Question 1

Using the following balance sheet and income statement data, what is the earnings per share?  Average common shares outstanding was 10,000.

Accepted Answer

A)   $3.90
B)   $6.00
C)   $2.10
D)   $0.48E) A) and D)
F) None of the above

Question 2

It is assumed that the activities of Ford Motor company can be distinguished from those of General Motors because of the

Accepted Answer

A)   going concern assumption.
B)   economic entity assumption.
C)   monetary unit assumption.
D)   periodicity assumption.E) A) and B)
F) A) and C)

Question 3

Dawson Corporation has the following information available for 2014:  Based on this information, what is Dawson's Retained Earnings balance at the end of the year?

Accepted Answer

A)   $680
B)   $530
C)   $420
D)   $605E) A) and B)
F) B) and D)

Question 4

Free cash flow represents

Accepted Answer

A)   cash provided by operations less adjustments for capital expenditures and dividends.
B)   a measurement of a company's cash generating ability.
C)   a measure of solvency.
D)   All of these answer choices are correct.E) A) and D)
F) A) and C)

Question 5

Which of the following statements is not true?

Accepted Answer

A)   Comparability means using the same accounting principles from year to year within a company.
B)   Faithful representation is the quality of information that gives assurance that it is free of error.
C)   Relevant accounting information must be capable of making a difference in the decision.
D)   The primary objective of financial reporting is to provide financial information that is useful to investors and creditors for making decisions.E) None of the above
F) B) and D)

Question 6

Most companies that follow IFRS present balance sheet (statement of financial position)  information in this order.

Accepted Answer

A)   current assets; investments; property; plant and equipment; intangible assets; current liabilities; long term liabilities; owners' equity.
B)   intangible assets; property; plant and equipment; investments; current assets; current liabilities; owners' equity; long term liabilities.
C)   current assets; noncurrent assets; current liabilities; noncurrent liabilities; equity.
D)   noncurrent assets; current assets; equity; noncurrent liabilities; current liabilities.E) B) and D)
F) A) and C)

Question 7

The principle that indicates that assets should be reported at the price received to sell an asset is the

Accepted Answer

A)   historical cost principle.
B)   fair value principle.
C)   full disclosure principle.
D)   consistency principle.E) A) and B)
F) A) and C)

Question 8

Generally accepted accounting principles are rules and practices that are recognized as a general guide for financial reporting purposes.

Accepted Answer

A) True 
 B)False

Question 9

The primary accounting standard-setting body in the United States is the Securities and Exchange Commission.

Accepted Answer

A) True 
 B)False

Question 10

Issuing new shares of common stock will

Accepted Answer

A)   increase retained earnings.
B)   decrease retained earnings.
C)   increase common stock.
D)   decrease common stock.E) C) and D)
F) A) and C)

Question 11

The historical cost principle requires that when assets are acquired, they be recorded at

Accepted Answer

A)   market value.
B)   the amount paid for them.
C)   selling price.
D)   list price.E) A) and B)
F) All of the above

Question 12

Which of the following is not an accounting assumption?

Accepted Answer

A)   Integrity
B)   Going concern
C)   Periodicity
D)   Economic entityE) C) and D)
F) A) and B)

Question 13

Accounting information should be verifiable in order to enhance

Accepted Answer

A)   comparability.
B)   faithful representation.
C)   consistency.
D)   relevance.E) B) and C)
F) A) and D)

Question 14

The debt to assets ratio is a

Accepted Answer

A)   liquidity ratio.
B)   profitability ratio.
C)   solvency ratio.
D)   None of the answer choices is correct.E) B) and D)
F) None of the above

Question 15

Which statement about long-term investments is not true?

Accepted Answer

A)   They will be held for more than one year.
B)   They are not currently used in the operation of the business.
C)   They include investments in stock of other companies and land held for future use.
D)   They do not include long-term notes receivable.E) A) and B)
F) None of the above

Question 16

Reporting a net income of $95,000 will

Accepted Answer

A)   increase retained earnings.
B)   decrease retained earnings.
C)   increase common stock.
D)   decrease common stock.E) B) and C)
F) A) and D)

Question 17

Ratios that measure the income or operating success of a company for a given period of time are

Accepted Answer

A)   liquidity ratios.
B)   profitability ratios.
C)   solvency ratios.
D)   trending ratios.E) None of the above
F) A) and D)

Question 18

Current assets divided by current liabilities is known as the

Accepted Answer

A)   working capital.
B)   current ratio.
C)   profit margin.
D)   capital structure.E) A) and B)
F) None of the above

Question 19

Consistency in accounting means that a company uses the same generally accepted accounting principles from one accounting period to the next accounting period.

Accepted Answer

A) True 
 B)False

Question 20

A liability is classified as a current liability if it is to be paid within the coming year.

Accepted Answer

A) True 
 B)False

Exam 2: A Further Look at Financial Statements

Accounting information should be verifiable in order to enhance

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Using the following balance sheet and income statement data, what is the earnings per share? Average common shares outstanding was 10,000.

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Which of the following statements is not true?

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The historical cost principle requires that when assets are acquired, they be recorded at

Correct AnswerverifiedShow Answer

Reporting a net income of $95,000 will

Correct AnswerverifiedShow Answer

Generally accepted accounting principles are rules and practices that are recognized as a general guide for financial reporting purposes.

Correct AnswerverifiedShow Answer

The debt to assets ratio is a

Correct AnswerverifiedShow Answer

A liability is classified as a current liability if it is to be paid within the coming year.

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Ratios that measure the income or operating success of a company for a given period of time are

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Free cash flow represents

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Which statement about long-term investments is not true?

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Current assets divided by current liabilities is known as the

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The principle that indicates that assets should be reported at the price received to sell an asset is the

Correct AnswerverifiedShow Answer

Dawson Corporation has the following information available for 2014: Based on this information, what is Dawson's Retained Earnings balance at the end of the year?

Correct AnswerverifiedShow Answer

The primary accounting standard-setting body in the United States is the Securities and Exchange Commission.

Correct AnswerverifiedShow Answer

Which of the following is not an accounting assumption?

Correct AnswerverifiedShow Answer

It is assumed that the activities of Ford Motor company can be distinguished from those of General Motors because of the

Correct AnswerverifiedShow Answer

Most companies that follow IFRS present balance sheet (statement of financial position) information in this order.

Correct AnswerverifiedShow Answer

Consistency in accounting means that a company uses the same generally accepted accounting principles from one accounting period to the next accounting period.

Correct AnswerverifiedShow Answer

Issuing new shares of common stock will

Correct AnswerverifiedShow Answer

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