Question 1

Hopper, Inc.
Use the information from Hopper Inc.to answer the following questions). 
-Read the information about Hopper, Inc.Which of the following statements is the best answer regarding the company's profit margin?

Accepted Answer

A) The profit margin was 15.8% in 2014. 
B) The profit margin was 15.8% in 2013. 
C) The profit margin was 31.5% in 2014. 
D) The profit margin was 31.5% in 2013.

Question 2

Companies prepare classified financial statements because they are required by international accounting principles.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following accounts are normally reported as current liabilities on a classified balance sheet?

Accepted Answer

A) Accounts payable and bonds payable 
B) Interest payable and mortgage payable 
C) Income taxes payable and salaries payable 
D) Capital stock and accounts payable

Question 4

Although businesses engage in a wide variety of activities, all of these activities can be categorized into three types.Which of the following choices best reflects these three types of business activities?

Accepted Answer

A) Operating, financing, reporting 
B) Investing, reporting, financing 
C) Operating, financing, investing 
D) Investing, reporting, operating

Question 5

The current ratio is irrelevant in liquidity analysis for service companies because they do not have inventories among their current assets

Accepted Answer

A) True 
 B)False

Question 6

The qualitative characteristics of accounting data include

Accepted Answer

A) Assets reported on the balance sheet 
B) All accounting information 
C) Cash flows 
D) Reliability

Question 7

Which one of the following equations represents retained earnings activity?

Accepted Answer

A) Beginning balance + net income + dividends = profits for the year 
B) Beginning balance + cash inflows - cash outflows = ending balance 
C) Beginning balance + dividends - net income = ending balance 
D) Beginning balance + net income - dividends = ending balance

Question 8

The statement of cash flows, like the income statement, reports only operating activities of a company.

Accepted Answer

A) True 
 B)False

Question 9

To determine the source of a company's assets, on which financial statement will you look?

Accepted Answer

A) Balance sheet only 
B) Income statement only 
C) Both the balance sheet and the income statement 
D) Both the income statement and the statement of retained earnings

Question 10

The following information is given for Sego Company:  What are the company's current assets?

Accepted Answer

A) $220,000 
B) $155,000 
C) $130,000 
D) $95,000

Question 11

____________________ is the process of writing off the cost of tangible assets and ____________________ is the process of writing off the cost of intangible assets.

Accepted Answer

The answer of ____________________ is the process of writing off...

Question 12

In the independent auditors' report included with the annual report, management discusses the financial statements and provides the shareholders with explanations for certain amounts reported in the statements.

Accepted Answer

A) True 
 B)False

Question 13

An accountant is uncertain about the best estimate of an amount for a business transaction.If two amounts are about equally likely, the amount least likely to overstate assets and income is selected.Which of the following qualities is characterized by this action?

Accepted Answer

A) Comparability 
B) Conservatism 
C) Materiality 
D) Neutrality

Question 14

Which statement is true concerning gains and losses?

Accepted Answer

A) Gains and losses are reported on the balance sheet in the Assets and Liabilities sections, respectively. 
B) Gains and losses are special types of revenues and expenses that are reported on the income statement. 
C) The amounts of gains and losses are included in the calculation of the current ratio, in the numerator and denominator, respectively. 
D) Gains and losses are reported only on a multi-step income statement.

Question 15

What is the primary objective of financial reporting?

Accepted Answer

A) To help investors make credit decisions. 
B) To help management assess cash flows. 
C) To protect users from fraudulent financial information. 
D) To provide useful information for decision making

Question 16

Which one of the following subtotals or totals would appear in a multiple-step, but not a single-step income statement?

Accepted Answer

A) Income tax expense 
B) Income from operations 
C) Cost of goods sold 
D) Net income

Question 17

Which of the following would not be considered to be an intangible asset?

Accepted Answer

A) Franchises 
B) Copyrights 
C) Investments 
D) Goodwill

Question 18

How are assets which are expected to be realized in cash, sold, or consumed within the normal operating cycle of a business or within one year if the operating cycle is shorter than one year) reported on a classified balance sheet?

Accepted Answer

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

Question 19

On the statement of cash flows, the section involves the issuance and repayment of long term liabilities and stock transactions.

Accepted Answer

The answer of On the statement of cash flows, the...

Question 20

Webb Company
Selected data from the accounting records of Webb Company are listed below: 
-Read the information about Webb Company.By what amount will net income on a single-step income statement differ from net income on a multi-step income statement if Webb Company prepares both formats?

Accepted Answer

A) $ 800 
B) $ 600 
C) $ 200 
D) $ -0-

Exam 2: Financial Statements and the Annual Report

Hopper, Inc. Use the information from Hopper Inc.to answer the following questions) . -Read the information about Hopper, Inc.Which of the following statements is the best answer regarding the company's profit margin?

Companies prepare classified financial statements because they are required by international accounting principles.

Which of the following accounts are normally reported as current liabilities on a classified balance sheet?

Although businesses engage in a wide variety of activities, all of these activities can be categorized into three types.Which of the following choices best reflects these three types of business activities?

The current ratio is irrelevant in liquidity analysis for service companies because they do not have inventories among their current assets

The qualitative characteristics of accounting data include

Which one of the following equations represents retained earnings activity?

The statement of cash flows, like the income statement, reports only operating activities of a company.

To determine the source of a company's assets, on which financial statement will you look?

The following information is given for Sego Company: What are the company's current assets?

is the process of writing off the cost of tangible assets and is the process of writing off the cost of intangible assets.

In the independent auditors' report included with the annual report, management discusses the financial statements and provides the shareholders with explanations for certain amounts reported in the statements.

An accountant is uncertain about the best estimate of an amount for a business transaction.If two amounts are about equally likely, the amount least likely to overstate assets and income is selected.Which of the following qualities is characterized by this action?

Which statement is true concerning gains and losses?

What is the primary objective of financial reporting?

Which one of the following subtotals or totals would appear in a multiple-step, but not a single-step income statement?

Which of the following would not be considered to be an intangible asset?

How are assets which are expected to be realized in cash, sold, or consumed within the normal operating cycle of a business or within one year if the operating cycle is shorter than one year) reported on a classified balance sheet?

On the statement of cash flows, the section involves the issuance and repayment of long term liabilities and stock transactions.

Webb Company Selected data from the accounting records of Webb Company are listed below: -Read the information about Webb Company.By what amount will net income on a single-step income statement differ from net income on a multi-step income statement if Webb Company prepares both formats?