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

To be useful for decision making,financial reporting must enable the user to assess cash flow prospects and assess management's stewardship.

Which of the following is not an enhancing qualitative characteristic?

Which of the following is a measure of liquidity?

The relevance of accounting information means that the information has a direct bearing on a decision.

Accounting information contains numerous estimates,classifications,summarizations,judgments,and allocations.

Classified balance sheets list accounts in alphabetical order.

A company with a profit margin of 6 percent earns sixty cents profit for every dollar of net sales.

Stephanie Cape purchased a franchise for dry cleaning services.Stephanie is running the dry cleaning business as her primary occupation.Where on the balance sheet is the franchise reported?

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

Each of the following statements is justified by a concept or convention of accounting.Write the letter in the blank next to each statement corresponding to the concept or convention involved. _____ 1.This convention best enhances comparability of financial statements between years. _____ 2.A merger agreed on just after the balance sheet date nevertheless is reported in the notes to the financial statements. _____ 3.A company forgoes hiring another full-time accountant,which would add only slightly to the financial statements' accuracy. _____ 4.A company uses lower-of-cost-or-market to value inventory. _____ 5.A large company rounds its financial statement figures to the nearest $10,000.

Use this information to answer the following question. The total dollar amount of assets to be classified as property,plant,and equipment is

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

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

Which of the following should be classified as an intangible asset?

Financial statements have faithful representation when the information has all of the following except

Working capital is the amount by which current liabilities exceed current assets and measures how efficiently liabilities are used to produce sales.

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

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

The cost-benefit convention holds that the benefits to be gained from providing accounting information should be greater than the costs of providing it.

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