Question 1
2.5 / 2.5 pts
The three major categories included on the statement of cash flows are ________.
investing, capital, and financing activities
financial, operating, and internal control activities
investing, operating, and contracting activities
investing, operating, and financing activities
Question 2
2.5 / 2.5 pts
Which of the following formulas represent cost of goods sold for a merchandising business?
Purchases and Freight In + Ending Merchandise Inventory = Cost of Goods Sold
Beginning Merchandise Inventory – Ending Merchandise Inventory = Cost of Goods Sold
Ending Merchandise Inventory + Purchases and Freight In – Beginning Merchandise Inventory = Cost of Goods Sold
Beginning Merchandise Inventory + Purchases and Freight In – Ending Merchandise Inventory = Cost of Goods Sold
Question 3
2.5 / 2.5 pts
The asset account, Office Supplies had a beginning balance of $5,300. During the accounting period, office supplies were purchased, on account, for $5,500. A physical count, on the last day of the accounting period, shows $2,800 of office supplies on hand. What is the amount of Supplies Expense for the accounting period?
$8,000
$5,500
$2,600
$2,500
Question 4
2.5 / 2.5 pts
Which of the following is used to determine how the sales revenue of a company has changed from one year to the next?
horizontal analysis of the balance sheet
horizontal analysis of the income statement
vertical analysis of the balance sheet
vertical analysis of the income statement
Question 5
2.5 / 2.5 pts
The financial statements for Silver Service Company include the following items:
| | 2019 | 2018 |
| | | |
| Cash | $50,500 | $42,000 |
| Short-term Investments | 26,000 | 14,500 |
| Net Accounts Receivable | 52,000 | 48,000 |
| Merchandise Inventory | 131,000 | 51,000 |
| Total Assets | 532,000 | 548,000 |
| Accounts Payable | 132,500 | 127,000 |
| Salaries Payable | 16,000 | 16,000 |
| Long-term Note Payable | 57,000 | 57,000 |
| | | |
Compute the acid-test ratio for 2018. (Round your answer to two decimal places)
0.63
0.73
0.82
0.87
Question 6
2.5 / 2.5 pts
When performing vertical analysis of an income statement, the base amount is ________.
sales revenue
total expenses
net sales revenue
gross profit
Question 7
2.5 / 2.5 pts
Allstate Moving Company reported the following amounts on its balance sheet as of December 31, 2019 and December 31, 2018:
| | 2019 | 2018 |
| Cash and Receivables | $75,000 | $145,000 |
| Merchandise Inventory | 175,000 | 250,000 |
| Property, Plant and Equipment, net | 820,000 | 710,000 |
| Total Assets | $1,070,000 | $1,105,000 |
| Total Liabilities | $455,000 | $405,000 |
For the vertical analysis, what is the percentage of current assets as of December 31, 2019? (Round your answer to two decimal places.)
23.36%
30.49%
55.63%
35.75%
Question 8
2.5 / 2.5 pts
Which of the following sections of the statement of cash flows includes activities that increase and decrease long-term liabilities anthe investing activities section
change in cash section
the financing activities section
the operating activities section
Question 9
2.5 / 2.5 pts
Which of the following statements is true of managerial accounting?
An external audit by an independent CPA is required for managerial accounting information.
Managerial accounting information must comply with Generally Accepted Accounting Principles.
The external stakeholders of a company are the primary users of managerial accounting.
Managerial accounting information is used to help managers plan, direct and control their operations.
Question 10
2.5 / 2.5 pts
Adjusting journal entries are prepared ________.
after preparing the financial statements
after posting the closing entries
after preparing the adjusted trial balance
after preparing the unadjusted trial balance
Question 11
2.5 / 2.5 pts
Assets that are expected to be converted to cash, sold, or used up during the next 12 months, or within the business’s normal operating cycle if the cycle is longer than a year, are called ________ assets.
long-term
intangible
current
plant
Question 12
2.5 / 2.5 pts
Under which of the following categories would Accounts Payable appear?
Current liabilities
Current assets
Long-term liabilities
Long-term assets
Question 13
2.5 / 2.5 pts
Brownstone, Inc. has a current ratio of 6.00. This indicates that the company has $6 in ________.
total assets for every $1 of current liabilities
current liabilities for every $1 of current assets
total assets for every $1 of current assets
current assets for every $1 of current liabilities
Question 14
2.5 / 2.5 pts
Which of the following statements accurately describes the statement of cash flows?
It is the link between the accrual-based income statement and the cash reported on the balance sheet.
It indicates when long-term debt will mature.
It shows the relative proportion of debt and assets.
It is the link between net income and earnings per share.
Question 15
2.5 / 2.5 pts
Costs are transferred from the balance sheet to the income statement as cost of goods sold when ________.
direct materials, direct labor and manufacturing overhead are transferred to the beginning Work-in-Process Inventory account
the total of Cost of Goods Manufactured is determined
finished goods are sold
goods are transferred from the Work-in-Process Inventory account to the Finished Goods Inventory account
Question 16
2.5 / 2.5 pts
Which of the following statements is true of the direct and indirect methods of preparing the statement of cash flows?
There is no difference in the way the operating activities section is presented.
The investing activities section is the only section that differs between the direct and indirect methods.
The indirect method and the direct method will produce the same amount of net cash provided by operating activities.
The indirect method shows three types of cash flows, but the direct method does not.
Question 17
2.5 / 2.5 pts
Salaries Payable, Accounts Payable, and Unearned Revenue are examples of ________.
long-term liabilities
fixed assets
short-term investments
current liabilities
Question 18
2.5 / 2.5 pts
The following is a summary of information presented on the financial statements of a company on December 31, 2019.
| Account | 2019 | 2018 |
| Net Sales Revenue | $607,000 | $502,000 |
| Cost of Goods Sold | 450,000 | 406,000 |
| Gross Profit | 157,000 | 96,000 |
| Selling Expenses | 54,000 | 52,000 |
| Net Income Before Income Tax Expense | 103,000 | 44,000 |
| Income Tax Expense | 38,000 | 24,000 |
| Net Income | $65,000 | $20,000 |
With respect to net sales revenue, a horizontal analysis reveals ________.
a 20.92% increase in net sales revenue
| Increase (Decrease) |
| 2019 | 2018 | Amount | Percentage |
| Net sales revenue | $607,000 | $502,000 | $105,000 | 20.92 |
a $44,000 increase in net sales revenue
a decrease of $44,000 in net sales revenue
a 240.62% decrease in net sales revenue
Question 19
2.5 / 2.5 pts
The financial statements of Carrier Office Furniture Company include the following items:
| | 2019 | 2018 |
| | | |
| Cash | $42,500 | $42,000 |
| Short-term Investments | 28,000 | 19,000 |
| Net Accounts Receivable | 102,000 | 98,000 |
| Merchandise Inventory | 166,000 | 148,000 |
| Total Assets | 527,000 | 547,000 |
| Total Current Liabilities | 273,000 | 285,000 |
| Long-term Note Payable | 64,000 | 60,000 |
| | | |
What is working capital for 2019?
Correct!
$65,500
Working capital = Current assets – Current liabilities
Working capital = (Cash $42,500 + Short-term Investments $28,000 + Net Accounts Receivable $102,000 + Merchandise Inventory $166,000) – $273,000
Working Capital = $338,500 – $273,000
Working Capital = $65,500
Working capital = (Cash $42,500 + Short-term Investments $28,000 + Net Accounts Receivable $102,000 + Merchandise Inventory $166,000) – $273,000
Working Capital = $338,500 – $273,000
Working Capital = $65,500
$100,500
$190,000
$37,500
Question 20
2.5 / 2.5 pts
To match expenses against revenues means to ________.
subtract expenses incurred during one period from revenues earned during that same period
add expenses incurred during one period to revenues earned during the previous period
subtract expenses incurred during one period from revenues earned during the previous period
add expenses incurred during one period to revenues earned during that same period
Question 21
2.5 / 2.5 pts
Cash received from the issuance of notes payable is a(n) ________ activity on the statement of cash flows.
non-cash investing and financing
operating
investing
financing
Question 22
2.5 / 2.5 pts
Which of the following accounts would be used under the accrual basis of accounting, but not under cash basis accounting?
Cash
Unearned Revenue
Salaries Expense
Service Revenue
Question 23
2.5 / 2.5 pts
The activities that are included in the operating activities section of the statement of cash flows are ________.
activities that create revenue or expenses
activities that increase or decrease long-term assets
activities that pertain to construction of new facilities
activities that involve stockholders’ equity
Question 24
2.5 / 2.5 pts
The financial statements of Denison Furniture Company include the following items:
| | 2019 | 2018 |
| | | |
| Cash | $53,500 | $53,000 |
| Short-term Investments | 29,000 | 15,000 |
| Net Accounts Receivable | 92,000 | 105,000 |
| Merchandise Inventory | 162,000 | 142,000 |
| Total Assets | 532,000 | 551,000 |
| Total Current Liabilities | 235,000 | 215,000 |
| Long-term Note Payable | 62,000 | 60,000 |
| | | |
What is the 2019 cash ratio? (Round your answer to two decimal places)
0.10
0.18
0.35
0.23
Question 25
2.5 / 2.5 pts
Which of the following are NOT included in a post-closing trial balance?
Revenues and expenses
Assets and liabilities
Common Stock and liabilities
Retained Earnings and assets
Question 26
2.5 / 2.5 pts
The ________ section of the statement of cash flows includes increases and decreases in long-term assets.
operating activities
non-cash operating activities
investing activities
financing activities
Question 27
2.5 / 2.5 pts
Oregon Company is preparing its statement of cash flows using the indirect method. During the year, the company purchased equipment for $15,000 cash. Which of the following statements is true?
$15,000 would be shown as a negative cash flow in the operating activities section.
$15,000 would be shown as a positive cash flow in the investing activities section.
$15,000 would be shown as a positive cash flow in the financing activities section.
$15,000 would be shown as a negative cash flow in the investing activities section.
Question 28
2.5 / 2.5 pts
Princeton Financial Services, Inc. purchased computers that are to be used in its consulting services. Based on the matching principle, what account, other than Computers, should appear on the balance sheet as of December 31, 2018?
Depreciation Expense – Equipment
Equipment Expense
Service Revenue
Accumulated Depreciation – Equipment
Question 29
2.5 / 2.5 pts
There are three main ways to analyze financial statements. Which of the following does NOT represent one of these ways of analyzing financial statements?
horizontal analysis
financial statement analysis
vertical analysis
ratio analysis
Question 30
2.5 / 2.5 pts
Which of the following sections of the statement of cash flows include activities that create revenue and expenses of the business?
the non-cash investing and financing section
the operating activities section
the financing activities section
the investing activities section
2.5 / 2.5 pts
Which of the following is NOT a way to accurately determine the financial performance of a company?
carefully examining one year of data
comparing a company’s performance with a competing company
comparing a company’s performance with the same industry as a whole
evaluating a company’s performance from year to year
Question 32
2.5 / 2.5 pts
An account that is not closed at the end of the period is called a(n) ________.
expense account
revenue account
permanent account
temporary account
Question 33
2.5 / 2.5 pts
Which of the following sections from the statement of cash flows includes the cash paid for the purchase of Treasury Stock?
the financing activities section
the non-cash investing and financing section
the investing activities section
the operating activities section
Question 34
2.5 / 2.5 pts
Elephant, Inc.’s cost of goods sold for the year is $2,000,000, and the average merchandise inventory for the year is $129,000. Calculate the inventory turnover ratio of the company. (Round your answer to two decimal places.)
7.75 times
9.36 times
6.45 times
15.50 times
Inventory turnover ratio = Cost of Goods Sold / Average Merchandise Inventory =
$2,000,000 / 129,000 = 15.50 times
$2,000,000 / 129,000 = 15.50 times
Question 35
2.5 / 2.5 pts
Which of the following is an example of a period cost for a manufacturing company?
property taxes for the factory
indirect materials
advertising expense
depreciation on factory equipment
Question 36
2.5 / 2.5 pts
Which of the following is a product cost for a manufacturing company?
commissions paid to sales staff
salary of administrative staff
depreciation on corporate building
wages paid to factory janitor
Question 37
2.5 / 2.5 pts
When performing vertical analysis of a balance sheet, the base amount is ________.
total cash and cash equivalents
total assets
gross profit
net income
Question 38
2.5 / 2.5 pts
Which of the following would be considered a product cost for a manufacturing company?
salary of the CEO
salary of the production manager
salaries of the accounting staff
salary of the sales manager
Question 39
2.5 / 2.5 pts
Which of the following is NOT a purpose of using of using ratios to explain different aspects of a company?
evaluating the ability to pay current liabilities
evaluating profitability
evaluating income tax return information
evaluating stock as an investment
Question 40
2.5 / 2.5 pts
The entries that transfer the revenue, expense, and dividends balances to the Retained Earnings account to prepare the company’s books for the next period are called ________ entries.
closing
end of period
opening
adjusting
Vertical analysis % = [($75,000 + 175,000)/ $1,070,000]× 100
Vertical analysis % = 23.36%