Professional Documents
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Exam
Exam
Exam
Financial reporting rules for financial accounting are set forth by which of the following?
c. World Bank
Question2
Which of the following covers a stated period of time and reports the company's revenues, expenses, and net income?
a. Balance sheet
d. Income statement
Question3
Fill in the blanks. _________________ accounting involves preparing reports for external use, while __________________
accounting provides information for internal management.
a. managerial, financial
b. external, internal
c. financial, managerial
d. cash, accrual
Question4
All of the following are types of assets EXCEPT:
a. bonds.
b. cash.
c. prepaid payments.
d. inventory.
Question5
Complete the following statement. Under the revenue recognition principle, revenues should be earned and realized:
Question6
Expenses must match with related expenses, in accordance with which of the following principles?
a. Balancing principle
c. Revenue-expense principle
d. Matching principle
Question7
Fill in the blank. Happy Burger purchases a $40,000 food truck to expand its business. The owner calculates the useful life
of the food truck to be 15 years, after which it will be completely depreciated. In this scenario, depreciation would be
considered a(n) __________ item.
a. tangible
b. accrued
c. estimated
d. recorded
Question8
Fill in the blanks. In T-accounts, credits are listed _________________, while debits are listed ________________.
a. credit, right
b. credit, left
c. debit, left
d. debit, right
Question10
The owner's interest in a corporation would be recorded under what category on the Balance Sheet?
a. Assets
b. Shareholder's Equity
c. Liabilities
d. Expenses
Question11
Things of value owned by a business are also known as?
a. Cash
b. Equity
c. Accounts Receivables
d. Assets
Question12
What are the two types of adjusting entries commonly identified in financial accounting?
Question13
Which of the following accurately presents the fundamental accounting equation?
Question14
Which of the following best defines a liability?
Question15
Which of the following contribute to shareholder's equity?
b. Retained earnings
c. Assets
d. Both A and B
Question16
Which of the following is an example of a liability?
a. Prepaid interest
b. Cash
c. Accounts receivable
d. Accounts payable
Question17
Which of the following are steps in the accounting cycle?
Choose one answer.
Question18
Fill in the blank. The fundamental difference between indirect and direct cash flow statements is how _____________
activities are recorded.
a. operating
b. investing
c. financing
d. revenue
Question19
Income and expense accounts are examples of what type of account, and why?
d. Permanent accounts, because they are carried over from one acc
Question20
Sip and Slurp is a local convenient store that has opened its first store. The owners have decided to record all transactions
when they occur, even if cash is not exchanged. What type of accounting system is being used by this company?
a. Exchange accounting
b. Cash accounting
c. Cash-accrual accounting
d. Accrual accounting
Question21
To prepare a balance sheet from T-accounts, you should do which of the following?
Choose one answer.
b. Use the trial balances from all T-accounts related to balance shee
Question22
To prepare an income statement from T-accounts, you should do which of the following?
d. Both A and C
Question23
Which of the following best describes what pro forma statements are and what information they convey?
b. Pro forma statements are estimated financial statements that are often used
requirements.
c. Pro forma statements are historical records used to determine the company'
d. Pro forma statements are abbreviated balance sheets and only given to the
Question24
Which of the following would be a transaction recorded on the statement of cash flows?
Question25
Which scenario is an example that may lead to a non-recurring item on the income statement?
b. A company acquires a rival and offers more than the asking price.
Question26
XYZ Enterprise had the following balances on its statement of cash flows. What can be concluded about its business
activities between 2011 and 2012?
Question27
When closing T-accounts, which of the following steps must be taken?
b. Reduce only revenue accounts to zero, and keep expense balances unc
c. Reduce only dividend account balances to zero, and keep expense and
Question28
Complete the following statement. The direct write-off method can only be used if the bad debt is:
a. 0.36
b. 0.63
c. 0.66
d. 0.86
Question30
Ice Ice Cream, a new ice cream restaurant, allows customers to order food and pay with their Ice Ice Cream credit card.
Currently there are 5 customers who have an outstanding balance that has not been paid for 9 months or more. What
should the company do about these unreceived funds?
Question31
Which of the following statements regarding how writing off a bad debt expense affects a company's accounts receivable
balance is true?
Question32
A customer purchases a computer from your retail store. The selling price is $1,200. The customer pays $200 in cash and
charges the remaining balance on the store's credit card. The $1,000 charged would be recorded in which account?
a. Accounts payable
b. Accounts receivable
c. Credit payable
d. Liability
Question33
Community Builders is a local company that builds pine wood sheds to sell to homeowners. On February 15th, the company
purchased $1,000 of pine wood ($1.25 per wood plank), and then the company purchased $850 more inventory when
prices fell in April to $0.85 per wood plank. In the first 6 months of the current fiscal year, Community Builders sold 30
sheds (each shed uses 40 wood planks). What is the LIFO reserve for this inventory?
a. 180
b. 240
c. 300
d. 410
Question34
Complete the following statement. The fundamental difference between FIFO and LIFO cost assumptions is:
Question35
How are LIFO inventory numbers converted into FIFO inventory numbers?
Question36
Which of the following best describes the difference between merchandising and manufacturing firms?
Question38
You purchase a shipment of inventory on January 31st and another shipment March 15th of the same year. If you use the
January 31st inventory first and record its price, then what type of inventory reporting method are you most likely using?
b. LIFO reserve
c. LIFO
d. FIFO
Question39
Which of the following are needed to generate an income statement for a merchandising firm?
Question40
Fill in the blanks. Depreciation is to ________________ as amortization is to __________________.
b. assets, liabilities
d. property, equipment
Question41
How is impairment loss recorded in a T-account for a piece of machinery equipment?
Question42
Using, straight-line depreciation, how much depreciation would be recorded each year for the value loss for a $10,000
school bus with a useful life of 15 years?
a. $150.00
b. $666.67
c. $1000.00
d. $1250.25
Question43
Fill in the blanks. A company is able to _____________ the cost of acquiring a resource if the resource will provide the
company with a tangible benefit for more than one fiscal year. Companies _________ costs that provide only one fiscal
year's worth of benefits.
a. expense, capitalize
b. capitalize, expense
c. depreciate, expense
d. amortize, capitalize
Question44
How are indefinite-life intangible assets recorded on a company's balance sheet?
d. Indefinite-life intangible assets are not amortized; instead, they are eva
Question45
Which of the following are examples of identified intangible assets?
Question46
Which of the following best describes goodwill?
Question47
Why would a company want to capitalize an intangible asset?
Question48
Which of the following is NOT an example of an intangible asset?
b. Goodwill
c. Copyrights
d. Patents
Question49
Complete the following statement. A bond issued with a coupon rate higher than the current interest rate is said to be
issued at:
a. a premium.
b. a discount.
c. par.
d. a declining rate.
Question50
How are bond prices calculated?
b. Use the sum of the future values of all expected coupon payme
value at maturity.
c. Use the sum of the present values of all expected coupon paym
value at maturity.
Question51
Fill in the blank. A loan that has a payment life of 10 years is considered to be a(n) _______________ liability.
a. current
b. long-term
c. definite-life
d. indefinite-life
Question52
Fill in the blank. Toys-A-Bunch's 2012 financial statements were recently released to the public. Revenues totaled $14.8
million, current assets totaled $21.89 million, current liabilities totaled $3.45 million, and long-term liabilities remained
unchanged at $5.35 million. Toys-A-Bunch's ________ ratio was found to be 6.34.
a. quick
b. current
c. working
d. gross profit
Question53
In 2011, Utility Queen recorded an EBIT (Earning before Income Tax) of $505,000; accounts receivables balance of
$500,000; $25,000 in interest expenses; and $315,000 in long-term debt. What was the company's interest coverage ratio
for 2011?
a. 0.05
b. 12.6
c. 14.6
d. 20.2
Question54
In 2012, company AlphaBites generated a total revenue of $125,000 with $500,000 of total assets on the company's
financial statements. The total overall expense for the fiscal year was recorded as $88,500. What was the asset turnover for
this firm?
a. 0.015
b. 0.073
c. 0.22
d. 0.25
Question55
In 2012, Utility Queen recorded an EBIT (Earning before Income Tax) of $535,000; $1.35 million in shareholder's equity; an
accounts payable balance of $250,000; and $385,000 in total liabilities. What was the company's debt-to-equity ratio for
2011?
a. 0.29
b. 0.33
c. 0.40
d. 1.54
Question56
Toys-A-Bunch's 2012 financial statements were recently released to the public. Revenues totaled $14.8 million, current
assets totaled $21.89 million, current liabilities totaled $3.45 million, and long-term liabilities remained unchanged at $5.35
million. What is Toys-A-Bunch's working capital?
a. $11.45 million
b. $16.54 million
c. $18.44 million
d. $27.89 million
Question57
Which of the equations is commonly used to determine a company's long-term solvency?
Question58
In 2012, company AlphaBites generated a total revenue of $125,000 with $500,000 of total assets on the company's
financial statements. The total overall expense for the fiscal year was recorded as $88,500. What was the ROA for this firm?
a. 4.5%
b. 6.1%
c. 7.3%
d. 10.2%
Question59
Historical financial statement ratios are often used to generate future financial statements when financial analysts conduct
which of the following?
a. Pro-forma estimation
b. Vertical analysis
d. Comparative analysis
Question60
Platinum Enterprises, Inc. had a net income in 2010 of $1.2 million. In 2011, operations suffered after several plants were
destroyed following an earthquake, and net income dropped to $650,000. How would this affect the return on equity ratio
for 2011? (Assume shareholders' equity remains constant.)
Question61
Review the following income statement for ABCD Builders. What can be concluded from the financial data?
Choose one answer.
b. The company saw a net gain in profit due to the increase in inven
d. The company is generating a low net income due to the high oper
Question62
Which of the following is NOT a ratio that can be calculated to determine a company's profitability?
a. Inventory turnover
b. Profit margin
c. Return on equity
d. Return on assets
Question63
A financial analyst examined the financial statements of a company from fiscal years: 2009, 2010, 2011, and 2012. This
would be an example of which type of financial statement analysis?
a. Historical analysis
b. Vertical analysis
c. Horizontal analysis
d. Comparative analysis