Question 1

Hedging foreign currency transactions can be accomplished by:

Accepted Answer

A) equal amounts of receivables and payables in foreign currencies. 
B) the purchase of future contracts. 
C) the purchase of foreign currencies to be received in the future. 
D) all of the above. 
A) equal amounts of receivables and payables in foreign currencies. 
B) the purchase of future contracts. 
C) the purchase of foreign currencies to be received in the future. 
D) all of the above.

Question 2

Recognizing revenue before it is earned is a major source of financial statement fraud.

Accepted Answer

A) True 
 B)False

Question 3

Westside Corporation had an investment in available-for-sale securities of $60,000.This investment experienced an unrealized loss of $7,000 during the year.Ignoring income taxes,the effect of this loss on comprehensive income will be:

Accepted Answer

A) $60,000 increase. 
B) $60,000 decrease. 
C) $7,000 increase. 
D) $7,000 decrease. 
A) $60,000 increase. 
B) $60,000 decrease. 
C) $7,000 increase. 
D) $7,000 decrease.

Question 4

Earnings per share figures are NOT computed for:

Accepted Answer

A) discontinued operations. 
B) income from continuing operations. 
C) income from operations. 
D) net income. 
A) discontinued operations. 
B) income from continuing operations. 
C) income from operations. 
D) net income.

Question 5

Earnings per share (EPS)is calculated as:

Accepted Answer

A) net income divided by the number of shares of common stock issued at the end of the year. 
B) net income divided by the number of shares of common stock outstanding at the end of the year. 
C) net income divided by the average number of shares of common stock outstanding throughout the year. 
D) net income divided by the average number of shares of common stock issued throughout the year. 
A) net income divided by the number of shares of common stock issued at the end of the year. 
B) net income divided by the number of shares of common stock outstanding at the end of the year. 
C) net income divided by the average number of shares of common stock outstanding throughout the year. 
D) net income divided by the average number of shares of common stock issued throughout the year.

Question 6

A type of financial statement fraud that is accomplished by shipping more to customers than they ordered,with the expectation that they may return some or all of the items is called:

Accepted Answer

A) improper asset recognition. 
B) improper expense recognition. 
C) channel stuffing. 
D) cooking the books. 
A) improper asset recognition. 
B) improper expense recognition. 
C) channel stuffing. 
D) cooking the books.

Question 7

Katherine's Fashions is going to discontinue one of its manufacturing divisions.The division's assets with a book value of $1,000,000 are sold for $750,000.The division generated an operating loss of $145,000 after the decision was made to discontinue the segment.Ignoring income taxes,what total amount should be reported on the income statement as discontinued operations?

Accepted Answer

A) $105,000 loss 
B) $250,000 loss 
C) $395,000 loss 
D) $145,000 gain 
A) $105,000 loss 
B) $250,000 loss 
C) $395,000 loss 
D) $145,000 gain

Question 8

For a merchandiser,how is Interest Revenue classified on the income statement?

Accepted Answer

A) Income from Discontinued Operations 
B) Extraordinary item 
C) Other Revenues and Gains 
D) Operating Expenses 
A) Income from Discontinued Operations 
B) Extraordinary item 
C) Other Revenues and Gains 
D) Operating Expenses

Question 9

Taxable income should always match pretax accounting income.

Accepted Answer

A) True 
 B)False

Question 10

An audit report is addressed to the board of directors and stockholders of the audited company.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following would be considered an extraordinary item?

Accepted Answer

A) Losses from a labor dispute 
B) Losses from a natural disaster 
C) Writing-down inventory to lower-of-cost or market 
D) Losses from the sale of property 
A) Losses from a labor dispute 
B) Losses from a natural disaster 
C) Writing-down inventory to lower-of-cost or market 
D) Losses from the sale of property

Question 12

Hedging enables an entity to protect itself from losing money in a foreign transaction by engaging in a counterbalancing transaction.

Accepted Answer

A) True 
 B)False

Question 13

Foreign-Currency Transaction Losses can be avoided if international transactions are settled in U.S.dollars instead of the foreign currency.

Accepted Answer

A) True 
 B)False

Question 14

Earnings per share is calculated:

Accepted Answer

A) only for preferred stock. 
B) only for common stock. 
C) for common and preferred stock. 
D) only for treasury stock. 
A) only for preferred stock. 
B) only for common stock. 
C) for common and preferred stock. 
D) only for treasury stock.

Question 15

Comprehensive income can be presented alone in a separate statement of comprehensive income.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is TRUE?

Accepted Answer

A) The income tax return is prepared using GAAP. 
B) The income tax return is prepared using rules set by the SEC. 
C) The income tax return is prepared using rules set by the IRS. 
D) The income tax return and the income statement are identical. 
A) The income tax return is prepared using GAAP. 
B) The income tax return is prepared using rules set by the SEC. 
C) The income tax return is prepared using rules set by the IRS. 
D) The income tax return and the income statement are identical.

Question 17

The audit report written by the outside auditors evaluates a company's:

Accepted Answer

A) financial statements only. 
B) internal controls over financial reporting only. 
C) management skills. 
D) financial statements and internal controls over financial reporting. 
A) financial statements only. 
B) internal controls over financial reporting only. 
C) management skills. 
D) financial statements and internal controls over financial reporting.

Question 18

A typical,unqualified audit report indicates that the audited company's:

Accepted Answer

A) financial statements are presented in accordance with GAAP. 
B) financial statements present fairly the company's financial condition and operating performance for a period of time. 
C) financial statements provide substantial evidence that the company is a safe investment. 
D) A and B 
A) financial statements are presented in accordance with GAAP. 
B) financial statements present fairly the company's financial condition and operating performance for a period of time. 
C) financial statements provide substantial evidence that the company is a safe investment. 
D) A and B

Question 19

Wendell Corporation reported net income for the current year of $800,000.Wendell had 5,000 shares of $100 par value,10% preferred stock outstanding and 40,000 shares of $1 par value common stock outstanding for the entire year.Earnings per share is:

Accepted Answer

A) $16.67. 
B) $17.77. 
C) $18.75. 
D) $20.00. 
A) $16.67. 
B) $17.77. 
C) $18.75. 
D) $20.00.

Question 20

The financial statements are the responsibility of:

Accepted Answer

A) the independent auditors. 
B) the shareholders. 
C) management. 
D) the board of directors. 
A) the independent auditors. 
B) the shareholders. 
C) management. 
D) the board of directors.

Hedging foreign currency transactions can be accomplished by:

Recognizing revenue before it is earned is a major source of financial statement fraud.

Westside Corporation had an investment in available-for-sale securities of $60,000.This investment experienced an unrealized loss of $7,000 during the year.Ignoring income taxes,the effect of this loss on comprehensive income will be:

Earnings per share figures are NOT computed for:

Earnings per share (EPS)is calculated as:

A type of financial statement fraud that is accomplished by shipping more to customers than they ordered,with the expectation that they may return some or all of the items is called:

For a merchandiser,how is Interest Revenue classified on the income statement?

Taxable income should always match pretax accounting income.

An audit report is addressed to the board of directors and stockholders of the audited company.

Which of the following would be considered an extraordinary item?

Hedging enables an entity to protect itself from losing money in a foreign transaction by engaging in a counterbalancing transaction.

Foreign-Currency Transaction Losses can be avoided if international transactions are settled in U.S.dollars instead of the foreign currency.

Earnings per share is calculated:

Comprehensive income can be presented alone in a separate statement of comprehensive income.

Which of the following statements is TRUE?

The audit report written by the outside auditors evaluates a company's:

A typical,unqualified audit report indicates that the audited company's:

Wendell Corporation reported net income for the current year of $800,000.Wendell had 5,000 shares of $100 par value,10% preferred stock outstanding and 40,000 shares of $1 par value common stock outstanding for the entire year.Earnings per share is:

The financial statements are the responsibility of:

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Short-Term Investments Receivables

Inventory Cost of Goods Sold

Plant Assets,natural Resources, Intangibles

Long-Term Investments: The Time Value of Money

Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

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Exam 11: Evaluating Performance: Earnings Quality, the Income Statement, the Statement of Comprehensive Income

Hedging foreign currency transactions can be accomplished by:

Recognizing revenue before it is earned is a major source of financial statement fraud.

Westside Corporation had an investment in available-for-sale securities of $60,000.This investment experienced an unrealized loss of $7,000 during the year.Ignoring income taxes,the effect of this loss on comprehensive income will be:

Earnings per share figures are NOT computed for:

Earnings per share (EPS)is calculated as:

A type of financial statement fraud that is accomplished by shipping more to customers than they ordered,with the expectation that they may return some or all of the items is called:

For a merchandiser,how is Interest Revenue classified on the income statement?

Taxable income should always match pretax accounting income.

An audit report is addressed to the board of directors and stockholders of the audited company.

Which of the following would be considered an extraordinary item?

Hedging enables an entity to protect itself from losing money in a foreign transaction by engaging in a counterbalancing transaction.

Foreign-Currency Transaction Losses can be avoided if international transactions are settled in U.S.dollars instead of the foreign currency.

Earnings per share is calculated:

Comprehensive income can be presented alone in a separate statement of comprehensive income.

Which of the following statements is TRUE?

The audit report written by the outside auditors evaluates a company's:

A typical,unqualified audit report indicates that the audited company's:

Wendell Corporation reported net income for the current year of $800,000.Wendell had 5,000 shares of $100 par value,10% preferred stock outstanding and 40,000 shares of $1 par value common stock outstanding for the entire year.Earnings per share is:

The financial statements are the responsibility of:

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Short-Term Investments Receivables

Inventory Cost of Goods Sold

Plant Assets,natural Resources, Intangibles

Long-Term Investments: The Time Value of Money

Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Filters