Reference no: EM132467045

Question 1: Which of the following statements regarding revenues and expenses is not true?

a.Revenues are recognized as a company satisfies performance obligations by transferring goods or services to customers.

b.Revenues and expenses are reported as net amounts because they reflect the effects of ongoing business activities that determine earnings.

c.Revenues and expenses relate to a company's major operating activities.

d.Expenses are recognized as assets are used up or liabilities are incurred.

Question 2: Financial statement users evaluate profit margins at various levels, reflecting different aspects of the company's financial performance. All of the following are common margins used to evaluate a company except

a.net profit margin.

b.operating margin.

c.gross profit margin.

d.rate of change margin.

Question 3: Which of the following statements regarding earnings per share is not true?

a.Companies are not required to report earnings per share on any discontinued operations.

b.Earnings per share must be reported for income from continuing operations and net income.

c.All companies are required to report basic and diluted (if applicable) earnings per share amounts.

d.An EPS schedule is an acceptable way to disclose earnings per share information in the financial report.

Question 4: In which of the following sections of the statement of cash flows is buying equipment reported?

a.Financing activities

b.Investing activities

c.Operating activities

d.Selling activities

Question 5: Which of the following statements regarding risk is not true?

a.The income statement is useful for determining the risk associated with investing in or extending credit to the company.

b.Generally, the greater the risk, the lower the expected rate of return.

c.Risk is the uncertainty and variability of the future profitability of cash flows of a company.

d.The greater the uncertainty of future results, the greater the risk associated with an investment in or loan to the company.

Question 6: Which of the following statements regarding the capital maintenance concept is not true?

a.Under the capital maintenance concept, income would be computed as the difference between the beginning and ending net assets, after any adjustments for additional investments or distributions to shareholders.

b.Under the capital maintenance concept, lifetime income would be computed as the total amount of cash distributed to shareholders minus the total amount of capital invested by shareholders.

c.The capital maintenance concept implies net income for the period is the amount of money that can be distributed to shareholders as a return on capital, without being a return of capital.

d.The capital maintenance concept asserts that shareholders' capital must be maintained and therefore income is measured as the decrease in capital.