If an analyst wanted to assess a company’s long-run survival, which of the following
categories of ratios would most likely be used?
A) Liquidity
B) Market share
C) Profitability
D) Solvency
Which of the following would be in the finished goods inventory of a company making
cheese?
A) Milk and cream used to make the cheese
B) Cheese that has been made but is curing before being ready to sell
C) Cured cheese that is waiting to be shipped to customers
D) Cured cheese that has been sold to customers
The Fastbank Motorcycle Service Company wins a $10 million bid to provide the repair
services for a recall on a popular brand of motorcycles. No money is exchanged. The
repair services are expected to be performed early next year. How will these events
affect the balance sheet prepared at the end of this year?
A) Accounts Receivable will increase by $10 million.
B) Both Accounts Receivable and Accounts Payable will each increase by $10 million.
C) Both Accounts Receivable and Stockholders’ Equity will each increase by $10
million.
D) These events will not impact the balance sheet.
Which of the following statements about the calculation of cash flows from operating
activities under the direct method is correct?
A) When the direct method is used, each revenue and expense account on the income
statement is individually examined to calculate the cash flows from operating activities.
B) Noncash revenues and expenses must be included in cash flows from operating
activities when preparing a statement of cash flows using the direct method.
C) Depreciation is reported as a cash inflow in the cash flows from operating activities
when the direct method is used.
D) A loss on the sale of a long-term asset is subtracted in the cash flows from operating
activities when the direct method is used.
Assume a company uses the direct method to prepare its statement of cash flows. If the
company’s Accounts Receivable increase during the accounting period, the change in
Accounts Receivable is:
A) added to the change in the Cash account to calculate cash collected from customers.
B) subtracted from Sales Revenue to calculate the cash collected from customers.
C) added to Sales Revenue to calculate the cash collected from customers.
D) subtracted from the change in the Cash account to calculate cash collected from
customers.
The debt-to-assets ratio is the:
A) ratio of current liabilities to current assets.
B) ratio of long term liabilities to fixed assets.
C) ratio of total liabilities to total assets.
D) proportion of short-term liabilities to total liabilities.
Within the debit/credit framework, the best interpretation of the word “credit” is:
A) left side of an account.
B) increase side of an account.
C) right side of an account.
D) decrease side of an account.
One major difference between deferral and accrual adjustments is that deferral
adjustments:
A) involve previously recorded assets and liabilities and accrual adjustments involve
previously unrecorded assets and liabilities.
B) are made after financial statements are prepared and accrual adjustments are made
before financial statements are prepared.
C) are made annually and accrual adjustments are made monthly.
D) are influenced by estimates of future events and accrual adjustments are not.
The statement of cash flows shows the following information:
Cash provided by operating activities of $16,500
Cash used by investing activities of $8,400
Cash used by financing activities of $2,900
The beginning cash was $14,000. What is the amount of cash at the end of the period?
A) $41,800.
B) $30,500.
C) $8,800.
D) $19,200.
The Xu Corporation uses a periodic inventory system. The company has a beginning
inventory of 300 units at $5 each on January 1. Xu purchases 500 units at $4 each in
February and 200 units at $6 each in March. There were no additional purchases or
sales during the remainder of the year.
Use the information above to answer the following question. Xu sells 300 units during
the quarter. If Xu uses the LIFO method, what is its cost of goods sold?
A) $1,600
B) $1,400
C) $1,500
D) $1,800
In a period of rising prices, the inventory costing method that will cause the company to
have the lowest cost of goods sold is:
A) LIFO.
B) FIFO.
C) Weighted average.
D) Specific identification.
Bonds that are backed with a pledge of the company’s assets are called:
A) debenture bonds.
B) convertible bonds.
C) secured bonds.
D) registered bonds.
The owner(s) of a business are taxed on the profits of the business if the business is a:
A) sole proprietorship.
B) partnership.
C) corporation.
D) public partnership.
The WC Company borrowed $26,500 from a bank during the year. This borrowing
would be reported on the statement of cash flows as a(n):
A) investing activity is the amount of ($26,500).
B) financing activity in the amount of ($26,500).
C) investing activity is the amount of $26,500.
D) financing investing activity is the amount of $26,500.
Generally accepted accounting principles (GAAP) were (are) established by:
A) an Italian monk in 1494.
B) the U.S. Congress and the SEC.
C) the PCAOB.
D) the FASB on an ongoing basis.
A deposit in transit on last month ‘s bank reconciliation is shown as a deposit on the
bank statement this month. As a result, in preparing this period’s reconciliation, the
amount of this deposit should:A)be added to the book balance of cash.B)be deducted
from the book balance of cash.C)be added to the bank balance of cash.D)not be
included as a reconciling item.
The Allowance for Doubtful Accounts account is a contra-account that offsets:
A) Bad Debt Expense.
B) Cash.
C) Net Income.
D) Accounts Receivable.