Professional Documents
Culture Documents
Solvency ratios measure the short-term ability of the company to pay its maturing obligations.
Answer
Selected Answer:
False
Correct Answer:
False
Question 2
2 out of 2 points
True
Correct Answer:
True
Question 3
2 out of 2 points
Consistent use of the same accounting principles and methods is necessary for meaningful analysis of trends within a
company.
Answer
Selected Answer:
True
Correct Answer:
True
Question 4
2 out of 2 points
The economic resources that are owned by a business are called stockholders equity.
Answer
Selected Answer:
False
Correct Answer:
False
Question 5
2 out of 2 points
Financing activities include the purchase or sale of long-lived assets or the purchase or sale of investment securities.
Answer
Selected Answer:
False
Correct Answer:
False
Question 6
2 out of 2 points
The multiple-step income statement is considered more useful than the single-step income statement because it
highlights the components of net income.
Answer
Selected Answer:
True
Correct Answer:
True
Question 7
2 out of 2 points
Which of the following is not a common way that managers use the balance sheet?
Answer
Selected
Answer:
To analyze the balances of assets, liabilities, and stockholders equity throughout the accounting
period
Correct Answer:
To analyze the balances of assets, liabilities, and stockholders equity throughout the accounting
period
Question 8
0 out of 2 points
Which of the following is the least likely consideration that management uses when deciding whether to pay a
dividend?
Answer
Selected Answer:
Does the company have more cash than it has opportunities?
Correct Answer:
Is the company's average number of common shares outstanding decreasing?
Question 9
2 out of 2 points
The revenue recognition principle dictates that revenue be recognized in the accounting period in which the
performance obligation is satisfied.
Answer
Selected Answer:
True
Correct Answer:
True
Question 10
2 out of 2 points
Question 11
2 out of 2 points
Goods that have been purchased FOB destination but are in transit, should be excluded from a physical count of
goods by the buyer.
Answer
Selected Answer:
True
Correct Answer:
True
Question 12
0 out of 2 points
Management may choose any inventory costing method it desires as long as the cost flow assumption chosen is
consistent with the physical movement of goods in the company.
Answer
Selected Answer:
True
Correct Answer:
False
Question 13
2 out of 2 points
Bathlinks Corporation has a debt to assets ratio of 73%. This tells the user of Bathlinkss financial statements that
Answer
Selected Answer:
there is a risk that Bathlinks cannot pay its debts as they come due.
Correct Answer:
there is a risk that Bathlinks cannot pay its debts as they come due.
Question 14
2 out of 2 points
Question 15
2 out of 2 points
True
Correct Answer:
True
Question 16
2 out of 2 points
Question 17
2 out of 2 points
To obtain maximum benefit from a bank reconciliation, the reconciliation should be prepared by the employee
authorized to sign checks.
Answer
Selected Answer:
False
Correct Answer:
False
Question 18
2 out of 2 points
Requiring employees to take vacations is a weakness in the system of internal controls because it does not promote
operational efficiency.
Answer
Selected Answer:
False
Correct Answer:
False
Question 19
2 out of 2 points
An advantage of using the periodic inventory system is that it requires less record keeping than the perpetual
inventory system.
Answer
Selected Answer:
True
Correct Answer:
True
Question 20
2 out of 2 points
A concentration of credit risk is a threat of nonpayment from a single customer or class of customers that could
adversely affect the financial health of the company.
Answer
Selected Answer:
True
Correct Answer:
True
Question 21
2 out of 2 points
$21,000
21,000
6,000
?
If the balance of the Buildings account was $45,000 and the equipment was sold for $21,000, what would be the total
of stockholders' equity?
Answer
Selected Answer:
$75,000
Correct Answer:
$75,000
Question 22
2 out of 2 points
Cash
Accounts receivable
Inventory
Prepaid insurance
35,000
50,000
70,000
40,000
Accounts payable
Salaries and wages payable
Mortgage payable
Total liabilities
$ 65,000
10,000
90,000
$165,000
Stock investments
80,000
Land
95,000
Buildings
$100,000
Less: Accumulated
depreciation
(30,000)
85,000
Trademarks
70,000
Total assets
$535,000
Answer
Common stock
Retained earnings
Total stockholders equity
Total liabilities and
stockholders equity
$120,000
250,000
$370,000
$535
Selected Answer:
2.60 : 1
Correct Answer:
2.60 : 1
Question 23
2 out of 2 points
An aging of accounts receivable schedule is based on the premise that the longer the period an account remains
unpaid, the greater the probability that it will eventually be collected.
Answer
Selected Answer:
False
Correct Answer:
False
Question 24
2 out of 2 points
Lankston Company began the year by issuing $90,000 of common stock for cash. The company recorded revenues of
$825,000, expenses of $720,000, and paid dividends of $45,000. What was Lankstons net income for the year?
Answer
Selected Answer:
$105,000
Correct Answer:
$105,000
Question 25
2 out of 2 points
Owners of business firms are the only people who need accounting information.
Answer
Selected Answer:
False
Correct Answer:
False