Question 1

Different companies using the same accounting principles is an application of

Accepted Answer

A)  consistency.
B)  materiality.
C)  full disclosure.
D)  comparability.E) A) and D)
F) A) and B)

Question 2

Net cash provided by operating activities takes into account that a company must invest in capital expenditures just to maintain its current level of operations.

Accepted Answer

A) True 
 B)False

Question 3

The going concern assumption is that the business will continue in operation long enough to carry out its existing objectives and commitments.

Accepted Answer

A) True 
 B)False

Question 4

Earnings per share is a

Accepted Answer

A)  profitability ratio.
B)  liquidity ratio.
C)  solvency ratio.
D)  trending ratio.E) B) and C)
F) B) and D)

Question 5

In order for accounting information to be relevant, it must

Accepted Answer

A)  have very little cost.
B)  help predict future events or confirm prior expectations.
C)  not be reported to the public.
D)  be used by many different firms.E) None of the above
F) A) and B)

Question 6

The following information is available for Bradshaw Corporation and Newell Corporation:  Based on this information, the earnings per share calculations (rounded to two decimals)  suggest

Accepted Answer

A)  lower performance in 2021 than in 2022 for Bradshaw Corporation.
B)  higher performance in 2022 than in 2021 for Bradshaw Corporation.
C)  less earnings available to Bradshaw's common stockholders in 2022 than in 2021.
D)  an increase in the average number of common shares outstanding between 2021 and 2022 for Bradshaw Corporation.E) A) and B)
F) A) and C)

Question 7

Earnings per share measures the net income available on each share of common stock.

Accepted Answer

A) True 
 B)False

Question 8

Characteristics associated with relevant accounting information are

Accepted Answer

A)  comparability and timeliness.
B)  predictive value and confirmatory value.
C)  neutral and verifiable.
D)  consistency and understandability.E) A) and B)
F) B) and D)

Question 9

Free cash flow is net cash provided by operating activities less dividends.

Accepted Answer

A) True 
 B)False

Question 10

The current ratio is computed as current liabilities divided by current assets.

Accepted Answer

A) True 
 B)False

Question 11

Information is _________ if independent measures, using the same methods, obtain similar results.

Accepted Answer

A)  Verifiable
B)  Consistent
C)  Understandable
D)  RelevantE) B) and D)
F) A) and B)

Question 12

The following information is available for Cooke Corporation for the year 2022:  What is the cash and equivalents amount at year-end?

Accepted Answer

A)  $1,090
B)  $530
C)  $1,630
D)  $2,530E) A) and B)
F) A) and D)

Question 13

Which of the following is not considered an asset?

Accepted Answer

A)  Equipment
B)  Dividends
C)  Accounts receivable
D)  InventoryE) A) and B)
F) A) and D)

Question 14

If a building is offered for sale at $100,000 and the buyer pays $95,000 cash for it, the buyer would record the building at $100,000.

Accepted Answer

A) True 
 B)False

Question 15

Working capital is calculated by taking

Accepted Answer

A)  current assets plus current liabilities.
B)  current assets minus current liabilities.
C)  current assets divided by current liabilities.
D)  current assets times current liabilities.E) A) and D)
F) A) and C)

Question 16

All of the following are qualities of useful information except

Accepted Answer

A)  faithful representation.
B)  materiality.
C)  relevance.
D)  flexibility.E) B) and C)
F) A) and D)

Question 17

The going concern assumption assumes that the business

Accepted Answer

A)  will be liquidated in the near future.
B)  will be purchased by another business.
C)  is in a growth industry.
D)  will remain in operation for the foreseeable future.E) B) and D)
F) A) and B)

Question 18

Cash and supplies are both classified as current assets.

Accepted Answer

A) True 
 B)False

Question 19

Use the following data to calculate the current ratio.

Accepted Answer

A)  2.07: 1
B)  1.67: 1
C)  3.00: 1
D)  2.60: 1E) B) and C)
F) A) and D)

Question 20

For information to be useful, it must be both relevant and faithfully representative.

Accepted Answer

A) True 
 B)False

Exam 2: A Further Look at Financial Statements

The following information is available for Cooke Corporation for the year 2022: What is the cash and equivalents amount at year-end?

Correct AnswerverifiedShow Answer

If a building is offered for sale at $100,000 and the buyer pays $95,000 cash for it, the buyer would record the building at $100,000.

Correct AnswerverifiedShow Answer

The current ratio is computed as current liabilities divided by current assets.

Correct AnswerverifiedShow Answer

Free cash flow is net cash provided by operating activities less dividends.

Correct AnswerverifiedShow Answer

Earnings per share measures the net income available on each share of common stock.

Correct AnswerverifiedShow Answer

In order for accounting information to be relevant, it must

Correct AnswerverifiedShow Answer

The following information is available for Bradshaw Corporation and Newell Corporation: Based on this information, the earnings per share calculations (rounded to two decimals) suggest

Correct AnswerverifiedShow Answer

Characteristics associated with relevant accounting information are

Correct AnswerverifiedShow Answer

The going concern assumption assumes that the business

Correct AnswerverifiedShow Answer

Cash and supplies are both classified as current assets.

Correct AnswerverifiedShow Answer

All of the following are qualities of useful information except

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The going concern assumption is that the business will continue in operation long enough to carry out its existing objectives and commitments.

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Earnings per share is a

Correct AnswerverifiedShow Answer

Which of the following is not considered an asset?

Correct AnswerverifiedShow Answer

Use the following data to calculate the current ratio.

Correct AnswerverifiedShow Answer

Different companies using the same accounting principles is an application of

Correct AnswerverifiedShow Answer

Working capital is calculated by taking

Correct AnswerverifiedShow Answer

Information is _________ if independent measures, using the same methods, obtain similar results.

Correct AnswerverifiedShow Answer

For information to be useful, it must be both relevant and faithfully representative.

Correct AnswerverifiedShow Answer

Net cash provided by operating activities takes into account that a company must invest in capital expenditures just to maintain its current level of operations.

Correct AnswerverifiedShow Answer

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