Financial Accounting MCQ Questions Answers

1. Investing money in a retirement fund is part of a plan for achieving _____.

2. In an argumentative essay, the premises of the argument __________.

3. Investing online is usually ________ than trading through a traditional stock brokerage firm.

4. Interest rates on ____ are typically lower than on any other form of consumer credit.

5. Differences in ________ explain why interest rates on treasury securities are not all the same.

6. Debt payments can be handled through either debt-repayment needs or ____ needs.

7. Borrowing money ________

8. A(n) _____ is a noninterest-paying demand deposit account.

9. Employers often provide _____ life insurance as a fringe benefit for their employees.

10. Empirical results estimated from historical data indicate that betas _________.

11. A _____ is a formal iou issued by a corporation or government entity.

12. _____________ are examples of investment bankers offering traditional commercial banking services.

13. If you believed in the reversal effect, you should __________.

14. If investors overweight recent performance in forecasting the future, they are exhibiting _______.

15. ______ option can only be exercised on the expiration date.

16. If the expected return is above the required return on an asset, rational investors will ________.

17. According to the efficient market hypothesis, prices of actively traded stocks ________.

18. Bonds of a single issue that mature on different dates are called ____________ bonds.

19. As investors approach retirement age, they are often more interested in ______ portfolios.

20. The nyse hybrid market allows _____.

21. The fund whose main objective is to simply match the market known as a(n) ____ fund.

22. Moving averages are ______ indicators.

23. The top four categories of bond ratings are collectively known as __________.

24. The largest proportion of long-term mutual fund assets is held by ___________________.

25. The type of mutual fund that is unmanaged is called a(n) ____ fund.

26. U.s. depository institutions may be subject to as many as ______________ separate regulators.

27. The annual dividend yield is computed by dividing _____ annual dividend by the current stock price.

28. The ability to charter banks is an example of a ________ power.

29. Buying on credit ____ the amount of working capital needed by the business doing the buying.

30. Buying a car is an example of _____.

31. _____ is a mechanism for mitigating potential agency problems.

32. An investor with a strong appetite for risk should purchase a(n) ________.

33. A compensating balance on a bank loan effectively ____________ the cost of the loan.

34. _____ are the amounts the corporation owes to various creditors.

35. The journal entry for accrued interest on a note payable includes ________.

36. The _________ of forecasting is a process of gaining consensus from a group of experts.

37. When you purchase an item in a store, you may be charged __________. a

38. The amount of cash interest the borrower pays each year is based on the ________.

39. _____ involves outsourcing production to third-party firms.

40. ________ is designed to meet the needs of internal decision makers.

41. Fixed operating costs ________.

42. The goal-setting theory has most value in countries where ________.

43. Nike's "just do it" advertising is an example of ______.

44. Savings compounded ____________ would have the highest effective yield

45. Corporations sell equity in the form of ________.

46. A ________ defines the problem or purpose of your research.

47. Q-Tell Incorporated is in the communications industry and has the same absolute dollar level of current liabilities as the average firm in the industry. The current ratio and quick ratio for Q-Tell and the communications industry are as follows: Industry: Current Ratio of 3.0, Quick Ratio of 2.5 Q-Tell: Current Ratio of 3.0, Quick Ratio of 2.1 Relative to the communications industry Q-Tell is most likely to have:

48. Summarize FAS 160.

49. Which type of a capital structure contains no dilutive securities?

50. The deferred tax liability can have a much larger balance than other liability accounts because:

51. Which of the following would be reported as an investing activity in a company's statement of cash flows?

52. On the cash flow statement, interest received from a bond is found in the _________ section.

53. International Financial Reporting Standard IFRS 7 deals with the reporting of:

54. What is the formula for Price/Book Ratio

55. Regarding bank reconciliation, Adjusting entries are made for which of the following reconciling adjustments?

56. The basic earnings per share calculation excludes:

57. A firm has a patent that they would like to expense over its useful life. Which of the following would the firm credit to record this expense over the patent’s life?

58. How do you calculate double declining depreciation (first year)?

59. Which of the following will be NOT found on the cash flow statement?

60. How are prior period adjustments reflected in current net income?

61. Under US GAAP, if you own 50% of a company, what is the appropriate accounting method?

62. Generally, where are gains / losses shown for securities classified as available for sale securities?

63. If a company has negative net income the net change in cash on the Statement of cashflows will also be negative.

64. A consignee (the agent selling the goods) will include the value of the inventory for sale on their balance sheet while they are in possession of the saleable goods.

65. Summarize IAS 7 (IFRS).

66. Under US GAAP, what is the appropriate accounting treatment for ownership under 20%?

67. What is NOT a line item that would be found in the Cashflows from investing activities?

68. Can equities be classified as held-to-maturity?

69. What is the best definition of an Asset basis?

70. (US GAAP ) You receive a dividend, what happens on the cash flow statement and in which section?

71. Which is NOT one of the criteria of determining if a lease should be considered a capital lease?

72. One item reported as an element of other comprehensive income is:

73. What does FASB No. 142 represent?

74. Where in the financial statements of a company, would you most typically find operating leases?

75. In a cash flow statement a bonus issue will:

76. A business receives a check from a customer for £256 in full agreed settlement of an account which showed a debit balance of £270. Which of the following entries correctly records this transaction?

77. The initial recording of unearned revenue would generate a:

78. Various standard-setting bodies, in consultation with the accounting profession and the business community, determine guidelines for GAAP. Which of the following standard-setting bodies does NOT contribute to enhancing GAAP?

79. A sinking fund is a(n):

80. How would an investor expect to see carrying costs for a natural resource extraction company? (e.g. mining, drilling, timber)

81. Under straight-line depreciation, what amount of the cost of equipment (less salvage value) purchased 9/1/2010 will be recognized in calendar year 2015 for an asset with a 5 year economic life?

82. When closing stock increases, what is the effect on gross profit?

83. (US GAAP ) You have depreciation for the past year, what happens on the cash flow statement and in which section?

84. What is the formula for Dividend Payout Ratio?

85. What is the impact to Net cash provided by (used for) financing activities of interest paid on long-term debt?

86. For a discontinued operation, what is the date at which management formally commits itself to a formal plan to dispose of the business segment?

87. When a company issues a stock dividend which of the following would be affected?

88. Which of the following statements about agency problems is TRUE?

89. Which of the following is considered to be a non-operational income statement item?

90. How is an adjunct account different from a contra account?

91. What are two key elements of the comparability accounting principle?

92. When bonds are converted into common stock:

93. What is the purpose of an 8-K filing with the SEC?

94. Summarize IFRS 3 (IFRS).

95. At what point in time are shareholders entitled to a cash dividend?

96. Retained earnings is equal to

97. At the beginning of this year Aramed had 400,000 shares of common stock outstanding. Aramed paid a 10 percent stock dividend on March 31 of this year. Aramed issued 90,000 new common shares on June 20 of this year and repurchased 12,000 shares on December 1. The number of shares Aramed should use in computing earnings per share at the end of the year is:

98. Which of the following transactions would not be treated as a reversing entry on the first day of the new accounting period?

99. How does a preparer of financial statements differentiate a firm's revenues and a firm's recognized gains?

100. Employer payroll taxes do not include: