| Question 1 | 5 / 5 points |
Which item below would NOT be a quality of financial reporting issue related to the balance sheet?
Question options:
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| Mismatching the type of debt (short or long-term) used to finance assets | ||
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| Discretionary expenses | ||
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| Overvaluation of assets | ||
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| Off-balance sheet financing | ||
| Question 2 | 5 / 5 points | ||
Which of the following statements is FALSE?
Question options:
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| Companies are allowed to use more than one inventory valuation method. | ||
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| LIFO is an income tax concept. | ||
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| Using FIFO for high-technology products makes sense if the firm is trying to reduce taxes because the technology industry is generally deflationary. | ||
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| Companies using IFRS may not reverse entries for inventory write-downs if the market recovers. | ||
| Question 3 | 5 / 5 points | ||
Which of the following statements is FALSE?
Question options:
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| Common-size balance sheets allow for comparison of firms with different levels of total assets by introducing a common denominator. | ||
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| The common-size balance sheet reveals the composition of assets within major categories. | ||
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| Each item on a common-size balance sheet is expressed as a percentage of sales. | ||
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| The common-size balance sheet reveals the capital and the debt structure of the firm. | ||
| Question 4 | 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:
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| liability | ||
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| receivable | ||
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| asset | ||
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| accrued asset | ||
| Question 5 | 5 / 5 points | ||
A __________ expresses each item on the balance sheet as a percentage of total assets.
Question options:
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| ratio balance sheet | ||
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| common-size balance sheet | ||
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| relative balance sheet | ||
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| usual and customary | ||
| Question 6 | 5 / 5 points | ||
The balance sheet is also called the:
Question options:
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| statement of future. | ||
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| statement of welfare. | ||
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| statement of condition. | ||
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| statement of potential position. | ||
| Question 7 | 0 / 5 points | ||
How are deferred taxes recorded on the balance sheet?
Question options:
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| As current or noncurrent liabilities | ||
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| As stockholders' equity | ||
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| As noncurrent assets or noncurrent liabilities | ||
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| As current or noncurrent assets or liabilities | ||
| Question 8 | 5 / 5 points | ||
What are current assets?
Question options:
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| Assets purchased within the last year | ||
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| Assets which will be used within the next month | ||
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| Assets are the net working capital of the firm | ||
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| Assets expected to be converted into cash within one year or operating cycle | ||
| Question 9 | 5 / 5 points | ||
How are marketable securities valued on the balance sheet?
Question options:
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| Historical cost | ||
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| At cost or fair value depending on how the securities are classified | ||
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| Market value | ||
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| At fair value with the difference between cost and fair value reported as revenue | ||
| Question 10 | 5 / 5 points | ||
Which of the following items would NOT be classified as cash equivalents?
Question options:
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| U.S. Treasury bills | ||
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| Trading securities | ||
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| Commercial paper | ||
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| Money market funds | ||
| Question 11 | 5 / 5 points | ||
The net realizable value of accounts receivable is the actual amount of the account less an allowance for __________ accounts.
Question options:
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| future | ||
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| questionable | ||
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| unknown | ||
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| doubtful | ||
| Question 12 | 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:
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| $3 | ||
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| $5 | ||
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| $7 | ||
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| $25 | ||
| Question 13 | 5 / 5 points | ||
Which of the following items should alert the analyst to the potential for manipulation when analyzing accounts receivable and the allowance for doubtful accounts?
Question options:
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| Sales, accounts receivable and the allowance for doubtful accounts are all growing at approximately the same rate. | ||
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| A company lowers its credit standards and also increases the balance in the allowance for doubtful accounts. | ||
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| Accounts receivable is growing at a large rate and the allowance for doubtful accounts is decreasing. | ||
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| An analysis of the "Valuation and Qualifying Accounts" schedule required in the Form 10-K reveals that the amounts recorded for bad debt expense are close in amount to the actual amounts written off each year. | ||
| Question 14 | 5 / 5 points | ||
The valuation of marketable securities on the balance sheet requires the separation of investment securities into three categories:
Question options:
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| held to maturity, negotiable securities, and securities available for sale. | ||
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| held to maturity, negotiable securities, and securities available for purchase. | ||
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| held to maturity, trading securities, and securities available for purchase. | ||
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| held to maturity, trading securities, and securities available for sale. | ||
| Question 15 | 5 / 5 points | ||
Which type of firm would most likely carry the most finished goods inventory?
Question options:
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| A manufacturing firm | ||
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| A retail firm | ||
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| A service firm | ||
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| A wholesale firm | ||
| Question 16 | 5 / 5 points | ||
Which item below does NOT describe a balance sheet?
Question options:
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| Assets = Liabilities + Stockholders' Equity | ||
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| Financial position at a point in time | ||
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| Assets – Liabilities = Stockholders' Equity | ||
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| Assets + Liabilities = Stockholders' Equity | ||
| Question 17 | 5 / 5 points | ||
A common-size balance sheet is useful to the analyst because it facilitates the __________ analysis of the firm.
Question options:
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| functional | ||
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| structural | ||
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| operational | ||
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| cost | ||
| Question 18 | 0 / 5 points | ||
Most manufacturing firms use the accelerated depreciation method and retailers use the __________ method for financial reporting purposes.
Question options:
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| reverse accelerated depreciation | ||
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| accelerated depreciation (also) | ||
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| straight-line depreciation | ||
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| incremental depreciation | ||
| Question 19 | 5 / 5 points | ||
If a company chooses the LIFO method of inventory valuation, which inventory will appear as ending inventory on the balance sheet?
Question options:
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| The last inventory purchased | ||
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| The first inventory purchased | ||
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| An average of all inventory purchased | ||
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| The actual inventory which has not been sold | ||
| Question 20 | 5 / 5 points | ||
Companies that use IFRS may switch the order of presentation of __________, listing noncurrent items before current items.
Question options:
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| assets and liabilities |
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| liabilities and owner's equity |
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| assets and owner's equity |
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| owner's equity only |
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