Reference no: EM131834673

Question 1 :  Which of the following circumstances might indicate that management is manipulating the allowance for doubtful accounts?

A company tightens its credit standards and the allowance account increases.

A company lowers its credit standards and the allowance account decreases.

A company tightens its credit standards and the allowance account decreases.

A company lowers its credit standards and the allowance account increases.
 
Question 2 : Which statement best describes the retained earnings account?

The retained earnings account is the measurement of all distributed earnings.

Retained earnings represent unused cash of the firm.

Retained earnings are funds a company has chosen to reinvest in the operations of a business rather than pay out to stockholders in dividends.

The retained earnings account is equal to the cash account less dividends paid.
 
Question 3 : Reserve accounts such as the allowance for doubtful accounts can be abused by setting aside funds in good years and then shifting the reserve amounts to the income statement in poor years.
True
False
 
Question 4 : A common size balance sheet expresses each item on the balance sheet as a percentage of total assets.
True
False
 
Question 5 : Which of the following would cause the recognition of a liability?

Any and all of these would lead to recognizing a liability

Recognition of expense prior to the actual payment of cash

Receipt of cash in advance for services to be provided

Credit extended by suppliers
 
Question 6 : Which of the following statements is true?

The process of depreciation is a method of allocating the cost of long-lived assets.

Book value is equal to the original cost of a fixed asset plus any accumulated depreciation to date.

Land, buildings and equipment should be depreciated over the period of time they benefit the firm.

Most companies use accelerated depreciation for financial reporting purposes.
 
Question 7 : Inventory valuation is based on an assumption regarding the flow of goods and has nothing to do with the actual order in which products are sold.
True
False
 
Question 8 : Noncontrolling interest reflects the ownership of noncontrolling or "minority" shareholders in the equity of consolidated subsidiaries that are less than wholly owned.
True
False
 
Question 9 : Treasury stock represents ________.

assets held for safekeeping in company's vaults

a company's own common stock that it has repurchased

retained earnings that have been appropriated to make equity investments

investments in government securities
 
Question 10 : Which of the following is not an acceptable inventory costing method under U.S. GAAP?

Last-In, First-Out (LIFO)

Specific identification

Next-In, First-Out (NIFO)

First-In, First-Out (FIFO)
 
Question 11 : Accounts receivable is reported on the balance sheet ________.

as the total amount of credit granted less an allowance for doubtful accounts

at their net realizable value, which can be defined as the total amount less an allowance for doubtful accounts

at their net realizable value

as the total amount of credit granted plus an allowance for doubtful accounts
 
Question 12 : Marketable securities are valued on the balance sheet ________.

at fair value with the difference between cost and fair value reported as revenue

at historical cost

at cost or fair value depending on whether they are classified as "available for sale" or "held to maturity"

at market value
 
Question 13 : The use of capital and/or operating lease financing can affect both the balance sheet and the income statement.
True
False
 
Question 14 : Accrued liabilities (or accrued expenses) are a result of recognizing expenses prior to the actual payment of cash.
True
False
 
Question 15 : A deferred tax asset is recorded when expenses are recorded on the income statement but not allowed to be deducted for tax purposes until a later accounting period.
True
False
 
Question 16 : Which of the following would not be found listed as a liability on a company's balance sheet?

Operating lease obligations

Unearned revenue

Taxes payable

Bonds payable
 
Question 17 : When analyzing accounts receivable and the allowance for doubtful accounts it is helpful to assess the relationship between the growth rates of sales, accounts receivable, and the allowance for doubtful accounts.
True
False
 
Question 18 : Operating leases are a common form of off-balance-sheet financing.
True
False
 
Question 19 : At the beginning of 2017, Execon Company had total assets of $200,000, total liabilities of $110,000, and total shareholders' equity of $90,000. During the year, Execon reported net income of $75,000 and declared cash dividends of $30,000. At the end of 2017, the company had total assets of $300,000 and total shareholders' equity of $135,000. At the end of 2017, Execon had total liabilities of ________.

$165,000

$45,000

$50,000

none of the answers are correct
 
Question 20 : Which of the following accounts would not ordinarily be classified as an intangible asset?

Copyrights

Research and development

Patents

Goodwill
 
Question 21 : Which of the following items would be classified as intangible assets?

Goodwill, trademarks, franchises

Deferred taxes, prepaid expenses, patents

Unearned revenue, patents, copyrights

Land, goodwill, copyrights
 
Question 22 : Warranty obligations are estimated in order to recognize the obligation at the balance sheet date and to charge the expense to the period of the sale.
True
False
 
Question 23 : Accumulated other comprehensive income is reported in a separate equity account on the balance sheet.
True
False
 
Question 24 : Deferred tax accounts arise because of using different accounting methods for tax and financial reporting purposes.
True
False
 
Question 25  :Which of the following is not a current asset?

Prepaid insurance

Unearned revenue

Prepaid interest

Marketable securities