77 test bank for financial accounting an introduction to concepts methods and uses 13th

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77 Test Bank for Financial Accounting An Introduction to Concepts Methods and Uses 13th

Edition by Stickney Multiple Choice Questions-Page 1

The balance sheet of Old Gold Mines, a gold mining company, for the year ended June 30, 2009, showed current assets of $6 million, noncurrent assets of $49 million, noncurrent liabilities of $14 million,and current liabilities of $4 million Compute the amount of

shareholders’ equity on Old Gold Mines’ balance sheet at the end of

The income statement of Peoples Motors Corporation, a U.S

automotive manufacturer, for the year ended December 31, 2009, reported revenues of $207,000, cost of sales of $165,000, other operating expenses, including income taxes of $50,000, and net financing income, after taxes, of $6,000 Compute the amount of net income or loss that Peoples Motors reported for 2009

2 income statement and statement of cash flows

3 balance sheet and statement of cash flows

4 statement of cash flows and funds flow statement

5 balance sheet and statement of cash receipts and disbursements

Net income that is not paid to shareholders as dividends increases _

The _ matches revenues with the costs associated with

earning those revenues and is not sensitive to the timing of

expenditures

1 tax basis of accounting

2 modified accrual basis of accounting cash basis of accounting

3 accrual basis of accounting

4 present value basis of accounting

Revenues are:

1 cash payments from customers

2 outflows of assets to customers

3 cash receipts from customers

4 inflows of assets from customers

5 sensitive to the timing of cash receipts from customers

A(n) _ item is expected to generate cash over periods longer than a year or use cash over periods longer than a year

A _ year ends on a date that is determined by the firm,

perhaps based on its business model (for example, many retailers choose the end of January)

The income statement of Ride-on Motors, an automotive

manufacturer, for the year ended December 31, 2009, reported revenues $7,400 million and cost of sales of $6,000 million In

addition, it reported other operating expenses of $900 million, a loss

of $2 million on the sale of a business, and net financing income of

$200 million Tax expense for the year was $100 million Compute the amount of net income or loss that Ride-on Motors reported for

2009

1 net income of $198 million

2 net income of $698 million

3 net loss of $698 million

4 net income of $598 million

5 net loss of 598 million

Most firms report the amounts in their financial statements using _

The _ shows assets, liabilities and shareholders’ equity as of aspecific date, similar to a snapshot

1 balance sheet

2 income statement

3 statement of cash flows

4 statement of sources and uses of funds

5 statement of cash receipts and disbursements

The balance sheet of Allhear, a communications firm, for the year ended December 31, 2009, showed current assets of $20 million, current liabilities of $16 million, shareholders’ equity of $17 million, and noncurrent assets of $29 million Compute the amount of

noncurrent liabilities on Allhear’s balance sheet at the end of 2009

showed a balance in cash of $32,700 at December 31, 2008, and

$101,200 at December 31, 2009 Compute the net amount of cash provided or used by Lights-On’s investing activities for 2009

1 $68,500 million provided

2 $271,300 million used

3 $372,500 million provided

4 $336,700 million used

5 $236,700 million used

_ represent amounts owed by customers for goods and

services they have already received The customer, therefore, has the benefit of the goods and services before it pays cash

1 Government Accountability Office (GAO)

2 Public Company Accounting Oversight Board (PCAOB)

3 International Accounting Standards Board (IASB)

4 Financial Accounting Standards Board (FASB)

5 U.S Securities and Exchange Commission (SEC)

The _ shows the relation between net income and cash flows from operations, and changes in assets and liabilities that involve cash flows

1 balance sheet

2 statement of cash flows

3 income statement

4 funds flow statement

5 cash receipts and cash disbursement statement

Expenses are:

1 inflows of assets from customers

2 cash receipts from customers

3 outflows of assets from generating revenues

4 cash payments

5 sensitive to the timing of expenditures

_ reflect values at the balance sheet date, so they reflect that day’s economic conditions

1 Historical amounts

2 Current amounts

3 Present amounts

4 Liquidation amounts

5 Discounted cash flow amounts

The balance sheet of Copper Industries, a producer of copper, showed retained earnings of $26,000 million at March 31, 2008 At March 31, 2009, the balance in retained earnings was $70,500 million Copper declared dividends during the year ended March

31, 2009, of $3,500 million Compute Copper’s net income for the year ended March 31, 2009 (fiscal 2008)

The balance sheet of Old Gold Mines for the year ended June 30,

2009, showed a balance in retained earnings of $6,000 million at the end of 2009 and $4,600 million at the end of 2008 Net income for 2009 was $2,400, million Compute the amount of dividends Old Gold Mines declared during 2009

Which of the following is true regarding the investing activities of charitable organizations?

1 are not similar to business firms

2 acquire productive capacity (for example, buildings) to carry out their activities

3 issue common stock

4 issue bonds

5 issue preferred stock

A _ connects two successive balance sheets because it

explains the change in cash from operating, financing, and investingactivities

1 statement of cash receipts and disbursements

2 income statement

3 funds flow statement

4 statement of cash flows

5 statement of retained earnings

Broke Inc is experiencing a cash flow problem finding that its cash decreases, even though net income increases Which of the

following is a possible reason?

1 lag between cash expenditures incurred in producing goods and cash

collections from customers once the firm sells those goods

2 must generally produce more units than it sells during a period of growth if it is

to have sufficient quantities of inventory on hand for future sales

3 cash needed for a higher level of production exceeds the cash received from the prior period's sale

4 all of the above

5 none of the above

A _ item is expected to result in a cash receipt or a cash

payment within approximately one year or less

Which of the following are true regarding setting goals and

strategies for a charitable organization?

1 obtain sufficient resources to fund operations

2 not pursue profits or wealth increases as goals.

3 direct efforts toward providing services to constituencies

4 all of the above are true

5 none of the above are true

_ is a private-sector financial accounting standard setter that promulgates accounting standards that are required or permitted to

be used in over 100 countries, but has no enforcement powers

1 Financial Accounting Standards Board (FASB)

2 International Accounting Standards Board (IASB)

3 Public Company Accounting Oversight Board (PCAOB)

4 U.S Securities and Exchange Commission (SEC)

5 Governmental Accountability Office (GAO)

Which of the following are true regarding the financing of a

charitable organization?

1 may obtain some or all of its financing from donations (contributions)

2 does not issue common stock or other forms of shareholders’ equity

3 does not have retained earnings

4 all of the above are true

5 none of the above are true

An income statement connects two successive _ through its effect on retained earnings

1 balance sheets

2 cash flow statements

3 cash receipts and disbursement statements

4 funds flow statements

5 financing statements

Who under the oversight of the firm’s governing board, prepares thefinancial statements?

1 independent auditor

2 Securities and Exchange Commission

3 Public Companies Accounting Oversight Board

Who evaluates the accounting system, including its ability to record transactions properly and its operational effectiveness, and also determines whether the financial reports prepared conform to the requirements of the applicable authoritative guidance?

The _ is the private-sector financial accounting standard setter

in the U.S., but has no enforcement powers

1 Financial Accounting Standards Board (FASB)

2 Government Accountability Office (GAO)

3 International Accounting Standards Board (IASB)

4 Public Company Accounting Oversight Board (PCAOB)

5 Accounting Standards Board

Which of the following is not true regarding the operations of a

charitable organization?

1 might prepare financial statements that compare inflows (for example,

contributions) with outflows

2 there would be no calculation of net income

3 purpose is to provide services to its constituents

4 purpose is to seek profits.

5 all of the above

The purpose of the conceptual framework developed by the

Financial Accounting Standards Board (FASB) is to guide?

1 alternative rule making decisions

2 enforcement decisions

3 academic research and study

4 Congressional decision-makers

5 standard setting decisions

The statement of cash flows for Goal Corporation, a U.S retailer, for the year ended February 2, 2009 (fiscal 2008), showed a net cash inflow from operations of $4,100 million, a net cash outflow for investing of $6,200 million, and a net cash inflow for financing of

$3,700 million The balance sheet at February 3, 2008, showed a balance in cash of $800 million Compute the amount of cash on the balance sheet at February 2, 2009

77 Free Test Bank for Financial Accounting An

Introduction to Concepts Methods and Uses 13th Edition

by Stickney Multiple Choice Questions-Page 2

_ measure the outflow of assets (or increases in liabilities) used in generating revenues

In 2007 the U.S SEC adopted new rules that permit _ that list and trade their securities in the United States to apply IFRS in their financial reports filed with the SEC without any reconciliation to U.S.GAAP

1 U.S SEC registrants

2 non-U.S SEC registrants

3 EU SEC registrants

4 Chinese SEC registrants

5 all of the above

_ are creditors’ claims for funds, usually because they have provided funds, or goods and services, to the firm

1 there is no obligation to repay these funds

2 there is an obligation to repay these funds firms must distribute cash

dividends to that firm’s shareholders at least annually

3 firm must distribute stock dividends to that firm’s shareholders at least

annually

4 none of the above are true

Regulatory bodies generally require firms whose securities trade publicly (for example, common shares) to obtain an audit of their financial reports by _

1 the audit committee

2 the vice-president for finance

3 an internal auditor.

4 an independent external auditor.

5 the controller

The income statement and statement of cash flows provide

information about the _, respectively, of a firm during a period

1 asset and equity position at a moment in time and profitability

2 asset and equity position at a moment in time and liquidity

3 liquidity and profitability

4 profitability and liquidity

5 none of the above

FASB board members make standard-setting decisions guided by aconceptual framework that addresses the qualitative characteristics

of accounting information Which of the qualitative characteristics ofaccounting information holds that the information should be

pertinent to the decisions made by users of financial statements, in the sense of having the capacity to affect their resource allocation decisions?

The cash basis of accounting, as a basis for measuring

performance for a particular accounting period, has which of the following weakness(es)?

1 does not adequately match the cost of the efforts required to generate inflows with the inflows themselves

2 separates the recognition of revenue from the process of earning those

revenues.

3 sensitive to the timing of cash expenditures

4 all of the above

5 none of the above

Examples of factors from the operating environment that would affect a firm’s goals and strategies include which of the following?

1 goals and strategies of the firm’s competitors

2 barriers to entry of the firm’s industry, such as patents or large investments in buildings and equipment

3 nature of the demand for the firm’s products and services

4 existence and nature of government regulation

5 all of the above

To increase cash flow, a manufacturer might:

1 delay paying its suppliers

2 borrow from a bank using the inventory as collateral

3 institute a just-in-time inventory system

4 all of the above

5 none of the above

_ reports information about cash generated from (or used by) operating, investing, and financing activities during specified time periods

1 Statement of sources and uses of cash

2 Statement of cash flows

3 Statement of cash receipts and disbursements

4 Funds flow statement

profitability and risk during the past year

1 Balance sheet or statement of financial position

2 Management’s Discussion and Analysis

3 Income statement or statement of profit and loss

4 Statement of cash flows.

5 Statement of shareholders’ equity.

Firms communicate the results of their business activities in the _

1 annual report to shareholders

2 weekly press releases

3 monthly press releases

4 annual press releases

5 annual income tax returns

To carry out their plans, firms require financing, that is, funds from owners and creditors Owners provide funds to a firm and in return receive ownership interests For a corporation, the ownership

1 offer a discount if customers pay quickly

2 charge interest if customers delay payment

3 use the accounts receivable as a basis for external financing

4 sell only for cash

5 all of the above

_ are the means for achieving goals

5 none of the above

6 Correct Feedback accrual

7 Incorrect Feedback accrual

A firm makes investments to obtain productive capacity to carry out its business activities Investing activities involve acquiring all of the following except:

1 land, buildings, and equipment.

2 patents, licenses, and other contractual rights

3 common shares or bonds of other firms

4 long-term notes receivable of other firms

5 common shares or bonds of the firm

Management, under the oversight of the firm’s governing board (or boards), sets the firm’s strategies Such strategies might include:

1 determining the firm’s lines of business

2 determining the firm’s geographic locations

3 degree to which a given business unit will engage in new product

development

4 all of the above

5 none of the above

When creditors provide funds to a firm, which of the following is true?

1 the firm must repay, usually with interest, in specific amounts at specific dates.

2 long-term creditors require repayment from the borrower over a period of time that exceeds one year.

3 one common form of long-term financing is bonds

4 suppliers of raw materials or merchandise that do not require payment for 30 days provide short-term funds

5 all of the above are true

_ are the end results toward which the firm directs its