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Financial accounting-90 Minutes- PROF. LG ONLY

 
Question 11 pts
A debt to equity ratio of 1.0 means that half of the company's assets are financed by creditors.
 
 
 

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Question 21 pts
The Sarbanes-Oxley Act requires a company to guarantee that its financial statements are 100 percent accurate.
 
 
 

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Question 31 pts
The cost-benefit convention holds that the benefits to be gained from providing accounting information should be greater than the costs of providing it.
 
 
 

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Question 41 pts
The investments category on the balance sheet normally includes investments that are intended to be held for a long period of time.
 
 
 

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Question 51 pts
Investors and creditors use financial statements to evaluate a company's ability to pay dividends and interest.
 
 
 

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Question 61 pts
Current assets divided by current liabilities is known as the
 
 
 

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Question 71 pts
The normal operating cycle helps define which of the following balance sheet sections?
 
 
 

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Question 81 pts
Which of the following is a measure of liquidity?
 
 
 

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Question 91 pts
The user can depend on the accuracy of financial information when which of the following qualitative characteristics has been followed?
 
 
 

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Question 101 pts
Relevance is comprised of all of the following except
 
 
 

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Question 111 pts
___________ is related to both the nature of an item and its size.
 
 
 

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Question 121 pts
The lower-of-cost-or-market method of accounting for inventories follows the convention of
 
 
 

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Question 131 pts
A practical decision to expense a $120 printer rather than record it as property, plant, and equipment and depreciate it probably is made on the basis of the convention of
 
 
 

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Question 141 pts
The convention of consistency refers to consistent use of accounting principles
 
 
 

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Question 151 pts
The profit margin equals
 
 
 

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Question 161 ptsSkip to question text.

Use this balance sheet and income statement to answer the following question. Use ending balances whenever average balances are required for computing ratios.

 
National Textile
Balance Sheet
December 31, 20×5
Assets
Liabilities
Current assets
$ 12,000
  Current liabilities
$ 8,000
Investments
2,000
  Long-term liabilities
   2,000
Property, plant, and equipment
16,000
  Total liabilities
$ 10,000
Intangible assets
   10,000
     
   
Stockholders' Equity
      Common stock
  30,000
         
         
      Total liabilities and  
Total assets
$40,000
  stockholders' equity
$40,000
           

 
National Textile
Income Statement
For the Year Ended December 31, 20×5
Net sales
$48,000
Cost of goods sold
    16,000
Gross margin
$32,000
Operating expenses
  22,400
Net income
$  9,600
   
   
   

The current ratio for National Textile is

 
 
 

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Question 171 ptsSkip to question text.

Use this balance sheet and income statement to answer the following question. Use ending balances whenever average balances are required for computing ratios.

 
National Textile
Balance Sheet
December 31, 20×5
Assets
Liabilities
Current assets
$ 12,000
  Current liabilities
$ 8,000
Investments
2,000
  Long-term liabilities
   2,000
Property, plant, and equipment
16,000
  Total liabilities
$ 10,000
Intangible assets
   10,000
     
   
Stockholders' Equity
      Common stock
  30,000
         
         
      Total liabilities and  
Total assets
$40,000
  stockholders' equity
$40,000
           

 
National Textile
Income Statement
For the Year Ended December 31, 20×5
Net sales
$48,000
Cost of goods sold
    16,000
Gross margin
$32,000
Operating expenses
  22,400
Net income
$  9,600
   
   
   

The return on assets for National Textile is

 
 
 

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Question 181 ptsSkip to question text.

Use this information to answer the following question.

 
Sunshine Travel
Balance Sheet
December 31, 20×5
Assets
Cash  
$ 40,000
 
Short-term investments  
20,000
 
Notes receivable (due in ten months)  
15,000
 
Accounts receivable  
10,000
 
Merchandise inventory  
35,000
 
Land held for future use  
40,000
 
Land  
45,000
 
Building
$50,000
   
  Less accumulated depreciation
   10,000
40,000
 
Trademark  
  35,000
 
Total assets    
$280,000
 
Liabilities
Notes payable (due in six months)  
$ 25,000
 
Accounts payable  
10,000
 
Salaries payable  
5,000
 
Mortgage payable (due in seven years)  
  45,000
 
Total liabilities    
$85,000
       
Stockholders' Equity
Common Stock  
100,000
 
Retained Earnings  
95,000
 
Total Stockholders’ Equity    
195,000
Total liabilities and stockholders’ equity    
$280,000
       
       
       
         

The total dollar amount of assets to be classified as current assets is

 
 
 

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Question 191 ptsSkip to question text.

Use this information to answer the following question.

 
Coyle Company
Balance Sheet
December 31, 20×5
Assets
Cash  
$ 70,000
 
Short-term investments  
56,000
 
Accounts receivable  
28,000
 
Notes receivable (due in six months)  
42,000
 
Merchandise inventory  
98,000
 
Special fund for purchasing a building  
112,000
 
Land  
140,000
 
Building
$150,000
   
  Less accumulated depreciation
   28,000
122,000
 
Trademark  
  92,000
 
Total assets    
$760,000
 
Liabilities
Notes payable (due in one year)  
$ 70,000
 
Accounts payable  
130,000
 
Salaries payable  
14,000
 
Mortgage payable (due in seven years)  
  46,000
 
Total liabilities    
$260,000
       
Stockholders’ Equity
       
Common stock    
500,000
Total liabilities and stockholders' equity    
$760,000
         

The total amount of working capital is

 
 
 

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Question 201 ptsSkip to question text.

Use this balance sheet and income statement for the first year of operations for Cane Construction to answer the following question. Use ending balances whenever average balances are required for computing ratios.

 
Cane Construction
Balance Sheet
December 31, 20×5
Assets
Liabilities
Current assets
$ 14,000
  Current liabilities
$  8,000
Investments
6,000
  Long-term liabilities
      2,000
Property, plant, and equipment
24,000
  Total liabilities
$  10,000
Intangible assets
   16,000
     
   
Stockholders' Equity
      Common stock
  50,000
         
      Total liabilities and  
Total assets
$60,000
  stockholders' equity
$60,000
           

 
Cane Construction
Income Statement
For the Year Ended December 31, 20×5
Net sales
$80,000
Cost of goods sold
  32,000
Gross margin
$48,000
Operating expenses
  26,400
Net income
$21,600
   
   
   

The current ratio for Cane Construction is

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