1. Gains differ from revenues because gains

a. are not a result of the entity's ongoing, central operations

b. do not have to be realized

c. are reported as income from operating activities

d. do not involve any offsetting costs or expenses

2. Which of the following accounts are not included in the calculation for Gross Profit?

a. Revenue

b. Cost of goods sold

c. Net sales

d. General and selling expenses  

3. Which of the following below generally is the most useful in analyzing companies of different sizes.

a. comparative statements

b. common-sized financial statements

c. price-level accounting

d. audit report

4. Corporate governance include concerns about business ethics and social responsibility

a. True

b. False 

5. Management's statement of responsibility:

a. explains that the entity's financial statements are the responsibility of the entity's auditors

b. states that the financial statements are free of significant error

c. affirms that management is responsible for assuring adherence to internal control policies and

d. procedures guarantees that the firm has operated in a highly ethical manner

6. Business segment information is included in the explanatory notes to financial statements because:

a.the amounts shown on the financial statements of most companies are just too large to comprehend

b.current and potential investors can make more informed judgments about the company

c. net income from various geographic areas can be clearly determined

d. by combining these amounts, there is no need for ROI for each segment, disclosure is not needed  

7. The price/earnings ratio

a. is a measure of the relative expensiveness of a firm's common stock

b. does not usually change by more than 1.0 (e.g. 8.2 to 9.2) during the year

c. can be used to determine the cash dividend to be received during the year

d. is calculated by dividing the earnings multiple by net income  

8. Accounts receivable turnover is calculated by taking sales divided by the accounts receivable ending balance.

a. True

b. False

9. Which of the following is(are) an example of a measure of leverage?

a. Debt yield

b. Debt payout ratio

c. Debt/equity ratio

d. All of the above

10. As the level of activity increases

a. fixed cost per unit increase

b. variable cost per unit increase

c. variable cost per unit decrease

d. fixed cost per unit decrease

 11. To which function of management is CVP analysis most applicable?

a. Planning

b. Organizing

c. Directing

d. Controlling

 12. The contribution margin format income statement

a. results in a larger amount of operating income than the traditional income statement format

b. uses a behavior pattern classification for costs rather than a functional cost classification

c. approach  is most frequently used for financial statement reporting purposes

d. emphasizes that all costs change in proportion to any change in revenues