1. Another name for the balance sheet is the a Statement of cash f...

1. Another name for the balance sheet is the
a Statement of cash flows
b. Statement of financial position
c. Statement of earnings
d. Retained earnings statement

2. Which of the following types of accounts are NOT found on the balance sheet?
a. Revenues
b. Assets
c. Liabilities
d. Owners' equity

3. Another name for the income statement is
a. Statement of cash flows
b. Statement of financial position
c. Statement of earnings
d. Retained earnings statement

4. If a company has $200,000 of sales revenue, pays $10,000 in dividends, and has net income of $50,000, how much were the expenses for the year?
a $170,000
b. $160,000
c. $150,000
d. $140,000

5. A major source of cash from operating activities is:
a. Receipts from sale of goods
b. Receipts from borrowing
c. Receipts from sale of building
d. Receipts from inventory by owner

6. If a company has assets of $230,000, liabilities of $25,000 and capital stock of $50,000, what is the amount of retained earnings?
a $75,000
b. $105,000
c. $55,000
d. $155,000

7. In completing an audit of a company's financial statements, auditors:
a. Guarantee that the financial statements are accurate
b. Examine every transaction underlying the financial statements
c. Assume responsibility for the accuracy of the financial statements
d. Provide some assurance that the financial statements are not misleading

8. The accuracy of the information contained in the financial statements is the responsibility of the
a. Stockholders
b. Certified Public Accountant
c. Management
d. Securities and Exchange Commission

9. What ratio is used to measure a firm's liquidity?
a. Debt ratio
b. Corrent ratio
c. Asset turnover
d. Return on equity

10. Lange Company purchased land for $15,000 in 2000. In 2013, the land is valued at $60,000 The land would appear on the company's books in 2013 at
a. $15,000
b. $60,000
c. $45,000
d. $75,000

11. The idea that businesses must be accounted for as though they will exist at least for the foresceable future is the
a. Going concern concept
b. Entity concept
c. Monetary measurement concept
d. Arm's-length transaction concept

12. During the period, Coco Company completed the following transactions
Purchased $1,200 of inventory for cash
Took out a loan with MoneyComesFirst Bank for a $15,000 (ignore interest)
Paid $7,800 of accounts payable
As a result of these transactions, Coco Company's total assets would:
a Increase by $24,000
b. Increase by $22,800
c. Increase by $8,400
d. Increase by $7,200

13. Under accrual-basis accounting, revenues are always recognized when
a. Earned
b. Cash is received
c. The manufacture of the product to be sold is completed
d. The selling price is firmly established

14. The matching concept requires that
a. Cash outflows be matched to cash inflows
b. Expenses incurred be matched with revenue earned
c. Assets be matched with liabilities
d. Assets be matched with owners' equity

15. A twelve month accounting period ending on December 31 is known as a
a. Calendar year
b. Report period
c. Fiscal year
d. All of the above

16. The idea that company's life can be divided into distinct time periods so that accounting information can be reported on a timely basis is the:
a Continuity
b. Matching
c. Periodicity
d. None of the above

17. During 2013, Rodium Corporation (an accrual basis company) had cash and credit sales of $21,760 and $15,225, respectively. The company also collected accounts receivable of $9,765 and incurred operating expenses of $27,700, 80% of which were paid during the year, In addition. Rodium paid $4,500 for an 18-month advertising campaign that began on September 30. Rodium's accrual-basis net income (loss) for 2013 was:
a. $9,285
b. $8,535
c. $14,075
d. $(775)

18. Caledonia Corporation (a cash basis company), a calendar year company, had the following transactions during 2013: Rented an office building to Freeland Company. On September 1, 2013 Freeland paid $27,000 for the year ending August 31, 2014. Received notice that a $1,200 dividend would be paid on January 2, 2014, by Apple Corporation. Received a check for $13,000 from a client on December 3, 2013 for services that will be performed during 2014. Assuming cash-basis accounting for Caledonia Corporation, how much income should be reported on its 2013 income statement?
a $21,000
b. $27,000
c. $40,000
d. $41,200

19. Which of the following accounts would seldom, if ever, be adjusted when making adjusting entries?
a. Prepaid Insurance
b. Cash
c. Unearned Rent
d. Consulting Revenue

20. Revenue items that are earned but have not been collected or recognized are called:
a Unearned revenues
b. Deferred revenues
c. Accrued revenues
d. Prepaid revenues

21. Which of the following will occur if an adjusting entry to record an earned but unrecorded revenue is NOT made?
a. Both revenues and assets will be understated
b. Both revenues and assets will be overstated
c. Revenue will be understated but assets will be overstated
d. Assets will be understated, but revenues will be overstated

22. Which of the following will occur if an adjusting entry to record an accrued but unrecorded expense is NOT made?
a. Both expenses and liabilities will be understated
b. Both expenses and liabilities will be overstated
c. Expenses will be understated but liabilities will be overstated
d. Liabilities will be understated but expenses will be overstated

23. The failure to adjust a prepaid expense that has partially expired and was originally recorded by debiting (increasing) a prepaid expense (a current asset) for the entire amount will usually result in an
a. Understatement of assets and an understatement of expenses
b. Overststement of assets and an overstatement of expenses
c. Understatement of assets and an overstatement of expenses
d. Overstatement of assets and an understatement of expenses

24. On April 1, Goldenchase Company (a calendar year company) paid $3,600 for one year's rent and recorded the entire amount as a debit (increase) to prepaid rent(a current asset). The adjusting entry on December 3lof that year would include a:
a. Credit (decrease) to Rent Expense of $900
b. Credit (decrease) to Prepaid Rent of $900
c. Debit (increase) to Rent Expense of $2,700
d. Debit (increase) to Prepaid Rent of $2,700

25. On June 30, 2011, Tribeca Co. purchased a two-year fire insurance policy at a cost of $12,000 and increased (debited) Prepaid Insurance for the entire amount The policy covers the period July 1, 2011, to June 30, 2013. The adjusting entry needed on December, 2011, includes a debit (increase) to:
a Insurance expense for $6,000
b. Insurance expense for $3,000
c Prepaid insurance for $3,000
d. Prepaid insurance for $6,000

26. If a company receives rent for January 2013 from a tenant in December 2012, that rent would be
a. Recorded as revenue in 2012
b. Recorded as an expense in 2012
c. Recorded as a liability in 2012
d. None of the above

27. Rent collected in advance is classified as a(n):
a. Liability
b. Expense
c. Asset
d. Revenue

28. In a common-size income statement, each item on the income statement is expressed as a percentage of:
a. Revenue
b. Expense
c. Net income
d. Gross profit

29. In a common-size balance sheet, each item on the balance sheet is expressed as a percentage of:
a. Assets
b. Net income
c. Equity
d. Revenue

30 The following data came from the financial statements of Peacock Co.:
Revenue $800,000
Assets $500,000
Expenses $600,000
Liabilities $100,000
Net income $200,000
Equity $400,000
Compute the net profit margin
a. 25%
b. 33%
c. 40%
d. 50%

31. Financial statement analysis helps users see how well a company is doing in comparison to:
a Alternative opportunities for investment
b. Predetermined objective standards or general rules of thumb
e Other companies in the industry
d. All of the above

32. Marty Company had sales of $64,000 in 2011 and $76,000 in 2012. The gross margin in 2011 was $14,000, and the cost of goods sold in 2012 was $55,000. What percentage change in cost of goods sold from 2011 to 2012 would a vertical analysis show?
a 9%
b. 10%
c. 16%
d. 18%

33. A company has a current ratio of 3 to 1. This ratio will decrease in the company
a. Receives a 5% stock dividend on one of its short-term investments
b. Borrows cash on a 6-month note
c. Pays a large account payable that had been a current liability
d. Sells merchandise for more than cost and records the sale using the perpetual inventory method

34. If current liabilities exceed current assets, payments to creditors made on the last day of the month will
a Decrease the current ratio
b. Increase the current ratio
c. Increase net working capital
d. None of the above

35. The quick ratio is a measure of
a. Solvency
b. Risk
o Liquidity
d. Profitability

36. On December 31, 2012, Comcaster Inc.'s financial statements showed the following:
Net sales revenue $150,000
Average Accounts Receivable $18,750
Cost of Goods Sold $90,000
Average Inventory $12,000
Net income $10,500
Total Assets $940,000
Given this information and assuming a 365-day business year, what was Comcaster's average number of days sales in inventory (rounded) during 2012?
a. 56 days
b. 53 days
c. 49 days
d. 41 days

37. During the current calendar year, Fears Corporation purchased $330,000 of inventory. The beginning inventory balance was $42,000 and the inventory balance at year-end was $60,000 The inventory turnover for the current year was
a 5.20 times
b. 5.50 times
c. 6.12 times
d. 7.86 times

38. The debt-equity management ratio measures
a. Profitability
b. Solvency
c. Liquidity
d. Efficiency

39. The following data were taken from the financial records of Shiloh Company for the current year:
Net sales $2,400,000
Interest expense $90,000
Income taxes $450,000
Net income $600,000
Given this information, what was the times-interest-carned ratio for the year?
a 6.67 times
b. 7.67 times
c. 11.67 times
d. 12.67 times

40. The following data were taken from the records of TiredOfCalcs Corporation for the year:
Sales $1,800,000
Interest expense $60,000
Income taxes $300,000
Net income $400,000
Given this information, what was the times-interest-carned ratio for the year?
a 7.67 times
b. 11.67 times
c. 12.67 times
d. 13.67 times

41. Examining financial statements alone may not provide enough information to make an informed judgment about a company's future success The analyst must also consider factors such as:
a General business conditions
b. The outlook for the industry of which the business is a part
c. Economic and political conditions
d. All of these answers are correct

42. This who have purchased an ownership interest in a company are called
a. Trade creditors
b. Banks
c. Equity investors
d. Customers

43. The accounting information available to outsiders is called:
a. Management accounting information
b. Financial accounting information
c. Proprietary accounting information
d. Public accounting information

44. A consistent relationship exists among the three elements of the balance sheet known as the accounting equation This relationship can be expressed as:
a. Assets - liabilities + owners' equity
b. Liabilities - owners' equity assets
c. Assets + liabilities = owners' equity
d. Owners' equity * assets - liabilities

45. The process of looking beyond the face of the financial statements to gain additional insight about a company is called
a Profitability analysis
b. Solvency analysis
c. Financial statement analysis
d. Standard industrial classification

46. A technique used by analysis to attempt to determine the amount of changes in key financial amounts over a period of time to see if a pattern emerges is called
a Ratio analysis
b. Trend analysis
c. Profitability analysis
d. Standard industrial classification

47. For ratios to be truly useful to economic decision makers, an analyst must compare ratios to other information such as:
a The company's ratios in past years
b. The ratios of peer companies
c. Industry averages
d. All of the above answers are correct

48. In annual reports, the SEC requires companies to present selected financial information for _______ years, income statements and statements of cash flows for ______ years, and balance sheets for _______ years
a Two; three; five
b. Five; three; two
c. Five; two; three
d. Three, five; two

49. An analyst desiring to measure the ability of a company to generate the cash needed to meet its short-term obligations will use:
a. Solvency ratios
b. Efficiency ratios
c. Liquidity ratios
d. Profitability ratios

50. If a company is NOT liquid, it means:
a. It has only common stock issued and outstanding
b. It may only have long-term debt
c. It is more stable for "financially solid"
d. The company may have difficulty generating enough cash to pay its bills