Question 1

Common-size balance sheets may be used for all of the following except

A. gaining insights into the nature of a company's operations
B. analyzing a company's asset and financial structure
C. determining how management assesses the risks a company faces.
D. learning about the underlying economics of an industry

Question 2

Investing activities include the cash effects of:

A. producing and delivering goods and services
B. purchasing and disposing of fixed assets used in production of revenue
C. borrowing and repaying loans used to purchase fixed assets.
D. selling stocks and bonds to raise capital to purchase fixed assets

Question 3

Financing activities include the cash effects of:

A. producing and delivering goods and services
B. purchasing and disposing of fixed assets used in production of revenue
C. purchasing and disposing of debt securities of other companies
D. selling stocks and bonds to raise capital for the production of revenue

Question 4

Probable future sacrifices of economic benefits arising from an entity's present obligations to transfer resources or provide services to other entities in the future as a result of past transactions or events define:

A. assets
B. liabilities
C. equity.
D. retained earnings

Question 5

The Common Stock account is reported on the balance sheet at the:

A. historical par value of the stock
B. current market value of the stock
C. net realizable value of the stock
D. discounted present value of the future dividends`

Question 6

How much cash did Kris collect from customers during Year 2? Assume all sales are on credit.

A. $150,000
B. $750,000
C. $850,000
D. $900,000

Question 7

Current liabilities are reported on the balance sheet at:

A. current market value.
B. historical cost.
C. discounted present value
D. future value

Question 8

The Additional Paid-In Capital account is reported on the balance sheet at the __________ minus par value.

A. current market value of the stock
B. historical sales price of the stock
C. net realizable value of the stock
D. discounted present value of the future dividends

Question 9

Companies that are considered to be in stronger financial health and better credit risks are able to satisfy most of their cash needs from __________ activities

A. operating
B. investing
C. financing
D. investing and financing

Question 10

The amount of income taxes recognized on the income statement but NOT yet payable to the government are found on the:

A. balance sheet in the account Deferred Income Taxes.
B. balance sheet in the account Income Taxes Payable.
C. income statement in the account Income Tax Expense Current.
D. income statement in the account Income Tax Expense Deferred

Question 11

Which one of the following equations explains why successive balance sheets can be used to prepare a firm's cash flow statement?

A. Assets = Liabilities - Equity
B. Cash - Noncash assets = Liabilities - Equity
C. D Cash = D Liabilities - D Noncash assets + D Stockholders' equity
D. D Cash = D Liabilities + D Stockholders' equity

Question 12

Retained earnings are reported on the balance sheet at:

A. historical cost.
B. current market value.
C. net realizable value.
D. a mixture of different measurement bases

Question 13

How far into the future the obligations of a company will come due refers to the company's:

A. capital structure
B. maturity structure
C. solvency
D. liquidity

Question 14

In a common-size balance sheet, each balance sheet account is expressed as a percentage of total:

A. liabilities
B. assets
C. shareholders' equity
D. assets plus shareholders' equity

Question 15

Inventories are reported on the balance sheet at:

A. current market value
B. historical cost
C. net realizable value
D. the lower of cost or market

Question 16

How much cash did Barden pay for rent during Year 4?

A. $0
B. $15,000
C. $25,000
D. $40,000

Question 17

Operating activities result from the cash effects of:

A. producing and delivering goods and services
B. purchasing and disposing of fixed assets used in production of revenue
C. borrowing and repaying loans used in the production of revenue
D. selling stocks and bonds to raise capital for the generation of revenue

Question 18

All of the following disclosures would appear in the Summary of Significant Accounting Policies EXCEPT the __________ method

A. inventory
B. depreciation
C. long-term construction contract
D. financing

Question 19

The balance sheet amount reported for a long-term debt on the issue date is the:

A. discounted present value of the future principal repayment
B. discounted present value of the periodic interest payments
C. sum of the future value of principal repayment and the periodic interest payments.
D. sum of the discounted present values of the future principal repayments and the periodic interest payments.

Question 20

Current assets are assets expected to:

A. be converted to cash within twelve months
B. be converted to cash within twelve months or one operating cycle if it is longer than twelve months
C. remain on the books for at least twelve months
D. remain on the books for at least twelve months or one operating cycle if longer than twelve months