Indicate the type of each ratio listed below.
a. liquidity ratio
b. solvency ratio
c. profitability ratio
Profit margin ratio
Select the statement on which each of the items provided below would be reported.
a. Statement of retained earnings
b. Statement of stockholders’ equity
c. Items that may require reporting on either statement
d. Items not reported on either of the statements
Net income for the period.
When a company discounts a promissory note at the bank, it receives cash at the same
time it would if it held the note to maturity.
a. True
b. False
A debit memorandum appeared on Cinco Inc.’s May bank statement. How will Cinco
treat this amount on its May bank reconciliation?
a. Add it to the bank balance
b. Add it the book balance
c. Deduct from the bank balance
d. Deduct from the book balance
Farley River Inc. Use the information presented below for Farley River, Inc. for 2015
and 2014 to answer the questions that follow. Farley River uses the straight-line
depreciation method.
Refer to the information for Farley River, Inc. Using the 2015 data, what is the average
life of Farley River’s property, plant, and equipment (rounded to one decimal place)?
a. 1.6 years
b. 2.5 years
c. 4.0 years
d. 10.0 years
When a company declares a cash dividend, which of the following is true?
a. Stockholders’ equity is increased.
b. Liabilities are increased.
c. Assets are increased.
d. Assets are decreased.
Which of the following is the attribute used to measure many assets that are recognized
on a balance sheet, because it is more objective and verifiable?
a. Market value
b. Historical cost
c. Liquidation value
d. Current replacement cost
A construction company that builds skyscrapers is likely to have an operating cycle
longer than one year.
a. True
b. False
In order for accounting information to be useful in making informed decisions, it must
be
a. relevant
b. reliable
c. both relevant and reliable
d. nether relevant nor reliable
For each item listed, select the section of the balance sheet in which the item would be r
eported.
a. Current Assets
b. Property, Plant, and Equipment
c. Current Liabilities
d. Long-term Liabilities
e. Stockholders’ Equity
Computer used within the business
Hopper,Inc.
Use the information from Hopper Inc. to answer the following question(s).
Read the information about Hopper. Inc. Which statement best represents Hopper’s
performance?
a. Hopper’s profit margin ratio decreased.
b. Hopper has become more profitable.
c. Hopper’s increase in operating revenues increased the company’s net income.
d. Hopper’s operating expenses as a percentage of operating revenues remained the
same.