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| 1 | |
Which of the following is an information intermediary? |
| | A) | company managers (CEO or CFO) |
| | B) | auditors |
| | C) | financial analysts |
| | D) | institutional investors |
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| 2 | |
Information that is accurate, unbiased, and verifiable is called |
| | A) | relevant information. |
| | B) | reliable information. |
| | C) | consistent information. |
| | D) | comparable information. |
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| 3 | |
Information that is timely and has predictive value and/or feedback is called |
| | A) | relevant information. |
| | B) | reliable information. |
| | C) | consistent information. |
| | D) | comparable information. |
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| 4 | |
The information provided by companies that apply similar accounting methods is called |
| | A) | relevant information. |
| | B) | reliable information. |
| | C) | consistent information. |
| | D) | comparable information. |
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| 5 | |
Information that can be compared over time because similar accounting methods have been applied is called |
| | A) | relevant information. |
| | B) | reliable information. |
| | C) | consistent information. |
| | D) | comparable information. |
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| 6 | |
The suggestion that the cost of obtaining information should be less than the benefit derived from having the information is called |
| | A) | the relevant information fallacy. |
| | B) | the cost-benefit constraint. |
| | C) | the consistency constraint. |
| | D) | conservatism. |
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| 7 | |
The quick, unbiased reaction to information provided by financial analysts is called |
| | A) | earnings forecasts. |
| | B) | market efficiency. |
| | C) | the cost-benefit constraint. |
| | D) | market forecasting. |
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| 8 | |
Managers of pension funds, mutual funds, endowment, and other funds are called |
| | A) | private investors. |
| | B) | public investors. |
| | C) | institutional investors. |
| | D) | either (A) or (C). |
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| 9 | |
Which of the following would you not expect to find in the financial reports of a privately held company? |
| | A) | basic financial statements |
| | B) | recent stock prices |
| | C) | auditor's report (or opinion) |
| | D) | related footnotes |
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| 10 | |
The difference between expected earnings and actual earnings is called |
| | A) | unexpected earnings. |
| | B) | excess profit. |
| | C) | unanticipated dividends. |
| | D) | management efficiencies profit. |
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| 11 | |
Which of the following reports filed with the SEC is an annual report that includes a description of the company's products, product development, sales and marketing, manufacturing, and competitors? |
| | A) | Form 10-K |
| | B) | Form 10-Q |
| | C) | Form 8-K |
| | D) | Form 1040 |
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| 12 | |
Which of the following reports filed with the SEC is a quarterly report? |
| | A) | Form 10-K |
| | B) | Form 10-Q |
| | C) | Form 8-K |
| | D) | Form 1040 |
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| 13 | |
Which of the following reports must be filed with SEC when any material event important to company investors occurs? |
| | A) | Form 10-K |
| | B) | Form 10-Q |
| | C) | Form 8-K |
| | D) | Form 1040 |
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| 14 | |
Consider the following:
| | Financial statement item | Classification | | A. | Inventory | Current asset | | B. | Intangible assets | Noncurrent asset | | C. | Accrued expenses | Current asset | | D. | Bonds payable | Long-term liabilities |
Which line of the chart shows an incorrect financial-statement classification?
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| | A) | Line A |
| | B) | Line B |
| | C) | Line C |
| | D) | Line D |
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| 15 | |
Which of the following is not one of the three items classified as "accumulated other comprehensive income" on the income statement? |
| | A) | foreign currency translation adjustments |
| | B) | unrealized gains and losses from securities transactions |
| | C) | gains and losses on the sale of productive (or long-term) assets |
| | D) | minimum pension liability adjustment |
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| 16 | |
A corporation issued for cash 100,000 shares of its $0.01 par value common stock for $450,000. Which of the following is the correct journal entry to record this transaction? |
| | A) | Cash, debit, $450,000; Common Stock, credit, $450,000 |
| | B) | Cash, debit, $450,000; Common Stock, $45,000; Paid-in Capital, credit, $405,000 |
| | C) | Cash, debit, $450,000; Common Stock, $1,000; Paid-in Capital, credit, $449,000 |
| | D) | Cash, debit, $450,000; Paid-in Capital, credit, $450,000 |
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| 17 | |
A corporation sold 10,000 shares of its $5 par value common stock for $14 per share. The journal entry to record this transaction will include a |
| | A) | debit to Cash for $50,000 |
| | B) | credit to Common Stock for $140,000. |
| | C) | credit to Paid-in Capital for $140,000. |
| | D) | credit to Paid-in Capital for $90,000. |
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| 18 | |
Consider the following presented in no particular order:
| A. | Extraordinary items | | B. | Continuing operations | | C. | Earnings per share | | D. | Discontinued operations | | E. | Cumulative effect of changes in accounting methods |
What is the proper sequence of the items as they would appear on a classified income statement?
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| | A) | B, D, A, E, and C |
| | B) | A, B, C, D, and E |
| | C) | B, C, E, D, and A |
| | D) | C, D, A, B, and E |
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| 19 | |
Which of the following are reported on the income statement as "nonrecurring items?" |
| | A) | extraordinary items |
| | B) | discontinued operations |
| | C) | cumulative effect of changes in accounting methods |
| | D) | all of the above |
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| 20 | |
Which of the following is NOT an operating expense? |
| | A) | Salaries and Benefits expense |
| | B) | Rent expense |
| | C) | Interest expense |
| | D) | Depreciation expense |
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| 21 | |
Which of the following is FALSE? |
| | A) | Discontinued operations result from the sale or disposal of a major segment of the company. |
| | B) | Extraordinary items are usual but infrequent in nature. |
| | C) | The current ratio is a measurement of company liquidity. |
| | D) | Gross profit is not a ledger account. |
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| 22 | |
Increasing sales volume, and all else remaining unchanged, will increase which ratio? |
| | A) | asset turnover |
| | B) | net profit margin |
| | C) | financial leverage |
| | D) | both (A) and (C) |
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| 23 | |
Net income was $450,000. Beginning and ending stockholders' equity was $4,000,000 and $4,800,000, respectively. What was the return on equity (ROE)? |
| | A) | 9.4% |
| | B) | 10.23% |
| | C) | 11.25% |
| | D) | 10.41% |
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| 24 | |
Net profit margin is 0.10. Asset turnover is 0.125. Financial leverage is 1.6. Compute the return on equity. |
| | A) | 1.5% |
| | B) | 1.0% |
| | C) | 2.0% |
| | D) | 2.5% |
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| 25 | |
An increase in average total assets, with all else remaining unchanged, will |
| | A) | decrease financial leverage. |
| | B) | increase asset turnover. |
| | C) | decrease net profit margin. |
| | D) | increase financial leverage |
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