Chapter 01 – Accounting and Business
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(a) Compute the ratio of liabilities to stockholders’ equity. Round your answer to one decimal place.
(b) Has the creditors’ risk increased or decreased from December 31, Year 1, to December 31, Year 2?
ANSWER:
(a) 12/31/Year 2: $150,000/$75,000 = 2.0
12/31/Year 1: $105,000/$60,000 = 1.8
(b) Increased
POINTS:
1
DIFFICULTY:
Bloom’s: Analyzing
Moderate
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–06 – LO: 01–06
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.23 – Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/26/2017 4:27 PM
DATE MODIFIED:
10/16/2017 3:33 PM
226. Any twelve-month accounting period adopted by a company is known as its fiscal year.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–02 – LO: 01–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.05 – Accounting Cycle
ACCT.AICPA.BB.01 – Industry
ACCT.AICPA.FN.03 – Measurement
BUSPROG – Analytic
DATE CREATED:
8/1/2017 1:12 PM
DATE MODIFIED:
10/16/2017 3:33 PM
227. A fiscal year that ends when business activities have reached their lowest point is called the natural business year.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19..01–02 – LO: 01–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.05 – Accounting Cycle
Chapter 01 – Accounting and Business
Copyright Cengage Learning. Powered by Cognero.
Page 93
ANSWER:
c
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–02 – LO: 01–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03 – Measurement
BUSPROG – Analytic
DATE CREATED:
8/1/2017 2:17 PM
DATE MODIFIED:
10/16/2017 3:33 PM
231. Financial reports that are available for user’s to use in decision making show
a.
b.
c.
d.
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–02 – LO: 01–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
ACCT.AICPA.FN.03 – Measurement
BUSPROG – Analytic
DATE CREATED:
8/1/2017 2:25 PM
DATE MODIFIED:
10/16/2017 3:33 PM
232. Relevant and faithful representation of accounting data is enhanced when financial reports are clear and concise.
Such reports demonstrate
a.
b.
c.
d.
ANSWER:
b
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–02 – LO: 01–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.02 – GAAP
Chapter 01 – Accounting and Business
Copyright Cengage Learning. Powered by Cognero.
Page 95
d.
calendar year that ends when business activities are at their highest point
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–02 – LO: 01–02
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.05 – Accounting Cycle
ACCT.AICPA.BB.01 – Industry
ACCT.AICPA.FN.03 – Measurement
BUSPROG – Analytic
DATE CREATED:
8/1/2017 2:43 PM
DATE MODIFIED:
10/16/2017 3:33 PM
236. Resources owned by a business are known as
a.
debts
b.
liabilities
c.
assets
d.
equity
ANSWER:
c
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.01–03 – LO: 01–03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.06 – Recording Transactions
ACCT.ACBSP.APC.16 – Current Liabilities Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG – Analytic
DATE CREATED:
8/1/2017 2:48 PM
DATE MODIFIED:
10/16/2017 3:33 PM
237. The rights of owners in a corporation are referred to as
a.
proprietor’s equity
b.
stockholder’s equity
c.
dividends
d.
equity in assets
ANSWER:
b
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False