Question 1

State the definition of a current asset.

Accepted Answer

A current asset is cash or ano

Question 2

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 3

Describe how the current ratio is calculated.If a company has a very low current ratio,what might this mean? If a company has a very high current ratio,what might this mean?

Accepted Answer

The current ratio is the ratio of curren

Question 4

Use this balance sheet and income statement for the first year of operations for Cane Construction to answer the following question.Use ending balances whenever average balances are required for computing ratios.

-The profit margin for Cane Construction is

Accepted Answer

A) 30 percent. 
B) 75 percent. 
C) 60 percent. 
D) 27 percent. 
A) 30 percent. 
B) 75 percent. 
C) 60 percent. 
D) 27 percent.

Question 5

The convention of consistency has led to an increase in the notes to financial statements.

Accepted Answer

A) True 
 B)False

Question 6

The Securities and Exchange Commission instituted rules requiring the chief executive officers and chief financial officers of all publicly traded companies to certify that,to their knowledge,the quarterly and annual statements that their companies file with the SEC are

Accepted Answer

A) 100 percent accurate and contain no misstatements,errors,or mistakes. 
B) accurate and complete. 
C) subject to interpretation due to the many accounting rules and regulations. 
D) not to be used except by individuals working for the company. 
A) 100 percent accurate and contain no misstatements,errors,or mistakes. 
B) accurate and complete. 
C) subject to interpretation due to the many accounting rules and regulations. 
D) not to be used except by individuals working for the company.

Question 7

On a corporate balance sheet,earned capital is also known as

Accepted Answer

A) common stock. 
B) paid-in capital. 
C) retained earnings. 
D) contributed capital. 
A) common stock. 
B) paid-in capital. 
C) retained earnings. 
D) contributed capital.

Question 8

Current assets divided by current liabilities is known as the

Accepted Answer

A) profit margin. 
B) current ratio. 
C) working capital. 
D) capital structure. 
A) profit margin. 
B) current ratio. 
C) working capital. 
D) capital structure.

Question 9

Match between columns
                        Premises: A company uses lower-of-cost-or-market to value inventory.
This convention best enhances comparability of financial statements between years.
A merger agreed on just after the balance sheet date nevertheless is reported in the notes to the financial statements.
A company forgoes hiring another full-time accountant, which would add only slightly to the financial statements' accuracy.
A large company rounds its financial statement figures to the nearest $10,000.

Accepted Answer

The Answer of Full disclosure and Conservatism and Materiality and is...

Question 10

General-purpose external financial statements that are divided into subcategories are called classified financial statements.

Accepted Answer

A) True 
 B)False

Question 11

The user can depend on the accuracy of financial information when which of the following qualitative characteristics has been followed?

Accepted Answer

A) Relevance 
B) Faithful representation 
C) Understandability 
D) Timeliness 
A) Relevance 
B) Faithful representation 
C) Understandability 
D) Timeliness

Question 12

__________ is the quality that different knowledgeable and independent observers could reach concensus that a particular depiction is a faithful representation.

Accepted Answer

A) Verifiability. 
B) Consistency. 
C) Comparability. 
D) Neutrality. 
A) Verifiability. 
B) Consistency. 
C) Comparability. 
D) Neutrality.

Question 13

In accounting,$1,000 is generally considered the dividing line between material and immaterial amounts.

Accepted Answer

A) True 
 B)False

Question 14

Profitability means having enough cash on hand to pay bills when they become due.

Accepted Answer

A) True 
 B)False

Question 15

A company's management can improve overall profitability by decreasing the profit margin,
the asset turnover,or both.

Accepted Answer

A) True 
 B)False

Question 16

The Retained Earnings portion of a corporation represents the initial contribution of capital to the business.

Accepted Answer

A) True 
 B)False

Question 17

Using the following amounts taken from the balance sheet and income statement of a business,compute the measures listed below.After each answer,write "L" if it is a measure of liquidity or "P" if it is a measure of profitability.Round to two decimal places.
   a.Current ratio
b.Return on equity
c.Return on assets
d.Working capital

Accepted Answer

a.1.5 L ($30,000 F1F1F1S1F1F1

Question 18

The main differences among the balance sheets of the sole proprietorship,the partnership,and the corporation are found in the current assets and current liabilities sections.

Accepted Answer

A) True 
 B)False

Question 19

Natural resources,such as coal mines and oil wells,are classified as intangible assets.

Accepted Answer

A) True 
 B)False

Question 20

Use this balance sheet and income statement to answer the following question.Use ending balances whenever average balances are required for computing ratios.  
 
-The profit margin for National Textile is

Accepted Answer

A) 60 percent. 
B) 25 percent. 
C) 20 percent. 
D) 12 percent. 
A) 60 percent. 
B) 25 percent. 
C) 20 percent. 
D) 12 percent.

Exam 5: Foundations of Financial Reporting and the Classified Balance Sheet

State the definition of a current asset.

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

Describe how the current ratio is calculated.If a company has a very low current ratio,what might this mean? If a company has a very high current ratio,what might this mean?

Use this balance sheet and income statement for the first year of operations for Cane Construction to answer the following question.Use ending balances whenever average balances are required for computing ratios. -The profit margin for Cane Construction is

The convention of consistency has led to an increase in the notes to financial statements.

The Securities and Exchange Commission instituted rules requiring the chief executive officers and chief financial officers of all publicly traded companies to certify that,to their knowledge,the quarterly and annual statements that their companies file with the SEC are

On a corporate balance sheet,earned capital is also known as

Current assets divided by current liabilities is known as the

General-purpose external financial statements that are divided into subcategories are called classified financial statements.

The user can depend on the accuracy of financial information when which of the following qualitative characteristics has been followed?

__________ is the quality that different knowledgeable and independent observers could reach concensus that a particular depiction is a faithful representation.

In accounting,$1,000 is generally considered the dividing line between material and immaterial amounts.

Profitability means having enough cash on hand to pay bills when they become due.

A company's management can improve overall profitability by decreasing the profit margin, the asset turnover,or both.

The Retained Earnings portion of a corporation represents the initial contribution of capital to the business.

The main differences among the balance sheets of the sole proprietorship,the partnership,and the corporation are found in the current assets and current liabilities sections.

Natural resources,such as coal mines and oil wells,are classified as intangible assets.

Use this balance sheet and income statement to answer the following question.Use ending balances whenever average balances are required for computing ratios. -The profit margin for National Textile is

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Long -Term Assets

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis and Capital Budgeting

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