Question 1

The balance sheet reports a company's financial position at a point in time.

Accepted Answer

A) True 
 B)False

Question 2

Using an example, discuss the techniques that analysts use to transform accounting numbers into more useful forms.

Accepted Answer

Analysts convert accounting numbers into...

Question 3

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Subsequent events

Accepted Answer

A)  Management's views on its operations, liquidity, and capital resources.
B)  Independent and professional opinion about the fairness of the financial statements.
C)  Occurs after the fiscal year-end, but before the statements are issued.
D)  Information about the company's choices from among various alternative accounting methods.
E)  Includes disclosures of executive compensation.F) D) and E)
G) None of the above

Question 4

Listed below are four terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Horizontal analysis

Accepted Answer

A)  An indication of how adept a company is at withstanding various events and circumstances that might impair its ability to earn profits.
B)  An indication of whether a company won't be able to pay its obligations when they come due.
C)  Each item in the financial statements is expressed as a percentage of an appropriate corresponding total, or base amount, but within the same year.
D)  Each item in a financial statement is expressed as a percentage of that same item in the financial statements of another year (base amount) .E) B) and D)
F) A) and B)

Question 5

The acid-test ratio is also known as the:

Accepted Answer

A)   Current ratio.
B)   Debt to equity ratio.
C)   Times interest earned ratio.
D)   Quick ratio.E) A) and B)
F) A) and C)

Question 6

Listed below are ten terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Prepaid expense

Accepted Answer

A)  Asset recorded when an expense is paid for in advance.
B)  Goods to be sold in the ordinary course of business.
C)  Transactions with owners, managers, and affiliated companies.
D)  An intangible asset.
E)  Management's views on significant events.F) Net income less dividends since inception of the corporation.G) Amounts due from customers.H) Material events that occur after the end of the fiscal year and before the statements are issued.I) Obligations to suppliers of merchandise or of services purchased on account.J) Cash received from a customer in advance of providing a good or service.K) D) and H)
L) A) and E)

Question 7

Which is a shareholders' equity account in the balance sheet?

Accepted Answer

A)   Accumulated depreciation.
B)   Paid-in capital.
C)   Salaries payable.
D)   Accounts receivable.E) A) and C)
F) All of the above

Question 8

Which of the following would be an amount computed using horizontal analysis?

Accepted Answer

A)   The ratio of cost of goods sold to total sales for the current year.
B)   The percentage change in the cash balance from last year to this year.
C)   The difference between current assets and current liabilities at the end of the year.
D)   The ratio of inventory to total assets at the end of the year.E) B) and D)
F) A) and B)

Question 9

The balance sheet for Altoid Co. is shown below.

Required: Compute the following financial statement ratios for 2018:
-Altoid Co.'s debt to equity ratio. Round your answer to two decimal places.

Accepted Answer

($450 + 600) /$(150 ...

Question 10

Which of the following is not a current liability account?

Accepted Answer

A)   Accrued payroll.
B)   Dividends payable.
C)   Prepaid rent.
D)   Subscriptions collected in advance from customers.E) A) and B)
F) All of the above

Question 11

When a company pays its bill from a plumber for previous services on account:

Accepted Answer

A)   Its debt to equity ratio always decreases.
B)   Its acid-test ratio always remains unchanged.
C)   Its current ratio always remains unchanged.
D)   Its working capital decreases.E) B) and D)
F) B) and C) A

Question 12

Listed below are ten terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Subsequent events

Accepted Answer

A)  Asset recorded when an expense is paid for in advance.
B)  Goods to be sold in the ordinary course of business.
C)  Transactions with owners, managers, and affiliated companies.
D)  An intangible asset.
E)  Management's views on significant events.F) Net income less dividends since inception of the corporation.G) Amounts due from customers.H) Material events that occur after the end of the fiscal year and before the statements are issued.I) Obligations to suppliers of merchandise or of services purchased on account.J) Cash received from a customer in advance of providing a good or service.K) B) and F)
L) B) and J)

Question 13

Accrued salaries and wages in a balance sheet represent salaries and wages that have been earned by employees but not yet paid.

Accepted Answer

A) True 
 B)False

Question 14

A company may compare the amount of receivables in the current year to the amount of receivables in the previous year to estimate a trend in the company's ability to collect cash from customers. This type of analysis is known as:

Accepted Answer

A)   Horizontal analysis.
B)   Time analysis.
C)   Vertical analysis.
D)   Turnover analysis.E) B) and D)
F) A) and B)

Question 15

You are the independent accountant assigned to the audit of Neophyte Company. The company's accountant, a graduate of Rival State University, has prepared financial statements that contained the following questionable items:
a. The balance sheet reports land at $100,000. Included in this amount is a property held for speculation at a cost of $30,000.
b. Current liabilities include $50,000 for long-term debt that is due in three months. The company has received a suitable firm commitment to refinance the debt for five years and intends to do so.
c. Investments in marketable securities include $20,000 in short-term, high-grade commercial paper, which is a cash equivalent.

Required. Describe the appropriate balance sheet presentation for the above items.

Accepted Answer

a. Land held for speculation should be l...

Question 16

The balance sheets of Callaway Foods list current assets followed by long-term assets and current liabilities before long-term liabilities. If Callaway Foods prepared its financial statements according to International Financial Reporting Standards, what other approach might it take in preparing its balance sheet?

Accepted Answer

Under U.S. GAAP, we present current asse...

Question 17

The following balance sheet information (in $ millions) comes from the Annual Report to Shareholders of Merry International Inc. for the 2018 fiscal year. Certain amounts have been replaced with question marks to test your understanding of balance sheets. In addition, you are provided with the following information from an analysis of Merry's financial position at the same date:
Current ratio = 1.352259; Acid-test ratio = 0.5769692; Debt to equity ratio = 4.6675078.

Required: Compute the missing amounts (rounded to the nearest $ in millions) in the balance sheet.

Accepted Answer

The completed balance sheet is shown below. To solve the problem, students can start by using the debt to equity ratio to solve for total liabilities ($1,585 × 4.6675078 = $7,398 in total liabilities). Then they can determine the other missing data in the bottom half of the balance sheet by subtraction. With total liabilities and shareholders' equity known, so are the total assets. The current assets can be computed by the current ratio ($2,501 × 1. 352259 = $3,382 in current assets). The quick assets can be found from the acid-test ratio ($2,501 × .5769692 = $1,443 in quick assets less $ 505 in cash and cash equivalents = $938 in accounts and notes receivable). With that known, students can compute the inventory balance ($3,382 − 505 − 938 − 450 = $1,489). Finally, with current and total assets determined, the long-term assets can be found, leading to the missing balance in intangible assets.

Question 18

Bronco Electronics' current assets consist of cash, marketable securities, accounts receivable, and inventories. The following data were abstracted from a recent financial statement:

Required: Compute the following for Bronco:
-Current assets

Accepted Answer

Current assets (CA/Current Liabilities (CL)) = 3; therefore, CA = 3CL
Quick assets (QA/Current Liabilities) = 2.25; therefore, QA = 2.25CL
QA = CA − Inventory = CA − $150,000
2.25CL = 3CL − $150,000
.75CL = $150,000
CL = $200,000
CA = 3CL = $600,000

Question 19

Balance sheets prepared under IFRS often exclude a shareholders' equity section.

Accepted Answer

A) True 
 B)False

Question 20

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Summary of significant accounting policies

Accepted Answer

A)  Management's views on its operations, liquidity, and capital resources.
B)  Independent and professional opinion about the fairness of the financial statements.
C)  Occurs after the fiscal year-end, but before the statements are issued.
D)  Information about the company's choices from among various alternative accounting methods.
E)  Includes disclosures of executive compensation.F) D) and E)
G) A) and E)

Exam 3: The Balance Sheet and Financial Disclosures

The balance sheet reports a company's financial position at a point in time.

Correct Answer
verified

Using an example, discuss the techniques that analysts use to transform accounting numbers into more useful forms.

Correct Answer
verified
Analysts convert accounting numbers into...
View Answer

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Subsequent events

Correct Answer
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Listed below are four terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Horizontal analysis

Correct Answer
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The acid-test ratio is also known as the:

Correct Answer
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Listed below are ten terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Prepaid expense

Correct Answer
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Which is a shareholders' equity account in the balance sheet?

Correct Answer
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Which of the following would be an amount computed using horizontal analysis?

Correct Answer
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The balance sheet for Altoid Co. is shown below. Required: Compute the following financial statement ratios for 2018: -Altoid Co.'s debt to equity ratio. Round your answer to two decimal places.

Correct Answer
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($450 + 600) /$(150 ...
View Answer

Which of the following is not a current liability account?

Correct Answer
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When a company pays its bill from a plumber for previous services on account:

Correct Answer
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A

Listed below are ten terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Subsequent events

Correct Answer
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Accrued salaries and wages in a balance sheet represent salaries and wages that have been earned by employees but not yet paid.

Correct Answer
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A company may compare the amount of receivables in the current year to the amount of receivables in the previous year to estimate a trend in the company's ability to collect cash from customers. This type of analysis is known as:

Correct Answer
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Correct Answer
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a. Land held for speculation should be l...
View Answer

Correct Answer
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Under U.S. GAAP, we present current asse...
View Answer

Bronco Electronics' current assets consist of cash, marketable securities, accounts receivable, and inventories. The following data were abstracted from a recent financial statement: Required: Compute the following for Bronco: -Current assets

Correct Answer
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Current assets (CA/Current Liabilities (CL)) = 3; therefore, CA = 3CL Quick assets (QA/Current Liabilities) = 2.25; therefore, QA = 2.25CL QA = CA − Inventory = CA − $150,000 2.25CL = 3CL − $150,000 .75CL = $150,000 CL = $200,000 CA = 3CL = $600,000

Balance sheets prepared under IFRS often exclude a shareholders' equity section.

Correct Answer
verified

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Summary of significant accounting policies

Correct Answer
verified

Exam 3: The Balance Sheet and Financial Disclosures

The balance sheet reports a company's financial position at a point in time.

Correct AnswerverifiedShow Answer

Using an example, discuss the techniques that analysts use to transform accounting numbers into more useful forms.

Correct AnswerverifiedAnalysts convert accounting numbers into...View AnswerShow Answer

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Subsequent events

Correct AnswerverifiedShow Answer

Listed below are four terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Horizontal analysis

Correct AnswerverifiedShow Answer

The acid-test ratio is also known as the:

Correct AnswerverifiedShow Answer

Listed below are ten terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Prepaid expense

Correct AnswerverifiedShow Answer

Which is a shareholders' equity account in the balance sheet?

Correct AnswerverifiedShow Answer

Which of the following would be an amount computed using horizontal analysis?

Correct AnswerverifiedShow Answer

The balance sheet for Altoid Co. is shown below. Required: Compute the following financial statement ratios for 2018: -Altoid Co.'s debt to equity ratio. Round your answer to two decimal places.

Correct Answerverified($450 + 600) /$(150 ...View AnswerShow Answer

Which of the following is not a current liability account?

Correct AnswerverifiedShow Answer

When a company pays its bill from a plumber for previous services on account:

Correct AnswerverifiedA

Listed below are ten terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Subsequent events

Correct AnswerverifiedShow Answer

Accrued salaries and wages in a balance sheet represent salaries and wages that have been earned by employees but not yet paid.

Correct AnswerverifiedShow Answer

A company may compare the amount of receivables in the current year to the amount of receivables in the previous year to estimate a trend in the company's ability to collect cash from customers. This type of analysis is known as:

Correct AnswerverifiedShow Answer

Correct Answerverifieda. Land held for speculation should be l...View AnswerShow Answer

Correct AnswerverifiedUnder U.S. GAAP, we present current asse...View AnswerShow Answer

Bronco Electronics' current assets consist of cash, marketable securities, accounts receivable, and inventories. The following data were abstracted from a recent financial statement: Required: Compute the following for Bronco: -Current assets

Correct AnswerverifiedCurrent assets (CA/Current Liabilities (CL)) = 3; therefore, CA = 3CL Quick assets (QA/Current Liabilities) = 2.25; therefore, QA = 2.25CL QA = CA − Inventory = CA − $150,000 2.25CL = 3CL − $150,000 .75CL = $150,000 CL = $200,000 CA = 3CL = $600,000

Balance sheets prepared under IFRS often exclude a shareholders' equity section.

Correct AnswerverifiedShow Answer

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Summary of significant accounting policies

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Analysts convert accounting numbers into...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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($450 + 600) /$(150 ...
View Answer

Correct Answer
verified

Correct Answer
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A

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a. Land held for speculation should be l...
View Answer

Correct Answer
verified
Under U.S. GAAP, we present current asse...
View Answer

Correct Answer
verified
Current assets (CA/Current Liabilities (CL)) = 3; therefore, CA = 3CL Quick assets (QA/Current Liabilities) = 2.25; therefore, QA = 2.25CL QA = CA − Inventory = CA − $150,000 2.25CL = 3CL − $150,000 .75CL = $150,000 CL = $200,000 CA = 3CL = $600,000

Correct Answer
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Correct Answer
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