Question 1

Which one of the following statements is true?

Accepted Answer

A) The two primary sources of financing available to corporations are borrowed funds and funds invested by owners. 
B) Financing activities involve the acquisition of property,plant and equipment. 
C) Borrowed funds are a more permanent source of financing than funds invested by owners. 
D) Investing activities involve the selling of products or services and the incurring of expenses related to selling these products and services.

Question 2

Supplementary disclosures required by GAAP that help explain detail behind the accounting treatment of certain items in the financial statements is most likely found in which of the following sections of a corporate annual report?

Accepted Answer

A) Report of Independent Accountants 
B) Notes to the Financial Statements 
C) Management's Discussion and Analysis 
D) Balance sheet

Question 3

If a firm has a current ratio of 2,the subsequent receipt of a 60-day note receivable to settle an open account will cause the ratio to decrease.

Accepted Answer

A) True 
 B)False

Question 4

What is conservatism,and why is it important in accounting?

Accepted Answer

The answer of What is conservatism,and why is it important...

Question 5

What information is provided in an annual report in addition to the financial statements?

Accepted Answer

The answer of What information is provided in an annual...

Question 6

Seikoson
The 2017 income statement of Seikoson shows operating revenues of $130,800, selling expenses of $37,100, general and administrative expenses of $34,900, interest expense of $900, and income tax expense of $11,430. Seikoson’s stockholders’ equity was $280,000 at the beginning of the year and $320,000 at the end of the year. The company has 20,000 shares of stock outstanding at December 31, 2017.

-Read the information about Cobb Company.What is Cobb's net income?

Accepted Answer

A) $1,600 
B) $2,000 
C) $2,200 
D) $2,800

Question 7

Which one of the following is an operating activity of a business?

Accepted Answer

A) Paying for purchases of inventory 
B) Issuing stock for cash 
C) Borrowing money from a bank 
D) Purchasing a manufacturing plant

Question 8

One significant difference between a classified and a non-classified balance sheet is the distinction between which of the following items?

Accepted Answer

A) Assets and liabilities 
B) Current and noncurrent (or long-term)items 
C) Liabilities and owners' equity 
D) Resources invested by the owners and amounts borrowed from creditors

Question 9

Seikoson
The 2017 income statement of Seikoson shows operating revenues of $130,800, selling expenses of $37,100, general and administrative expenses of $34,900, interest expense of $900, and income tax expense of $11,430. Seikoson’s stockholders’ equity was $280,000 at the beginning of the year and $320,000 at the end of the year. The company has 20,000 shares of stock outstanding at December 31, 2017.

-Read the information about Seikoson.What is Seikoson's net income?

Accepted Answer

A) $80,000 
B) $92,190 
C) $130,800 
D) $46,470

Question 10

The amount of a transaction may be immaterial by company standards but still be considered significant by financial statement users.

Accepted Answer

A) True 
 B)False

Question 11

Bevco Company has provided the following information from its accounting records for the current year:
 $\begin{array}{lrlr}
\text { Cash } & \$ 55,000 & \text { Accounts receivable } & \$ 45,000 \
\text { Inventory } & 65,000 & \text { Land } & 75,000 \
\text { Accounts payable } & 50,000 & \text { Notes payable (due 2021) } & 150,000 \
\text { Retained earnings } & ? & \text { Capital stock } & 20,000
\end{array}$
-Read the information for Bevco Company.What are Bevco' current assets?

Accepted Answer

A) $100,000 
B) $165,000 
C) $210,000 
D) $240,000

Question 12

Which one of the following sections is least likely to be found in a corporate annual report?

Accepted Answer

A) Notes to the Financial Statements 
B) Forecasts of Cash Flows and Earnings 
C) Report of Independent Accountants 
D) Management's Discussion and Analysis

Question 13

Service-oriented companies have different needs than product-oriented companies when analyzing financial statements.
​
Required
Why is this true? Give an example of a financial ratio that is meaningless to a service business.

Accepted Answer

The answer of Service-oriented companies have different needs than product-oriented...

Question 14

Seikoson
The 2017 income statement of Seikoson shows operating revenues of $130,800, selling expenses of $37,100, general and administrative expenses of $34,900, interest expense of $900, and income tax expense of $11,430. Seikoson’s stockholders’ equity was $280,000 at the beginning of the year and $320,000 at the end of the year. The company has 20,000 shares of stock outstanding at December 31, 2017.

-Read the information about Cobb Company.What is Cobb's income from operations?

Accepted Answer

A) $1,600 
B) $2,000 
C) $2,200 
D) $2,800

Question 15

Business entities generally carry on

Accepted Answer

A) operating,investing,and financing activities. 
B) operating activities,but only corporations engage in financing and investing activities. 
C) investing and operating activities,but only corporations engage in financing activities. 
D) either investing or financing activities,but not both.

Question 16

The statement of ____________________ explains changes in the components of owners' equity during the period.

Accepted Answer

The answer of The statement of ____________________ explains changes in...

Question 17

The primary responsibility for the preparation and integrity of the financial statements in an annual report belongs to the company's independent accountants (CPAs).

Accepted Answer

A) True 
 B)False

Question 18

The quality of accounting information that makes it comprehensible to those willing to spend the necessary time is consistency.

Accepted Answer

A) True 
 B)False

Question 19

The lack of a common depreciation method makes it impossible to compare the performance of companies using different methods.

Accepted Answer

A) True 
 B)False

Question 20

What are the two subtotals that distinguish the multiple-step income statement from the single-step income statement?

Accepted Answer

A) Income before taxes and income taxes 
B) Total operating revenues and total operating expenses 
C) Income from operations and income before taxes 
D) Total revenues and total expenses

Exam 2: Financial Statements and the Annual Report

Which one of the following statements is true?

Supplementary disclosures required by GAAP that help explain detail behind the accounting treatment of certain items in the financial statements is most likely found in which of the following sections of a corporate annual report?

If a firm has a current ratio of 2,the subsequent receipt of a 60-day note receivable to settle an open account will cause the ratio to decrease.

What is conservatism,and why is it important in accounting?

What information is provided in an annual report in addition to the financial statements?

Which one of the following is an operating activity of a business?

One significant difference between a classified and a non-classified balance sheet is the distinction between which of the following items?

The amount of a transaction may be immaterial by company standards but still be considered significant by financial statement users.

Which one of the following sections is least likely to be found in a corporate annual report?

Service-oriented companies have different needs than product-oriented companies when analyzing financial statements. Required Why is this true? Give an example of a financial ratio that is meaningless to a service business.

Business entities generally carry on

The statement of ____________________ explains changes in the components of owners' equity during the period.

The primary responsibility for the preparation and integrity of the financial statements in an annual report belongs to the company's independent accountants (CPAs).

The quality of accounting information that makes it comprehensible to those willing to spend the necessary time is consistency.

The lack of a common depreciation method makes it impossible to compare the performance of companies using different methods.

What are the two subtotals that distinguish the multiple-step income statement from the single-step income statement?

Exam 2: Financial Statements and the Annual Report

Which one of the following statements is true?

Supplementary disclosures required by GAAP that help explain detail behind the accounting treatment of certain items in the financial statements is most likely found in which of the following sections of a corporate annual report?

If a firm has a current ratio of 2,the subsequent receipt of a 60-day note receivable to settle an open account will cause the ratio to decrease.

What is conservatism,and why is it important in accounting?

What information is provided in an annual report in addition to the financial statements?

Which one of the following is an operating activity of a business?

One significant difference between a classified and a non-classified balance sheet is the distinction between which of the following items?

The amount of a transaction may be immaterial by company standards but still be considered significant by financial statement users.

Which one of the following sections is least likely to be found in a corporate annual report?

Service-oriented companies have different needs than product-oriented companies when analyzing financial statements. ​ Required Why is this true? Give an example of a financial ratio that is meaningless to a service business.

Business entities generally carry on

The statement of ____________________ explains changes in the components of owners' equity during the period.

The primary responsibility for the preparation and integrity of the financial statements in an annual report belongs to the company's independent accountants (CPAs).

The quality of accounting information that makes it comprehensible to those willing to spend the necessary time is consistency.

The lack of a common depreciation method makes it impossible to compare the performance of companies using different methods.

What are the two subtotals that distinguish the multiple-step income statement from the single-step income statement?

Service-oriented companies have different needs than product-oriented companies when analyzing financial statements. Required Why is this true? Give an example of a financial ratio that is meaningless to a service business.