efficiently assets are used to produce sales.

If net cash flows from operating activities were $187,000,net income were $50,000,and net sales were $600,000,the cash flow yield would equal (Round amounts to one decimal place)

The main difference among the balance sheets of the sole proprietorship,the partnership,and the corporation is found in the liabilities section.

On the income statement of a merchandising company,net income is the amount by which net sales exceed operating expenses.

Gross margin equals the difference between net sales and

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Investments

Filters

Exam 5: Financial Reporting and Analysis

The asset turnover ratio measures

The convention of consistency pertains to the use of the same accounting principles by all firms.

All the following are qualitative characteristics of accounting information except

Patents would appear in which section of the balance sheet?

Which of the following accounts is not classified as a selling expense on the income statement?

Interest expense on a mortgage would be classified on a multistep income statement under the heading

The qualitative characteristic of faithful representation contains all the following features except

Which of the following appears on the balance sheet?

To understand accounting information,users must be familiar with the accounting conventions,or rules of thumb,used in preparing financial statements.

A cash flow yield of 2.5 times is considered better than one of 2.0 times.

The accounting convention that is most responsible for the increase in the number of notes to financial statements is

An advantage of accounting information is that it provides exact and completely reliable measures.

Which of the following is not a measure of profitability?

For accounting information to be useful,it must be both relevant and reliable.

Return on assets measures how efficiently assets are used to produce sales.

If net cash flows from operating activities were $187,000,net income were $50,000,and net sales were $600,000,the cash flow yield would equal (Round amounts to one decimal place)

The main difference among the balance sheets of the sole proprietorship,the partnership,and the corporation is found in the liabilities section.

On the income statement of a merchandising company,net income is the amount by which net sales exceed operating expenses.

Gross margin equals the difference between net sales and

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long Term Assets

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Investments

Filters