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| 1 | |
Which of the following is not a characteristic of the balance sheet? |
| | A) | The major classifications of the balance sheet are assets, liabilities, and owners' equity. |
| | B) | The balance sheet reports the change in financial position. |
| | C) | Assets generally are listed in order of their liquidity. |
| | D) | The balance sheet provides information useful in assessing liquidity. |
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| 2 | |
The basis used to classify assets as current or noncurrent is: |
| | A) | Whether an asset is monetary or nonmonetary. |
| | B) | The operating cycle or one year, whichever is shorter. |
| | C) | Usually one year, because the operating cycle typically is less than one year. |
| | D) | Whether the asset is currently used in the company's operations. |
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| 3 | |
An item not generally classified as a current asset is: |
| | A) | Patent. |
| | B) | Trade receivables. |
| | C) | Prepaid rent. |
| | D) | Inventories. |
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| 4 | |
Included in the category of current liabilities would be: |
| | A) | Pension obligations. |
| | B) | Lease obligations. |
| | C) | Obligations expected to require the creation of other current liabilities. |
| | D) | Mortgages payable. |
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| 5 | |
An item not generally classified as a current liability is: |
| | A) | Revenue received in advance. |
| | B) | Accrued interest payable. |
| | C) | Accounts payable. |
| | D) | Bonds payable. |
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| 6 | |
Current assets minus current liabilities equals: |
| | A) | Net assets. |
| | B) | Working capital. |
| | C) | The current ratio. |
| | D) | Cash equivalents. |
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| 7 | |
Operational assets refer to property, plant, and equipment, and: |
| | A) | Receivables. |
| | B) | Inventories. |
| | C) | Investments. |
| | D) | Intangibles. |
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| 8 | |
Information not generally disclosed in the summary of significant accounting policies is: |
| | A) | The company's depreciation method. |
| | B) | The fact that the company uses the FIFO inventory method. |
| | C) | A related party transaction. |
| | D) | The company's revenue recognition policy. |
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| 9 | |
The compensation of directors and top executives is disclosed in: |
| | A) | The proxy statement. |
| | B) | The annual report. |
| | C) | A disclosure note. |
| | D) | Interim financial statements. |
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| 10 | |
Which ratio most directly indicates the extent of the company's reliance on financial leverage? |
| | A) | Times interest earned. |
| | B) | Debt to equity. |
| | C) | Return on shareholders' equity. |
| | D) | Current ratio. |
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| 11 | |
The acid-test ratio excludes which of the following elements from the numerator? |
| | A) | Short-term investments. |
| | B) | Receivables. |
| | C) | Cash equivalents. |
| | D) | Inventories. |
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| 12 | |
For a firm with a current ratio of 2.0, which of the following transactions would most likely cause the ratio to decrease? |
| | A) | The collection of cash from customers on account. |
| | B) | The sale of a building for cash. |
| | C) | The purchase of inventory on account. |
| | D) | The issuance of capital stock for cash. |
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| 13 | |
Sanchez Corporation | Selected Financial Information |
| 12/31/09 | 12/31/08 | Cash | $ 20,000 | $ 25,000 | Accounts receivable (net) | 100,000 | 110,000 | Inventories | 190,000 | 155,000 | Total current assets | 310,000 | 290,000 | Noncurrent assets | 230,000 | 210,000 | Current liabilities | 200,000 | 190,000 | Long-term liabilities | 40,000 | 50,000 | Shareholders' equity | 300,000 | 260,000 |
Net income | $40,000 | Interest expense | 10,000 | Income tax expense | 20,000 |
The acid-test ratio for 2009 is: |
| | A) | 0.8 |
| | B) | 1.6 |
| | C) | 0.6 |
| | D) | 0.34 |
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| 14 | |
Sanchez Corporation | Selected Financial Information |
| 12/31/09 | 12/31/08 | Cash | $ 20,000 | $ 25,000 | Accounts receivable (net) | 100,000 | 110,000 | Inventories | 190,000 | 155,000 | Total current assets | 310,000 | 290,000 | Noncurrent assets | 230,000 | 210,000 | Current liabilities | 200,000 | 190,000 | Long-term liabilities | 40,000 | 50,000 | Shareholders' equity | 300,000 | 260,000 |
Net income | $40,000 | Interest expense | 10,000 | Income tax expense | 20,000 |
The debt to equity ratio for 2009 is: |
| | A) | .80 |
| | B) | .44 |
| | C) | .67 |
| | D) | .13 |
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| 15 | |
Sanchez Corporation | Selected Financial Information |
| 12/31/09 | 12/31/08 | Cash | $ 20,000 | $ 25,000 | Accounts receivable (net) | 100,000 | 110,000 | Inventories | 190,000 | 155,000 | Total current assets | 310,000 | 290,000 | Noncurrent assets | 230,000 | 210,000 | Current liabilities | 200,000 | 190,000 | Long-term liabilities | 40,000 | 50,000 | Shareholders' equity | 300,000 | 260,000 |
Net income | $40,000 | Interest expense | 10,000 | Income tax expense | 20,000 |
The times interest earned ratio is: |
| | A) | 4.0 times |
| | B) | 5.0 times |
| | C) | 6.0 times |
| | D) | 7.0 times |
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