Question 1

Which of the following would not be used to calculate income from operations?

Accepted Answer

A)  Gross profit.
B)  Selling and administrative expenses.
C)  Interest income.
D)  Research and development expense. C

Question 2

In which of the following classifications would cash dividend payments to stockholders be reported in the statement of cash flows?

Accepted Answer

A)  Operating activities.
B)  Financing activities.
C)  Investing activities.
D)  Stockholder activities. B

Question 3

Which of the following statements is false?

Accepted Answer

A)  The board of directors meets with the external auditors to discuss management's compliance with their financial reporting obligations.
B)  The external auditors are selected by the Securities & Exchange Commission (SE
C)  .
C)  The Securities & Exchange Commission (SE
C)  requires publicly traded companies to have their financial statements audited by an independent auditor.
D)  The external auditors assume some responsibility with respect to the fairness of the financial statements. B

Question 4

Which of the following would not be classified as a current asset?

Accepted Answer

A)  Accounts receivable.
B)  Goodwill.
C)  Inventories.
D)  Non-trade receivables.

Question 5

The Willie Company has provided the following information: Operating expenses were $345,000;
Income from operations was $415,000;
Net sales were $1,100,000;
Interest expense was $71,000;
Loss from sale of investments was $87,000;
Income tax expense was $58,000.
-
What was Willie's nonoperating income (expense)?

Accepted Answer

A)  ($71,000) .
B)  ($158,000) .
C)  $216,000.
D)  $257,000.

Question 6

Which of the following is not true about the audit committee of the board of directors?

Accepted Answer

A)  They meet with the auditors to discuss management's compliance with their financial reporting responsibilities.
B)  They ensure the accuracy and completeness of all reports provided to the Securities & Exchange Commission (SE
C)  .
C)  They are responsible for ensuring that processes are in place for maintaining the integrity of the financial statement preparation and reporting.
D)  They are responsible for hiring the company's external auditors.

Question 7

Which of the following would most likely increase the net profit margin ratio?

Accepted Answer

A)  An increase in the unit selling price.
B)  A decrease in the overall sales volume.
C)  An increase in operating expenses.
D)  An increase in cost of goods sold.

Question 8

For the year ending December 31,2019,the accounts of Jackson Corporation showed the following balances:
  Determine the components of stockholders' equity as of December 31,2019.

Accepted Answer

The answer of For the year ending December 31,2019,the accounts...

Question 9

Examples of nonoperating items that would appear on an income statement are:

Accepted Answer

A)  Interest income,depreciation expense,gain on sale of land.
B)  Cost of sales,interest expense,loss on sale of investments.
C)  Interest expense,interest income,loss on sale of investments.
D)  Depreciation expense,interest income,interest expense.

Question 10

Information on all contractual agreements is included in notes as a financial statement disclosure.

Accepted Answer

A) True 
 B)False

Question 11

The indirect method of reporting cash flow from operating activities on the statement of cash flow begins with net income and adjusts for cash items.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is false?

Accepted Answer

A)  Gross profit percentage is calculated as gross profit divided by net sales.
B)  Gross profit percentage should only be viewed for each reporting company and is not useful in comparing different companies in the same industry.
C)  Gross profit is calculated as net sales less cost of sales.
D)  A higher gross profit might be strategic in order to afford high research and development costs.

Question 13

Harley Company has provided the following selected financial information. 
- What is Harley's 2019 total asset turnover (rounded)?

Accepted Answer

A)  2.38
B)  2.25
C)  0.132
D)  2.65

Question 14

Comparative financial statements are those of a company in one industry presented with another company in the same industry.

Accepted Answer

A) True 
 B)False

Question 15

Kryton Corp.has provided the following information: Gross profit was $620,000;
Cost of goods sold was $380,000;
Net income was $400,000.
What was Kryton's gross profit percentage?

Accepted Answer

A)  40%
B)  61.3%
C)  62%
D)  155%

Question 16

Which of the following is not a responsibility of the chief executive officer (CEO)and the chief financial officer (CFO)?

Accepted Answer

A)  Overseeing the financial statement external audit.
B)  Ensuring the accuracy and completeness of all reports provided to the Securities & Exchange Commission (SE
C)  .
C)  The certification of the strength of the internal control system.
D)  The disclosure to the audit committee of any frauds they are aware of.

Question 17

The fraud triangle conditions necessary for financial statement fraud to occur are the existence of a system of internal control,the ability to invade the system,and rationalization to commit the fraud.

Accepted Answer

A) True 
 B)False

Question 18

The Public Company Accounting Oversight Board (PCAOB)sets auditing standards for independent auditors.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is correct?

Accepted Answer

A)  Accumulated depreciation is the amount of depreciation on the income statement.
B)  Current liabilities are debts expected to be paid within one year.
C)  Current assets are resources of a company that might include cash and copyrights.
D)  Patents,goodwill,and deferred revenues are classified as intangible assets on the balance sheet.

Question 20

Which of the following would not typically be disclosed in the notes to the financial statements?

Accepted Answer

A)  Additional detail regarding numbers reported in the financial statements.
B)  A summary of significant accounting policies.
C)  Commitments under long-term supply agreements.
D)  The net income earned for the reporting period.

Exam 5: Communicating and Interpreting Accounting Information

Which of the following would not be used to calculate income from operations?

In which of the following classifications would cash dividend payments to stockholders be reported in the statement of cash flows?

Which of the following statements is false?

Which of the following would not be classified as a current asset?

Which of the following is not true about the audit committee of the board of directors?

Which of the following would most likely increase the net profit margin ratio?

For the year ending December 31,2019,the accounts of Jackson Corporation showed the following balances: Determine the components of stockholders' equity as of December 31,2019.

Examples of nonoperating items that would appear on an income statement are:

Information on all contractual agreements is included in notes as a financial statement disclosure.

The indirect method of reporting cash flow from operating activities on the statement of cash flow begins with net income and adjusts for cash items.

Which of the following statements is false?

Harley Company has provided the following selected financial information. - What is Harley's 2019 total asset turnover (rounded) ?

Comparative financial statements are those of a company in one industry presented with another company in the same industry.

Kryton Corp.has provided the following information: Gross profit was $620,000; Cost of goods sold was $380,000; Net income was $400,000. What was Kryton's gross profit percentage?

Which of the following is not a responsibility of the chief executive officer (CEO) and the chief financial officer (CFO) ?

The fraud triangle conditions necessary for financial statement fraud to occur are the existence of a system of internal control,the ability to invade the system,and rationalization to commit the fraud.

The Public Company Accounting Oversight Board (PCAOB)sets auditing standards for independent auditors.

Which of the following statements is correct?

Which of the following would not typically be disclosed in the notes to the financial statements?