F030 Lesson 3 Exam SCORE 95 PERCENT

Question 1

5 / 5 points

Which of the following statements is FALSE?

Question options:

	Common-size balance sheets allow for comparison of firms with different levels of total assets by introducing a common denominator.
	The common-size balance sheet reveals the composition of assets within major categories.
	Each item on a common-size balance sheet is expressed as a percentage of sales.
	The common-size balance sheet reveals the capital and the debt structure of the firm.
Question 2		5 / 5 points

Companies that use IFRS may switch the order of presentation of __________, listing noncurrent items before current items.

Question options:

	assets and liabilities
	liabilities and owner's equity
	assets and owner's equity
	owner's equity only
Question 3		5 / 5 points

Temporary differences are a result of recording revenues or expenses on financial statements in an accounting period __________ when these items are recorded on the firm's tax return.

Question options:

	before the time
	after the time
	the same as
	different from
Question 4		5 / 5 points

A __________ expresses each item on the balance sheet as a percentage of total assets.

Question options:

	ratio balance sheet
	common-size balance sheet
	relative balance sheet
	usual and customary
Question 5		5 / 5 points

__________ are those assets expected to be converted into cash within one year or operating cycle, whichever is longer.

Question options:

	Marketable securities
	Future assets
	Current assets
	Short-lived
Question 6		5 / 5 points

The valuation of marketable securities on the balance sheet requires the separation of investment securities into three categories:

Question options:

	held to maturity, negotiable securities, and securities available for sale.
	held to maturity, negotiable securities, and securities available for purchase.
	held to maturity, trading securities, and securities available for purchase.
	held to maturity, trading securities, and securities available for sale.
Question 7		5 / 5 points

Which of the following statements is true?

Question options:

	The straight-line method of depreciation allocates a decreasing amount of depreciation expense each year.
	Straight-line depreciation is the least used method for financial reporting purposes.
	Fixed assets are reported at historical cost less accumulated depreciation on the balance sheet.
	The total amount of depreciation over the asset's life is larger when using an accelerated method of depreciation.
Question 8		5 / 5 points

Companies that are paid in advance for services or products record a(n) __________ on the receipt of cash referred to as unearned revenue or deferred credits.

Question options:

	liability
	receivable
	asset
	accrued asset
Question 9		5 / 5 points

Which item below does NOT describe a balance sheet?

Question options:

	Assets = Liabilities + Stockholders' Equity
	Financial position at a point in time
	Assets – Liabilities = Stockholders' Equity
	Assets + Liabilities = Stockholders' Equity
Question 10		5 / 5 points

Use the information below to answer the following question.

ABC Company purchases five products for sale in the order and at the costs shown below

Unit	Cost per Unit
1	$10
2	$12
3	$15
4	$18
5	$13

Assume ABC sells two items and uses the LIFO method of inventory valuation. What amount would appear for cost of goods sold on the income statement?

Question options:

	$37
	$41
	$22
	$31
Question 11		5 / 5 points

__________ are also referred to as short-term investments.

Question options:

	Real estate
	Annuities
	Non-term life insurance
	Marketable securities
Question 12		5 / 5 points

The net realizable value of accounts receivable is the actual amount of the account less an allowance for __________ accounts.

Question options:

	future
	questionable
	unknown
	doubtful
Question 13		5 / 5 points

Assume the following purchases of inventory for ABC Company and use this information to answer the following question.

Purchase #	Purchase Price
1	$3
2	$4
3	$5
4	$6
5	$7

Assume ABC uses the average cost method of inventory valuation. What unit cost would be used to determine the amount in ending inventory or cost of goods sold?

Question options:

	$3
	$5
	$7
	$25
Question 14		0 / 5 points

Most manufacturing firms use the accelerated depreciation method and retailers use the __________ method for financial reporting purposes.

Question options:

	reverse accelerated depreciation
	accelerated depreciation (also) (Incorrect)
	straight-line depreciation
	incremental depreciation
Question 15		5 / 5 points

Which item below would NOT be a quality of financial reporting issue related to the balance sheet?

Question options:

	Mismatching the type of debt (short or long-term) used to finance assets
	Discretionary expenses
	Overvaluation of assets
	Off-balance sheet financing
Question 16		5 / 5 points

The balance sheet is also called the:

Question options:

	statement of future.
	statement of welfare.
	statement of condition.
	statement of potential position.
Question 17		5 / 5 points

A (n) __________ balance sheet means that the asset and liability sections are categorized into key areas.

Question options:

	classified
	systematic
	organized
	legend
Question 18		5 / 5 points

A common-size balance sheet is useful to the analyst because it facilitates the __________ analysis of the firm.

Question options:

	functional
	structural
	operational
	cost
Question 19		5 / 5 points

Additional information helpful to the analysis of accounts receivable and the allowance account is provided in the schedule of:

Question options:

	deductions accounts.
	valuation and qualifying accounts.
	additions to costs and expenses accounts.
	allowance for unknown accounts.
Question 20		5 / 5 points

Which of the following accounts could be categorized as either a current or noncurrent liability depending on date the debt is due?

Question options:

	Notes payable and deferred taxes
	Accounts payable and current portion of long-term debt
	Deferred taxes and mortgages due in 30 years
	Long-term warranties and accounts payable