Question 1

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.

Question 2

Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment.

Accepted Answer

A)  $990,000
B)  $525,000
C)  $735,000
D)  $585,000 B

Question 3

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

Accepted Answer

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

Question 4

The debt to assets ratio measures the percentage of assets financed by creditors.

Accepted Answer

A) True 
 B)False

Question 5

The assumption that requires that only those things that can be expressed in money are included in the accounting records is the

Accepted Answer

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

Question 6

Using the following balance sheet and income statement data, what is the total amount of working capital?  Average common shares outstanding was 15,000.

Accepted Answer

A)  $8,000
B)  $32,000
C)  $10,000
D)  $16,000 D

Question 7

A major function of management is to provide the accountant with relevant and useful information.

Accepted Answer

A) True 
 B)False

Question 8

The monetary unit assumption states that transactions that can be measured in terms of money should be recorded in the accounting records.

Accepted Answer

A) True 
 B)False  True

Question 9

Using the following balance sheet and income statement data, what is the debt to assets ratio?  Average common shares outstanding was 15,000.

Accepted Answer

A)  26 percent
B)  13 percent
C)  65 percent
D)  35 percent

Question 10

Long-term creditors consider a high free cash flow amount an indication of solvency.

Accepted Answer

A) True 
 B)False

Question 11

Kingery Corporation has current assets of $1,800,000 and current liabilities of $750,000.If they pay $350,000 of their accounts payable, what will their new current ratio be?

Accepted Answer

A)  3.6:1
B)  2.4:1
C)  4.5:1
D)  2.0:1

Question 12

Characteristics associated with faithfully representative accounting information are

Accepted Answer

A)  verifiable and timely.
B)  verifiable and neutral.
C)  complete and neutral.
D)  relevance and verifiable.

Question 13

Use the following data to determine the total dollar amount of assets to be classified as investments.

Accepted Answer

A)  $0
B)  $320,000
C)  $180,000
D)  $280,000

Question 14

Suppose that Morgan Corporation produced and sold 4,800 laptop computers during 2022.It reported $130,000 cash provided by operating activities.In order to maintain production at 4,800 laptops, Morgan invested in $8,600 in equipment.Morgan paid $1,400 in dividends.What is Morgan's free cash flow?

Accepted Answer

A)  $120,000
B)  $140,000
C)  $137,000
D)  $130,000

Question 15

Which of the following organizations issues accounting standards for countries outside the United States?

Accepted Answer

A)  SEC
B)  GAAP
C)  IASB
D)  FASB

Question 16

Use the following data to determine the total dollar amount of assets to be classified as current assets.

Accepted Answer

A)  $855,000
B)  $600,000
C)  $510,000
D)  $435,000

Question 17

The economic entity assumption states that economic events can be identified with a particular unit of accountability.

Accepted Answer

A) True 
 B)False

Question 18

What is the order in which assets are generally listed on a classified balance sheet?

Accepted Answer

A)  Current and long-term
B)  Current; property, plant and equipment; long-term investments; intangibles
C)  Current; property, plant and equipment; intangibles; long-term investments
D)  Current; long-term investments; property, plant and equipment, intangibles

Question 19

Earnings available to common stockholders is equal to

Accepted Answer

A)  total revenues
B)  net income + preferred dividends.
C)  preferred dividends - net income.
D)  net income - preferred dividends.

Question 20

Consistent use of the same accounting principles and methods is necessary for meaningful analysis of trends within a company.

Accepted Answer

A) True 
 B)False

Exam 2: A Further Look at Financial Statements

Which statement about long-term investments is not true?

Correct AnswerverifiedShow Answer

Use the following data to determine the total dollar amount of assets to be classified as property, plant, and equipment.

Correct AnswerverifiedB

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

Correct AnswerverifiedShow Answer

The debt to assets ratio measures the percentage of assets financed by creditors.

Correct AnswerverifiedShow Answer

The assumption that requires that only those things that can be expressed in money are included in the accounting records is the

Correct AnswerverifiedShow Answer

Using the following balance sheet and income statement data, what is the total amount of working capital? Average common shares outstanding was 15,000.

Correct AnswerverifiedD

A major function of management is to provide the accountant with relevant and useful information.

Correct AnswerverifiedShow Answer

The monetary unit assumption states that transactions that can be measured in terms of money should be recorded in the accounting records.

Correct AnswerverifiedTrue

Using the following balance sheet and income statement data, what is the debt to assets ratio? Average common shares outstanding was 15,000.

Correct AnswerverifiedShow Answer

Long-term creditors consider a high free cash flow amount an indication of solvency.

Correct AnswerverifiedShow Answer

Kingery Corporation has current assets of $1,800,000 and current liabilities of $750,000.If they pay $350,000 of their accounts payable, what will their new current ratio be?

Correct AnswerverifiedShow Answer

Characteristics associated with faithfully representative accounting information are

Correct AnswerverifiedShow Answer

Use the following data to determine the total dollar amount of assets to be classified as investments.

Correct AnswerverifiedShow Answer

Suppose that Morgan Corporation produced and sold 4,800 laptop computers during 2022.It reported $130,000 cash provided by operating activities.In order to maintain production at 4,800 laptops, Morgan invested in $8,600 in equipment.Morgan paid $1,400 in dividends.What is Morgan's free cash flow?

Correct AnswerverifiedShow Answer

Which of the following organizations issues accounting standards for countries outside the United States?

Correct AnswerverifiedShow Answer

Use the following data to determine the total dollar amount of assets to be classified as current assets.

Correct AnswerverifiedShow Answer

The economic entity assumption states that economic events can be identified with a particular unit of accountability.

Correct AnswerverifiedShow Answer

What is the order in which assets are generally listed on a classified balance sheet?

Correct AnswerverifiedShow Answer

Earnings available to common stockholders is equal to

Correct AnswerverifiedShow Answer

Consistent use of the same accounting principles and methods is necessary for meaningful analysis of trends within a company.

Correct AnswerverifiedShow Answer

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True

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