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

Return on assets is a better measure of profitability than profit margin because it takes into account the assets invested in the business.

It is possible for an asset to be a current asset even though the expected conversion of that asset into cash is to be longer than one year.

A material item is one that is likely to affect a user's decision.

The main difference between intangible assets and property,plant,and equipment is physical substance.

Use this information to answer the following question. -The debt to equity ratio is

Profit margin and gross margin are the same thing.

The investments category on the balance sheet normally includes investments that are intended to be held for a long period of time.

Accounting information should make a difference to the outcome of a decision,according to the qualitative characteristic of

Classified balance sheets list accounts in alphabetical order.

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

The asset turnover ratio measures

In practice,accounting information is quite simple and precise.

Which of the following is expressed in terms of a percentage?

The Sarbanes-Oxley Act requires a company to guarantee that its financial statements are 100 percent accurate.

Liabilities have which of the following two major categories?

Although a garbage can that costs $25 is a long-term asset,it can be expensed because the amount is immaterial and will not affect anyone's decision making.

The profit margin equals

Which of the following accounts is most likely to appear on the balance sheet as a current liability?

Use this information to answer the following question. -The total amount of working capital is