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

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

Goals are the end results toward which the firm directs its

energies, and strategies are the means for achieving those

1 True

2 False

Current liabilities represent obligations a firm expects to pay within one year

Current assets, typically held and used for several years,

include land, buildings, equipment, patents; and long-term

investments in securities

1 True

2 False

The independent external auditors of a business prepare

financial statements to present meaningful information about that business’s activities to external users,

1 True

2 False

The amounts of individual assets that make up total assets, represented by accounts receivable, inventories, equipment, and other assets, reflect a firm’s financing decisions, each measured at the balance sheet date

The activities of a business include establishing goals and

strategies, obtaining financing, making investments and

1 True

2 False

Current liabilities and shareholders’ equity are sources of funds where the supplier of funds does not expect to receive them all back within the next year

1 True

2 False

To assist users of financial reports in making over-time

comparisons, both U.S GAAP and IFRS require firms to include results for multiple reporting periods in each report

1 True

2 False

The historical amount reflects the acquisition cost of assets or the amount of funds originally obtained from creditors or

owners

1 True

2 False

Multiple Choice Questions-Page 1

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 number of days between when the employees and

suppliers provide goods and services and when the firm pays cash to those employees and suppliers is called the _

March 31, 2009, of $3,500 million Compute Copper’s net

income for the year ended March 31, 2009 (fiscal 2008)

1 $41.000 million

1 statement of cash receipts and disbursements

2 income statement

3 funds flow statement

4 statement of cash flows

5 statement of retained earnings

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

A(n) _ item is expected to generate cash over periods

longer than a year or use cash over periods longer than a year

1 illiquid

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)

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

Who under the oversight of the firm’s governing board,

prepares the financial statements?

1 independent auditor

2 Securities and Exchange Commission

3 Public Companies Accounting Oversight Board

4 general counsel

5 management

_ 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

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

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 2009

5 Discounted cash flow amounts

Investments in long-lived assets, with useful lives (or service lives) that can extend for several or many years such as land, buildings, and equipment represent _ capital

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

_ are the amounts at which items entered the firm’s

balance sheet and reflect economic conditions at the time the firm obtained assets or obtained financing

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

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

_ must be used by U.S Securities and Exchange

Commission (SEC) registrants

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

Who provides an opinion that reflects their professional

conclusions regarding the financial statements and for most publicly traded firms in the U.S also provides a separate

opinion on the effectiveness of the firm’s internal controls over financial reporting?

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

Net income that is not paid to shareholders as dividends

increases _

1 cash receipts

2 retained earnings

3 cash disbursements

4 long-term liabilities

5 current liabilities

The _ report changes in assets and liabilities over a period

of time, similar to a motion picture

1 balance sheet and income statement

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

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 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

1 $5 million

2 $10 million

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

The _ is the government agency that enforces the securities laws of the U.S., including those that apply to financial reporting

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)

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

The statement of cash flows for Lights-On, a leading electric utility for the year ended December 31, 2009, showed a net cash inflow from operations of $427,000 million and a net cash

outflow for financing of $21,800 million The comparative

balance sheets 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 On’s investing activities for 2009

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

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

The _ shows assets, liabilities and shareholders’ equity as

of a specific 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

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)

1 balance sheet

2 statement of cash flows

3 income statement

4 funds flow statement

5 cash receipts and cash disbursement statement

77 Free Test Bank for Financial Accounting An

Introduction to Concepts Methods and Uses 13th Edition

by Stickney Multiple Choice Questions-Page 2

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

Which of the following is not a business:activity?

1 Establishing goals and strategies

2 Obtaining financing

3 Making investments

4 Conducting operations.

5 all of the above are business activities

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

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

An audit by an independent external auditor usually does not involve which of the following?

1 an assessment of the capability of a firm’s accounting system to accumulate, measure, and synthesize transactional data properly.

2 an assessment of the operational effectiveness of the accounting system

3 a determination of whether the financial report complies with the requirements of the applicable authoritative guidance

4 an assessment of the operational economy, efficiency, and effectiveness of the

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

_ items are depicted in words and numbers on the face of the financial statements, with amounts included in the totals

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

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 reduce the lag on collection of accounts receivable, a

company might

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

FASB board members make standard-setting decisions guided

by a conceptual framework that addresses the qualitative

characteristics of accounting information Which of the

qualitative characteristics of accounting information holds that the information should represent what it is supposed to

represent, in the sense that the information should correspond

to the phenomenon being reported, and it should be verifiable and free from bias?

1 Relevance

2 Reliability

3 Comparability.

4 Subjective

5 all of the above

Management operates the productive capacity of the firm to generate earnings Operating activities include the following except for:

1 Purchasing

2 Research and development

3 Marketing and administration.