1. Investing money in a retirement fund is part of a plan for achieving _____.
Answer
Correct Answer:
Long term goals
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2. In an argumentative essay, the premises of the argument __________.
Answer
Correct Answer:
Are the two reasons that support the thesis
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3. Investing online is usually ________ than trading through a traditional stock brokerage firm.
Answer
Correct Answer:
Less expensive
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4. Interest rates on ____ are typically lower than on any other form of consumer credit.
Answer
Correct Answer:
Home equity loans
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5. Differences in ________ explain why interest rates on treasury securities are not all the same.
Answer
Correct Answer:
Time to maturity.
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6. Debt payments can be handled through either debt-repayment needs or ____ needs.
Answer
Correct Answer:
Income-replacement.
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7. Borrowing money ________
Answer
Correct Answer:
Principal
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8. A(n) _____ is a noninterest-paying demand deposit account.
Answer
Correct Answer:
Regular checking account
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9. Employers often provide _____ life insurance as a fringe benefit for their employees.
Answer
Correct Answer:
Group
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10. Empirical results estimated from historical data indicate that betas _________.
Answer
Correct Answer:
Seem to regress toward 1 over time
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11. A _____ is a formal iou issued by a corporation or government entity.
Answer
Correct Answer:
Bond
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12. _____________ are examples of investment bankers offering traditional commercial banking services.
Answer
Correct Answer:
Cash management accounts
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13. If you believed in the reversal effect, you should __________.
Answer
Correct Answer:
Buy stocks this period that performed poorly last period
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14. If investors overweight recent performance in forecasting the future, they are exhibiting _______.
Answer
Correct Answer:
Representativeness bias
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15. ______ option can only be exercised on the expiration date.
Answer
Correct Answer:
European
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16. If the expected return is above the required return on an asset, rational investors will ________.
Answer
Correct Answer:
Buy the asset, which will drive the price up and cause expected return to reach the level of the required return
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17. According to the efficient market hypothesis, prices of actively traded stocks ________.
Answer
Correct Answer:
Do not differ from their true values in an efficient market
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18. Bonds of a single issue that mature on different dates are called ____________ bonds.
Answer
Correct Answer:
Serial
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19. As investors approach retirement age, they are often more interested in ______ portfolios.
Answer
Correct Answer:
Conservative
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20. The nyse hybrid market allows _____.
Answer
Correct Answer:
Brokers to send orders either to an electronic system or to a specialist
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21. The fund whose main objective is to simply match the market known as a(n) ____ fund.
Answer
Correct Answer:
Balanced
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22. Moving averages are ______ indicators.
Answer
Correct Answer:
Trend
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23. The top four categories of bond ratings are collectively known as __________.
Answer
Correct Answer:
Investment Grade Bonds
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24. The largest proportion of long-term mutual fund assets is held by ___________________.
Answer
Correct Answer:
The household sector.
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25. The type of mutual fund that is unmanaged is called a(n) ____ fund.
Answer
Correct Answer:
Index
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26. U.s. depository institutions may be subject to as many as ______________ separate regulators.
Answer
Correct Answer:
Four
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27. The annual dividend yield is computed by dividing _____ annual dividend by the current stock price.
Answer
Correct Answer:
Next year's
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28. The ability to charter banks is an example of a ________ power.
Answer
Correct Answer:
Concurrent
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29. Buying on credit ____ the amount of working capital needed by the business doing the buying.
Answer
Correct Answer:
Decreases
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30. Buying a car is an example of _____.
Answer
Correct Answer:
A short term goal
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31. _____ is a mechanism for mitigating potential agency problems.
Answer
Correct Answer:
Tying income of managers to success of the firm
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32. An investor with a strong appetite for risk should purchase a(n) ________.
Answer
Correct Answer:
Growth stock
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33. A compensating balance on a bank loan effectively ____________ the cost of the loan.
Answer
Correct Answer:
Raises
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34. _____ are the amounts the corporation owes to various creditors.
Answer
Correct Answer:
Liabilities
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35. The journal entry for accrued interest on a note payable includes ________.
Answer
Correct Answer:
A debit to Interest Expense and credit to Cash.
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36. The _________ of forecasting is a process of gaining consensus from a group of experts.
Answer
Correct Answer:
Delphi method
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37. When you purchase an item in a store, you may be charged __________. a
Answer
Correct Answer:
Sales tax
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38. The amount of cash interest the borrower pays each year is based on the ________.
Answer
Correct Answer:
Stated interest rate
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39. _____ involves outsourcing production to third-party firms.
Answer
Correct Answer:
Contract manufacturing
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40. ________ is designed to meet the needs of internal decision makers.
Answer
Correct Answer:
Managerial accounting
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41. Fixed operating costs ________.
Answer
Correct Answer:
All of the above.
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42. The goal-setting theory has most value in countries where ________.
Answer
Correct Answer:
Subordinates are reasonably independent
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43. Nike's "just do it" advertising is an example of ______.
Answer
Correct Answer:
Publicity
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44. Savings compounded ____________ would have the highest effective yield
Answer
Correct Answer:
Daily
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45. Corporations sell equity in the form of ________.
Answer
Correct Answer:
Stock
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46. A ________ defines the problem or purpose of your research.
Answer
Correct Answer:
Problem statement
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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:
Answer
Correct Answer:
more inventory.
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48. Summarize FAS 160.
Answer
Correct Answer:
Noncontrolling Interest
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49. Which type of a capital structure contains no dilutive securities?
Answer
Correct Answer:
Simple.
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50. The deferred tax liability can have a much larger balance than other liability accounts because:
Answer
Correct Answer:
It is the only liability account not listed at it's present value
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51. Which of the following would be reported as an investing activity in a company's statement of cash flows?
Answer
Correct Answer:
Collection of a note receivable from a related party.
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52. On the cash flow statement, interest received from a bond is found in the _________ section.
Answer
Correct Answer:
Operating
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53. International Financial Reporting Standard IFRS 7 deals with the reporting of:
Answer
Correct Answer:
financial instruments
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54. What is the formula for Price/Book Ratio
Answer
Correct Answer:
Market Cap/Book Value
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55. The basic earnings per share calculation excludes:
Answer
Correct Answer:
Dilutive securities
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56. 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?
Answer
Correct Answer:
Asset
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57. How do you calculate double declining depreciation (first year)?
Answer
Correct Answer:
2 * Asset value / useful life
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58. Which of the following will be NOT found on the cash flow statement?
Answer
Correct Answer:
Stock dividends
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59. How are prior period adjustments reflected in current net income?
Answer
Correct Answer:
The adjustments are not reflected.
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60. Under US GAAP, if you own 50% of a company, what is the appropriate accounting method?
Answer
Correct Answer:
Equity Method
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61. Generally, where are gains / losses shown for securities classified as available for sale securities?
Answer
Correct Answer:
Component of shareholder equity
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62. If a company has negative net income the net change in cash on the Statement of cashflows will also be negative.
Answer
Correct Answer:
True
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63. 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.
Answer
Correct Answer:
False
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64. Summarize IAS 7 (IFRS).
Answer
Correct Answer:
Cash flow statements
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65. Under US GAAP, what is the appropriate accounting treatment for ownership under 20%?
Answer
Correct Answer:
SFAS 115 Rules
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66. What is NOT a line item that would be found in the Cashflows from investing activities?
Answer
Correct Answer:
Income tax payments on interest earned on bonds held
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67. Can equities be classified as held-to-maturity?
Answer
Correct Answer:
Only hybrid securities can be held-to-maturity
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68. What is the best definition of an Asset basis?
Answer
Correct Answer:
The full cost of placing a fixed asset in service
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69. (US GAAP ) You receive a dividend, what happens on the cash flow statement and in which section?
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70. Which is NOT one of the criteria of determining if a lease should be considered a capital lease?
Answer
Correct Answer:
If the asset is required to be transferred to the lessor at the end of the lease
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71. One item reported as an element of other comprehensive income is:
Answer
Correct Answer:
Unrealized holding gains and losses due to the transfer from held-to-maturity securities to available-for-sale securities
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72. What does FASB No. 142 represent?
Answer
Correct Answer:
Goodwill Impairment Testing
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73. Where in the financial statements of a company, would you most typically find operating leases?
Answer
Correct Answer:
Notes to the financial statements.
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74. In a cash flow statement a bonus issue will:
Answer
Correct Answer:
not appear as no cash flow occurs as a result of a bonus issue.
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75. The initial recording of unearned revenue would generate a:
Answer
Correct Answer:
debit to cash
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76. 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?
Answer
Correct Answer:
PCFOB
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77. A sinking fund is a(n):
Answer
Correct Answer:
Asset
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78. How would an investor expect to see carrying costs for a natural resource extraction company? (e.g. mining, drilling, timber)
Answer
Correct Answer:
Depleted over time as the resource is used up.
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79. 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?
Answer
Correct Answer:
15%
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80. When closing stock increases, what is the effect on gross profit?
Answer
Correct Answer:
gross profit increases
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81. (US GAAP ) You have depreciation for the past year, what happens on the cash flow statement and in which section?
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82. What is the formula for Dividend Payout Ratio?
Answer
Correct Answer:
Cash Dividends/Net Income
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83. What is the impact to Net cash provided by (used for) financing activities of interest paid on long-term debt?
Answer
Correct Answer:
None of these
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84. For a discontinued operation, what is the date at which management formally commits itself to a formal plan to dispose of the business segment?
Answer
Correct Answer:
Measurement date.
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85. When a company issues a stock dividend which of the following would be affected?
Answer
Correct Answer:
Earnings per share.
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86. Which of the following statements about agency problems is TRUE?
Answer
Correct Answer:
Agency conflicts are common.
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87. Which of the following is considered to be a non-operational income statement item?
Answer
Correct Answer:
Merger Expense
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88. How is an adjunct account different from a contra account?
Answer
Correct Answer:
An adjunct account increases the amount of the balance sheet account.
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89. What are two key elements of the comparability accounting principle?
Answer
Correct Answer:
Comparing a firm over time and comparing companies with each other.
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90. When bonds are converted into common stock:
Answer
Correct Answer:
the carrying value of the bonds is transferred to paid-in capital accounts.
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91. What is the purpose of an 8-K filing with the SEC?
Answer
Correct Answer:
Special circumstances
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92. Summarize IFRS 3 (IFRS).
Answer
Correct Answer:
Business Combinations
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93. At what point in time are shareholders entitled to a cash dividend?
Answer
Correct Answer:
On the date of record.
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94. Retained earnings is equal to
Answer
Correct Answer:
Common stock - dividends + revenues - expenses
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95. 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:
Answer
Correct Answer:
484,000.
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96. Which of the following transactions would not be treated as a reversing entry on the first day of the new accounting period?
Answer
Correct Answer:
Allowance for Doubtful debts
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97. How does a preparer of financial statements differentiate a firm's revenues and a firm's recognized gains?
Answer
Correct Answer:
It depends on the firm's typical activities.
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98. Employer payroll taxes do not include:
Answer
Correct Answer:
Federal income taxes
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99. Deferred credits will appear on the balance sheet as:
Answer
Correct Answer:
a liability
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100. How is the contribution margin used to calculate a firm's breakeven unit amount?
Answer
Correct Answer:
Fixed Costs/Contribution margin per unit sold
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101. Summarize IAS 3 (IFRS).
Answer
Correct Answer:
Business Combinations
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102. Which of the following would be included in the cost of goods sold calculation of an income statement?
Answer
Correct Answer:
Freight inwards
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103. At the beginning of 2001, Osami Corporation had 1.4 million shares of common stock outstanding and no preferred stock. At the end of August 2001, Osami issued 1.2 million new shares of common stock. If Osami reported net income equal to $7.2 million, what were its earnings per share (EPS) for 2001?
Answer
Correct Answer:
$4.00.
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104. What is the equivalent of a nominal account?
Answer
Correct Answer:
Temporary Account
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105. Under GAAP which method is NOT allowed for writing-off bad debts
Answer
Correct Answer:
Direct write-off method
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106. Extraordinary income statement amounts are shown after comprehensive income is calculated.
Answer
Correct Answer:
False
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107. For US companies, what is the most common method of presenting Cashflows from operating activities?
Answer
Correct Answer:
Indirect method
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108. What is another term for a claim to a firm's resources?
Answer
Correct Answer:
Equity
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109. A new asset has been received in exchange for an old asset. What is the most likely value to be used in recording the newly-received asset?
Answer
Correct Answer:
Fair value of the asset given up
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110. In Year One, a company is sued for $500,000 and believes that it is reasonably possible that it will lose between $200,000 and $350,000 but probable that it will lose between $140,000 and $200,000. In Year Two, the law suit is settled for $190,000. What income effect should the company recognize in Year Two?
Answer
Correct Answer:
Loss of $50,000
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111. If you own 5% of a company, what is the appropriate accounting method?
Answer
Correct Answer:
SFAS 115
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112. Reporting accounts receivable at net realizable value is a departure from the accounting principle of:
Answer
Correct Answer:
Historical cost.
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113. In a period of inflation, inventory valuation with the LIFO methodology would be higher or lower than if the firm had adopted the FIFO methodology?
Answer
Correct Answer:
Higher
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114. A material loss should be presented separately as a component of income from continuing operations when it is:
Answer
Correct Answer:
Not unusual in nature but infrequent in occurrence.
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115. Called up capital can be more than:
Answer
Correct Answer:
Paid up Capital
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116. Which one is not The Fraud Triangle?
Answer
Correct Answer:
Lack of audit trial
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117. The RR Corporation had cash flow from operations of $20 million. RR purchased $5 million in equipment and sold $3 million of equipment during the period. Cash flows from financing were $2 million. What is RR's free cash flow for the period (in millions)?
Answer
Correct Answer:
$18
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118. All of the following are shown on the income statement net of tax EXCEPT:
Answer
Correct Answer:
unusual or infrequent items.
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119. What is an example of a financial transaction that does not incorporate the time value of money?
Answer
Correct Answer:
Marketable securities.
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120. A warranty payable is recorded as:
Answer
Correct Answer:
an estimated expense on the income statement when the sale is made.
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121. A company has cash of $30,000, accounts receivable of $150,000, inventory of $140,000, and accounts payable of $200,000. Which of the following is correct?
Answer
Correct Answer:
The quick ratio is 0.9 : 1 and the current ratio is 1.6 : 1.
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122. One million shares of common stock outstanding at the beginning of 1999 • 200,000 shares issued on the last day of March • 500,000 shares issued on the last day of June • 800,000 shares issued on the last day of September. What is the number of shares that should be used to compute 1999 earnings per share for the QRK Company?
Answer
Correct Answer:
2.5 million.
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123. Which of the following does NOT have a dilutive effect on earnings per share?
Answer
Correct Answer:
Preferred Stock
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124. What is the definition of a contribution margin?
Answer
Correct Answer:
Revenues less variable expenses
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125. When bonds are redeemed before maturity, the gain or loss on redemption is the difference between the cash paid and the:
Answer
Correct Answer:
carrying value of the bonds.
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126. Which of the following is correct for two companies that want to file a consolidated tax return as an affiliated group?
Answer
Correct Answer:
One company must hold at least 80 % of the other company's voting stock.
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127. What is an example of a temporary account?
Answer
Correct Answer:
Revenue Account
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128. How are funds used for development of a patent that are NOT expensed on the Income Statement accounted for on the Cashflow statement?
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129. Which is equivalent to Horizontal analysis?
Answer
Correct Answer:
Trend Analysis
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130. Compared to its 2004 cash-basis net income, Potoma Co.'s 2004 accrual-basis net income increased when it:
Answer
Correct Answer:
Had lower accrued expenses on December 31, 2004, than on January 1, 2004.
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131. Revenues are deferred to a balance sheet liability account until they are earned in a later period. The account is called:
Answer
Correct Answer:
Deferrals
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132. Where would purchased treasury stock with cash be classified on the Statement of cashflows?
Answer
Correct Answer:
Cashflows from financing activities
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133. MJG Company has the following information: *Net Loss = 100,000 *Total Assets = 3,000,000 *Common Stock, Dec 31 = 1,000,000 *Additional Paid in Capital = 500,000 *Dividends Declared = 700,000 The debt-to-equity ratio is 50% at December 31. What was the retained earnings on January 1?
Answer
Correct Answer:
1,300,000
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134. Miller Investments has $50,000 in liabilities and $50,000 in stockholders’ equity. If Miller issues debt with warrants of $50,000, and attached warrants are valued at $10,000, the firm’s debt-to-equity ratio after the issue will be:
Answer
Correct Answer:
1.5
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135. On July 1, 2014, PQR Company received a $150,000 simple interest note for 5 months at 12% simple interest from ABC Trading. After 3 months, PQR needed cash so it discounted the note at the MEBank at a discount rate of 14%. How much will PQR receive as a proceeds from the discounting of the notes?
Answer
Correct Answer:
$153,825
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136. Directors of a limited company are under an obligation to:
Answer
Correct Answer:
File copies of the financial statements with the registrar of companies.
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137. Which of the following should not be taken into account when determining the cost of inventories?
Answer
Correct Answer:
Recoverable purchase taxes
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138. For a firm with a simple capital structure, all of the following are necessary to measure basic earnings per share (EPS) EXCEPT:
Answer
Correct Answer:
dividends paid to common shareholders.
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139. Closing entries reset the balances of each revenue and expense account to zero and transfer these balances to _________.
Answer
Correct Answer:
retained earnings
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140. Under FASB 13, to qualify as a capital lease and not an operating lease, which of the following is true?
Answer
Correct Answer:
The lease must contain a bargain purchase option.
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141. Which cost are held-to-maturity securities reported at?
Answer
Correct Answer:
Amortized cost
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142. What is prime cost?
Answer
Correct Answer:
Any material, manufacturing, transportation, and labor costs that are necessary for production
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143. Which of the following is an example of a deferral?
Answer
Correct Answer:
Recording prepaid rent
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144. According to the IASB Framework, the process of reporting an item in the financial statements of an entity is:
Answer
Correct Answer:
Recognition.
Note: This Question is unanswered, help us to find answer for this one
145. Which of the following is among the items reported on the income statement "above the line" on a pretax basis?
Answer
Correct Answer:
Unusual or infrequent items.
Note: This Question is unanswered, help us to find answer for this one
146. What is NOT a line item that would be found in the Cashflows from financing activities
Answer
Correct Answer:
Providing loans to other companies
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147. What is not an allowance method for uncollectible receivables?
Answer
Correct Answer:
Special allowance accounts
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148. In calculating the income to be reported for two different segments of a company, general operating expenses must be allocated between the two. How should this allocation be made?
Answer
Correct Answer:
In the same manner as applied for internal decision-making purposes
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149. What is the gain or loss on disposal of an asset if at the time of the disposal its cost is $100000, the Bookvalue is $50000, and it sold for $30000?
Answer
Correct Answer:
$-20,000
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150. Which of the following statements correctly summarizes the key characteristics of a sole trader’s business?
Answer
Correct Answer:
The trader has unlimited liability, takes sole responsibility for management of the business and no audit is needed.
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151. Reggy Company expects to have a record year, with net income increasing by 20 percent. Reggy would like to share this increase with stockholders, how would Reggy record this? As a:
Answer
Correct Answer:
dividend payable in the current liabilities section of the balance sheet.
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152. Which of the following would NOT be reported below the line?
Answer
Correct Answer:
A stock split.
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153. ABC Ltd has declared an ordinary share dividend of £200,000 at 31/12/2011. Which of the following correctly explains the accounting entries for the dividend at the year end?
Answer
Correct Answer:
Appropriation of profit, current liability on the balance sheet.
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154. Which of the following is considered a cash expense?
Answer
Correct Answer:
Tax expense
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155. What will be the subsequent measurement of investments in equity instruments that do not have a quoted price in an active market and whose fair value cannot be reliably determined?
Answer
Correct Answer:
Cost
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156. What is an example of an adjusting journal entry?
Answer
Correct Answer:
Interest expense that is owed, but not yet paid or due
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157. If a company issues stock to another company in order to acquire a parcel of land, where will that transaction be disclosed (if material)?
Answer
Correct Answer:
As a footnote in the Statement of cashflows or in other disclosure notes as part of the financials.
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158. Which ratio or formula would provide the most accurate picture of a company's liquidity situation if it could not sell it's inventory to help cover its' debts?
Answer
Correct Answer:
Acid test ratio
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159. How does GAAP require companies to treat R&D Expense?
Answer
Correct Answer:
Expense in the period incurred
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160. What is the formula for Dividend Yield?
Answer
Correct Answer:
Annual Dividends per common share/Market price of Common stock per share
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161. Under IFRS, what is the appropriate accounting treatment for ownership over 50%?
Answer
Correct Answer:
Consolidation
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162. Which of the following is not classified as financial asset?
Answer
Correct Answer:
Inventory
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163. What type of transaction is not included in Comprehensive income reporting?
Answer
Correct Answer:
Transactions with owners.
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164. Where, in order on the Income statement, is the reporting of discontinued operations?
Answer
Correct Answer:
After Net Income, before Extraordinary items
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165. Simons Company is purchasing land to build a new factory. The following are the expenses incurred to purchase the land: • Purchase price of the land $150,000 • Real estate commissions $10,500 • Back property taxes $5,000 • Survey $5,000 At what amount should Simons record the land?
Answer
Correct Answer:
$170,500.
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166. If a company issues stock to another company in order to acquire a parcel of land, where will that transaction be reflected in the Statement of cashflows?
Answer
Correct Answer:
Not in any of the three parts of the Statement of cashflows
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167. An analyst gathered the following information about a company: • 01/01/01 - 20,000 shares issued and outstanding at the beginning of the year • 04/01/01 - 5.0% stock dividend • 07/01/01 - 5,000 shares repurchased • 10/01/01 - 2:1 stock split What is the company’s weighted average number of shares outstanding at the end of 2001?
Answer
Correct Answer:
37,000.
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168. An intangible asset may be amortized for a maximum of:
Answer
Correct Answer:
40 years.
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169. A fixed asset that is fully depreciated would:
Answer
Correct Answer:
be held as an asset until disposed of.
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170. Under US GAAP, if you own 75% of a company, what is the appropriate accounting method?
Answer
Correct Answer:
Consolidation
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171. At 12/31/10 there were 1,000,000 shares issued and 300,000 where held as treasury stock. During 2011, 100,000 shares were excercised via stock options and the company repurchased 50,000 of its outstanding shares. How many shares were outstanding as of 12/31/11?
Answer
Correct Answer:
750,000
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172. Revenue is recognized when it is both earned and realized.
Answer
Correct Answer:
False
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173. A company recently acquires 85% control over another company. They account for this investment under the initial value method. The subsidiary earns $100,000 income during the year, pays $75,000 dividends, and has excess amortizations of $10,000. How much should the investment in sub account increase as a result of these operations?
Answer
Correct Answer:
0
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174. Accruals occur when the cash flow comes _____ either expense or revenue recognition.
Answer
Correct Answer:
after
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175. (US GAAP ) You declare a dividend. What happens on the cash flow statement and in which section?
Answer
Correct Answer:
No change
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176. Under IFRS, which is NOT correct in relation to the treatment of assets?
Answer
Correct Answer:
You can use LIFO
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177. Is a slogan or jingle sometimes reported as an asset on the balance sheet? If so, categorized under what?
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178. Net Cash Provided By Operating Activities divided by Average Total Liabilities is also known as:
Answer
Correct Answer:
Cash Debt Coverage Ratio
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179. The lessee's carrying amount of an asset from the capitalization of a lease would be periodically reduced is defined by:
Answer
Correct Answer:
Depreciation of the asset
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180. What is the equation for asset turnover?
Answer
Correct Answer:
Net Sales / Total Assets
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181. Goods totaling $50,000 were puchased Febuary 2 with the terms of 2/10, n/30. Returns of $10,000 were made on Febuary 10. What discount, if any, can be availed of if the invoice was paid Febuary 12?
Answer
Correct Answer:
$800
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182. What will be the Price-Earnings Ratio if the Basic Earnings per Share is $1.80 and market price of each share is $27?
Answer
Correct Answer:
15
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183. A cash basis statement to report a company's revenues and expenses is called:
Answer
Correct Answer:
Statement of Revenues and Expenses
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184. Acme Co. had Shareholder's Equity of $50,000 at 1/1/2010. During 2010 the company issued common stock for proceeds of $100,000, paid dividends of $10,000 and purchased treasury stock for $20,000. The Cashflows from financing activities section will reflect:
Answer
Correct Answer:
Net (source of) cash of $70,000
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185. In a period of deflation, the cost flow method that results in the lowest income taxes is the:
Answer
Correct Answer:
FIFO
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186. Which of the following is a pervasive constraint on the information that can be provided by financial reporting
Answer
Correct Answer:
Cost and materiality
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187. A bond is issued at 101 above par. How are the excess proceeds recorded by the issuer?
Answer
Correct Answer:
As a credit to Premium on Bonds Payable
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188. For accounting purposes, which of the following is NOT an essential characteristic of an asset?
Answer
Correct Answer:
Its value is known with certainty.
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189. Accounts payable; a liability account that identifies an obligation to pay suppliers in the near future. Before the account can be transfered to the_____the_____must be reconciled to____.
Answer
Correct Answer:
general ledger, balance, Invoices
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190. Which of the following is considered non-current liabilities?
Answer
Correct Answer:
Deferred Tax Liability
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191. The control features of a bank account do not include:
Answer
Correct Answer:
having bank auditors verify the correctness of the bank balance per books.
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192. How is Loss on sale of assets accounted for on the Statement of Cash Flows?
Answer
Correct Answer:
Added back to Net Income in Cashflows from Operations
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193. In analyzing a company's financial statements, which financial statement would a potential investor use primarily to assess the company's liquidity and financial flexibility?
Answer
Correct Answer:
Balance Sheet.
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194. Karson Inc. issues 10-year bonds with a maturity value of $200,000. If the bonds are issued at a premium, this indicates that:
Answer
Correct Answer:
the contractual interest rate exceeds the market interest rate.
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195. Which of the following is not considered as financial statement under GAAP?
Answer
Correct Answer:
Statement of Retained Earnings
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196. In cash flow statement what will be the treatment of Dividends paid?
Answer
Correct Answer:
Dividends paid can be deducted from Financing activities only
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197. When the debit side of the trial balance equals the credit side, the trial balance is error free.
Answer
Correct Answer:
False
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198. What causes a corporation’s market value to be greater than its book value?
Answer
Correct Answer:
The accountant’s cost principle
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199. Acme Co. sold a piece of equipment for $10,000; the depreciated value was $2,000; what is reflected on the Cashflows from investing activities in the period of disposal?
Answer
Correct Answer:
$10,000 source of cash from sale of PP&E
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200. The purpose of the closing process is
Answer
Correct Answer:
to reduce temporary accounts to zero balances and to reflect the changes that have occurred in that account during the period
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201. If a company receives cash in exchange for a note and the present value of the note is less than the amount of the note, the difference is :
Answer
Correct Answer:
Amortized using the "Effective Interest method"
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202. Based upon the conservatism accounting principle, when should a gain on sale of property disposal be recognized?
Answer
Correct Answer:
When the cash is collected.
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203. FOXCO sells 1000 shares with a par value of $1.00 for $10.00 per share. What is the amount of paid in capital?
Answer
Correct Answer:
$9000
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204. The United States government set the standards outlined in US GAAP?
Answer
Correct Answer:
No
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205. What is a type of an affirmative covenant required by a lender?
Answer
Correct Answer:
Requirement to report financial performance
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206. What is the formula for Book Value of Equity Per Common Share?
Answer
Correct Answer:
Shareholders' equity/Number of Common shares
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207. If Acme issued 8,000 shares of common stock with par value of $1 per share and an issue price of $4 per share, what is the starting balance of paid-in-capital?
Answer
Correct Answer:
$24,000
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208. What is an example of a defined benefit retirement plan?
Answer
Correct Answer:
Company-funded pension
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209. What is withholding tax?
Answer
Correct Answer:
Tax deducted at source
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210. Investors (such as suppliers and bankers) use accounting information to evaluate the risks of granting credit or lending money.
Answer
Correct Answer:
True
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211. What type of activity is a purchase of treasury stock-
Answer
Correct Answer:
Financing activity
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212. What does ACFE stand for?
Answer
Correct Answer:
The Association of Certified Fraud Examiners
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213. A company must account for its investment in another company's stock using the equity method when they own more than:
Answer
Correct Answer:
20%
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214. What are acceptable accounting treatments to recognize the cost of intangible assets over time?
Answer
Correct Answer:
Straight line amortization over the useful life
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215. Discount on Bonds Payable:
Answer
Correct Answer:
is a contra account
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216. What is the balance sheet presentation of a Note Payable discount?
Answer
Correct Answer:
Contra-liability account
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217. On the cash flow statement, disposal of a business or subsidiary is found in the _________ section.
Answer
Correct Answer:
Investing
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218. What accounts are NOT considered "Other Comprehensive Income?"
Answer
Correct Answer:
Income from operating activities
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219. A pension fund is:
Answer
Correct Answer:
established by an employer to organize the investment of employees' retirement funds contributed by the employer and employees.
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220. When the return on equity equation (ROE) is decomposed, what three ratios comprise the components of ROE?
Answer
Correct Answer:
Net profit margin, asset turnover, equity multiplier.
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221. When you pay an expense via company credit card what general ledger category is credited?
Answer
Correct Answer:
Liabilities
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222. What is NOT a typical classification for a receivable?
Answer
Correct Answer:
Deposit receivables
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223. What is the internal rate of return?
Answer
Correct Answer:
Both of these describe the internal rate of return.
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224. Stock splits affect the following accounts when booked:
Answer
Correct Answer:
There is no book entry
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225. What is NOT true about Unearned Revenue?
Answer
Correct Answer:
It is an asset account that depletes as the services/products are delivered
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226. What is the formula for Debt to Equity Ratio?
Answer
Correct Answer:
Total Liabilities / Total Shareholder's Equity
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227. Revenue recognized after cash has been received follows which accounting method?
Answer
Correct Answer:
cash basis accounting
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228. Material events that have an uncertain outcome will be reported where?
Answer
Correct Answer:
In the contingency section of the supplemental balance sheet information.
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229. Neutrality means that financial accounting information should
Answer
Correct Answer:
be free from bias towards a predetermined result.
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230. Unearned revenue on a company's balance sheet is an:
Answer
Correct Answer:
Item not yet reflected in the result of operations
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231. The company uses BTC Bank to process customer credit cards payments. The fees charged by BTC Bank are called:
Answer
Correct Answer:
Merchant fees
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232. For the input for product, what are two usual cost variances that are measured for direct materials?
Answer
Correct Answer:
Cost and quantity used.
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233. What is a format that is NOT acceptable for reporting comprehensive income?
Answer
Correct Answer:
Reported as a summary in the footnotes
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234. What is the first line item of the Cashflows from operating activities under the Indirect method?
Answer
Correct Answer:
Net Income
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235. An increase in interest rates is most likely to benefit:
Answer
Correct Answer:
firms that issued debt at a lower cost than current rates.
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236. A company with a Z-Score above 3.0 is likely to fail.
Answer
Correct Answer:
False
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237. What is the formula for Inventory Turnover Ratio?
Answer
Correct Answer:
Cost of goods sold/((Beginning Inventories + Ending Inventories)/2))
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238. What is the formula for Inventory Turnover?
Answer
Correct Answer:
Cost of Goods Sold / Average Inventory
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239. According to GAAP, How is deferred revenue treated under cash basis accounting?
Answer
Correct Answer:
Deferrals are not recognized under cash basis accounting
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240. If a company using accrual accounting has quarterly (end of quarter) interest payments on a bond, what will they recognize at the end of the first month of the quarter?
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241. Which of the following defines a permanent account?
Answer
Correct Answer:
Accounts that have balances which carry over beyond the current accounting period
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242. How is a contribution margin ratio calculated?
Answer
Correct Answer:
(Sales price - variable cost per unit)/Sales price
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243. Public companies use external auditors to issue an opinion on their financial statements. The opinion that expresses that all statements are presently fairly and in accordance with GAAP is:
Answer
Correct Answer:
Unqualified
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244. What is a Closing Entry?
Answer
Correct Answer:
A journal entry to move amounts from temporary accounts to B/S or I/S accounts
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245. On the cash flow statement, dividends received from stock is found in the _________ section.
Answer
Correct Answer:
Investing
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246. An investment that the holder tends to sell in 30 days or less is classified as a:
Answer
Correct Answer:
Trading Security
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247. What is one of the requirements for a business component to be reported in Discontinued Operations?
Answer
Correct Answer:
The business does not have significant "continuing involvement"
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248. Diluted EPS, as compared to EPS, takes into consideration all of these additional variables, except:
Answer
Correct Answer:
Volume of stock trading on the market
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249. All of the following are recognized depreciation methods for GAAP reporting EXCEPT:
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256. The following information pertains to Bayside Corporation: Equipment purchase: $50,000 Salvage value: $5,000 Useful life: 7 years Year-1 depreciation: $14,285.70 What depreciation method does Bayside Corporation use?
Answer
Correct Answer:
Double declining balance.
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257. When calculating earnings per share (EPS) for firms with complex capital structures, stock options are ordinarily considered to be:
Answer
Correct Answer:
potentially dilutive securities.
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258. While analyzing the financial statements, an analyst should:
Answer
Correct Answer:
treat convertible bonds like equity when the stock price exceeds the conversion price.
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259. Which of the following are the components of owners' equity section of the balance sheet?
Answer
Correct Answer:
all of them
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260. XYZ, Inc. is closing books for July. It has spent 12,000USD for air conditioning on the weekend for employees working overtime. On which financial statement will this figure appear?
Answer
Correct Answer:
On the income statement as a SG&A expense
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261. Land is reported on the Balance Sheet at:
Answer
Correct Answer:
Historical Cost
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262. When a capital lease is initiated, what value is it recorded at on the balance sheet?
Answer
Correct Answer:
The present value of the future rental payments for the use of the leased asset
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263. What is an example of judgement and estimation used in accounting?
Answer
Correct Answer:
Collectibility of receivables.
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264. What is an example of a period cost?
Answer
Correct Answer:
General and Administrative costs
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265. Common size income statements express all income statement items as a percentage of:
Answer
Correct Answer:
sales.
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266. Notes to Financial Statements are given to
Answer
Correct Answer:
Increase understandability
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267. GAAP and Tax code depreciation methodologies are always economically equivalent in the first year the asset is put into use.
Answer
Correct Answer:
False
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268. Which is considered Extraordinary Items?
Answer
Correct Answer:
Effects of major natural casualties, if rare in the area
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269. What is an example of an asset that is not stated at acquisition (historical) cost?
Answer
Correct Answer:
Marketable securities.
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270. A large company purchases a $250 digital camera and expenses it immediately instead of recording it as an asset and depreciating it over its useful life. This practice may be acceptable because of which principle/guideline?
Answer
Correct Answer:
Materiality
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271. Unearned Subscription Revenue is recorded:
Answer
Correct Answer:
As a liability on the Balance Sheet
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272. What is the common period of time that a fixed expense is assumed to be unchangeable?
Answer
Correct Answer:
One accounting period
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273. What is a compensating balance of cash?
Answer
Correct Answer:
A minimum credit balance that a bank may require a borrower to keep on deposit as a condition for granting a loan.
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274. Why is the Balance sheet referred to as a "picture in time"?
Answer
Correct Answer:
The amounts shown on the line items of the balance sheet are the values as of the last day of the period being presented
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275. Which of the following accounts is not closed using the Income Summary Account
Answer
Correct Answer:
Cash
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276. Financial statements report the current market value of a company.
Answer
Correct Answer:
False
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277. In the annual report, where would a financial statement reader find out if the company’s financial statements give a fair depiction of its financial position and operating results?
Answer
Correct Answer:
Auditor's report
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278. After the initial recognition, bonds payable shall be measured at amortized cost using:
Answer
Correct Answer:
Effective interest method
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279. On the cash flow statement, depletion is found in the _________ section.
Answer
Correct Answer:
Operating
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280. What line item will always be a positive amount on the Statement of Cash Flows (Indirect Method)?
Answer
Correct Answer:
Depreciation
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281. What is done with the transactions in a company?
Answer
Correct Answer:
both of these
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282. What is a basis point?
Answer
Correct Answer:
A basis point is a hundredth (1/100) of a percentage point
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283. If the balance of accounts payable is $8,000 at 1/1/2010 and $6,500 at 12/31/2010, how is that represented on the Statement of cashflows?
Answer
Correct Answer:
Cashflows from operating activities reflect a negative ($1,500) use of cash
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284. Which of the following would normally be a current liability?
Answer
Correct Answer:
Unearned revenue
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285. Which of the following is the classification of a redeemable preference share?
Answer
Correct Answer:
Equity instrument
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286. What is factoring of accounts receivable?
Answer
Correct Answer:
A firm sells receivables at a discount to face value for immediate cash.
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287. What is the order of cash sources (uses) as presented in the Statement of Cash Flows?
Answer
Correct Answer:
Operating, Investing, and Financing
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288. (US GAAP ) Your accounts payable increases from the prior year, what happens on the cash flow statement and in which section?
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293. What is the asset method of adjusting entries?
Answer
Correct Answer:
Initial transaction recorded as an asset/liability
Note: This Question is unanswered, help us to find answer for this one
294. What is an example of a noncurrent liability?
Answer
Correct Answer:
Capital lease obligation
Note: This Question is unanswered, help us to find answer for this one
295. Under which classification on the balance sheet would Notes Payable NOT appear?
Answer
Correct Answer:
Current Assets
Note: This Question is unanswered, help us to find answer for this one
296. What is the formula for Return on Assets (ROA)?
Answer
Correct Answer:
Net Income/((Beginning Assets + Ending Assets)/2))
Note: This Question is unanswered, help us to find answer for this one
297. Which of the following line items are part of cost of goods sold?
Answer
Correct Answer:
none of them
Note: This Question is unanswered, help us to find answer for this one
298. The book value of an asset is its:
Answer
Correct Answer:
Cost minus accumulated depreciation
Note: This Question is unanswered, help us to find answer for this one
299. A company began the accounting period with $50,000 in owner’s capital, ended with $75,000 in owner’s capital, and the owner withdrew $30,000 during the period for personal use. What was the company’s net income or loss for the period?
Answer
Correct Answer:
$55,000 net income
Note: This Question is unanswered, help us to find answer for this one
300. What is the formula for Return on Equity (ROE)?
Answer
Correct Answer:
Net Income/((Beginning Stockholders' Equity + Ending Stockholders' Equity)/2))
Note: This Question is unanswered, help us to find answer for this one
301. If the balance of accounts receivable is $2,000 at 1/1/2010 and $3,500 at 12/31/2010, how is that represented on the Statement of Cash Flows?
Answer
Correct Answer:
Cashflows from operating activities reflect a negative ($1,500) use of cash
Note: This Question is unanswered, help us to find answer for this one
302. On the cash flow statement, amortization is found in the _________ section.
Answer
Correct Answer:
Operating
Note: This Question is unanswered, help us to find answer for this one
303. Which of the following statements is true about the reporting of operating segments by a business?
Answer
Correct Answer:
Publicly-held companies are required to present this information while other companies are allowed to present it.
Note: This Question is unanswered, help us to find answer for this one
304. In the financial statements, when a convertible bond is retired, it is shown as:
Answer
Correct Answer:
as a reduction to cash and long-term liability on the balance sheet.
Note: This Question is unanswered, help us to find answer for this one
305. Acme company has 5,000 shares outstanding, and Retained earnings balance of $12,000. If Acme declares a dividend of $3/share, what is the resulting Retained earnings balance?
Answer
Correct Answer:
-($3,000) ; Retained Losses
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306. What is the formula for Accounts Receivable Turnover Ratio?
Note: This Question is unanswered, help us to find answer for this one
307. According to IFRS 18 revenue recognition, revenue is recognized:
Answer
Correct Answer:
when the risks and rewards of the ownership of the goods are transferred to the buyer
Note: This Question is unanswered, help us to find answer for this one
308. Where is comprehensive income reported in the income statement?
Answer
Correct Answer:
Seperatly after net income.
Note: This Question is unanswered, help us to find answer for this one
309. If Company X issued 10,000 shares with a stated value of $1 per share at $5 a share, how would this transaction be reflected on their balance sheet?
Answer
Correct Answer:
Debit to Cash for 50,000; Credit to Common Stock for 10,000; Credit to Additional Paid in Capital for 40,000
Note: This Question is unanswered, help us to find answer for this one
310. Which of the following would NOT be an adjustment to net income using the indirect method?
Answer
Correct Answer:
Increase in market value of company- owned property
Note: This Question is unanswered, help us to find answer for this one
311. What is the formula for Asset Turnover Ratio?
Answer
Correct Answer:
Sales/((Beginning Total Assets + Ending Total Assets)/2))
Note: This Question is unanswered, help us to find answer for this one
312. What is the impact to Net cash provided by (used for) financing activities from a company issuing long-term debt?
Answer
Correct Answer:
Positive: Source of cash
Note: This Question is unanswered, help us to find answer for this one
313. Where are gains / losses shown for securities classified as trading securities?
Answer
Correct Answer:
Income Statement
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314. The purpose of the income statement is to show cash sources and uses during a specific period of time.
Answer
Correct Answer:
False
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315. Which type of lease is reflected on a company's balance sheet?
Answer
Correct Answer:
Capital Lease
Note: This Question is unanswered, help us to find answer for this one
316. When the expensed tax rate changes, deferred tax:
Answer
Correct Answer:
Liability and Asset accounts are adjusted to reflect the new expected tax rate.
Note: This Question is unanswered, help us to find answer for this one
317. When is an expense recognized under the matching principle?
Answer
Correct Answer:
When the related revenue is recognized
Note: This Question is unanswered, help us to find answer for this one
318. Cash flow statements are required by:
Answer
Correct Answer:
International Financial Reporting Standard No. 1
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319. What are the journal entries for a company issuing 1,000 shares of stock at $8/share issue price and no par value?
Note: This Question is unanswered, help us to find answer for this one
320. Which organization is most like IASB, but monitors and improves the standards under US GAAP?
Answer
Correct Answer:
FASB
Note: This Question is unanswered, help us to find answer for this one
321. If the balance of inventories is $5,000 at 1/1/2010 and $3,500 at 12/31/2010, how is that represented on the Statement of cashflows?
Answer
Correct Answer:
Cashflows from operating activities reflect a positive $1,500 source of cash
Note: This Question is unanswered, help us to find answer for this one
322. Under straight-line depreciation, what percent of the cost of equipment to be allocated will be recognized in the third year of a 5 year economic life?
Answer
Correct Answer:
20%
Note: This Question is unanswered, help us to find answer for this one
323. What is the best definition for Amortization?
Answer
Correct Answer:
The process of allocating the original cost of an intangible asset to the periods benefited
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324. The U.S. government agency with authority over the financial reporting requirements of publicly traded corporations is the _______.
Answer
Correct Answer:
SEC
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325. A business has prepared its accounts for a financial year and these show a profit of $600 000. The accounts do not include the following items: • a likely loss on a contract of $100,000 • a possible Court ruling in favor of the company which is likely to increase profits by $10 000 • a possible Court ruling against the company which could result in damages of between $5 000 to $10 000. Having regard to the fundamental accounting concepts, which of the following revised profit which figures is correct when the above factors are taken in to account?
Answer
Correct Answer:
500,000
Note: This Question is unanswered, help us to find answer for this one
326. An example of financial expense in a multistep income statement would be:
Answer
Correct Answer:
interest expense.
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327. Free Cash Flow (FCF) is best described as:
Answer
Correct Answer:
Operating cash flow - Capital expenditures
Note: This Question is unanswered, help us to find answer for this one
328. Which of the following is not closed out to a zero balance in the closing entries?
Answer
Correct Answer:
Assets
Note: This Question is unanswered, help us to find answer for this one
329. Assets are depreciated:
Answer
Correct Answer:
to match the costs with the benefit of the asset.
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330. What is the best definition for Depletion?
Answer
Correct Answer:
The process of allocating the original cost of a natural resource to the quantity at which the resource is extracted
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331. On the cash flow statement, net income is found in the _________ section.
Answer
Correct Answer:
Operating
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332. (US GAAP ) Your accounts receivable drops from the prior year. What happens on the cash flow statement and in which section?
Note: This Question is unanswered, help us to find answer for this one
368. What is a deposit in transit?
Answer
Correct Answer:
A deposit that was made at month end but is not reported on the bank statement until the following month.
Note: This Question is unanswered, help us to find answer for this one
369. Accrual basis of accounting is considered better than the cash basis because:
Answer
Correct Answer:
it matches revenue with expenses
Note: This Question is unanswered, help us to find answer for this one
370. You purchase $1200 worth of inventory on credit. Your journal entries would have __
Answer
Correct Answer:
Debits and Credits balance out
Note: This Question is unanswered, help us to find answer for this one
371. What is an investment in bonds considered?
Answer
Correct Answer:
Asset
Note: This Question is unanswered, help us to find answer for this one
372. Which is NOT an intangible asset?
Answer
Correct Answer:
Unused Line of Credit
Note: This Question is unanswered, help us to find answer for this one
373. ABC Co. has current assets of $50,000 and total assets of $150,000. ABC has current liabilities of $30,000 and total liabilities of $80,000. What is the amount of ABC's owner's equity?
Answer
Correct Answer:
$ 70,000
Note: This Question is unanswered, help us to find answer for this one
374. What is the normal balance for contra asset accounts?
Answer
Correct Answer:
Credit
Note: This Question is unanswered, help us to find answer for this one
375. Which of the following can be found in the FINANCING section of the cash flow statement?
Answer
Correct Answer:
Issuing bonds
Note: This Question is unanswered, help us to find answer for this one
376. Which is not a method to account for the loss of receivables?
Answer
Correct Answer:
Factoring of Receivables Method
Note: This Question is unanswered, help us to find answer for this one
377. If you own 40% of a company, what is the appropriate accounting method?
Answer
Correct Answer:
Equity Method
Note: This Question is unanswered, help us to find answer for this one
378. What is an example of an extraordinary item?
Answer
Correct Answer:
Impact of a hurricane on a factory
Note: This Question is unanswered, help us to find answer for this one
379. What is a deferred income?
Answer
Correct Answer:
A income received which has to be earned over a certain period of time
Note: This Question is unanswered, help us to find answer for this one
380. If a firm has a great deal of inventory built up which of the following ratios would be the largest?
Answer
Correct Answer:
Current Ratio.
Note: This Question is unanswered, help us to find answer for this one
381. Recording revenues when earned and expenses when incurred is associated with what basis of accounting?
Answer
Correct Answer:
Accrual
Note: This Question is unanswered, help us to find answer for this one
382. What is an investment in stocks considered?
Answer
Correct Answer:
Asset
Note: This Question is unanswered, help us to find answer for this one
383. The cost principal dictates that companies record ____ at their cost.
Answer
Correct Answer:
Assets
Note: This Question is unanswered, help us to find answer for this one
384. What is NOT an acceptable depreciation method?
Answer
Correct Answer:
Accrual method
Note: This Question is unanswered, help us to find answer for this one
385. Which account is at the bottom of the Statement of Cash Flows, displaying: _____ at the beginning and at the end of the period?
Answer
Correct Answer:
Cash
Note: This Question is unanswered, help us to find answer for this one
386. Which of the following will be found on the balance sheet?
Answer
Correct Answer:
Wages payable
Note: This Question is unanswered, help us to find answer for this one
387. How do you calculate straight-line depreciation?
Answer
Correct Answer:
Asset value - salvage / useful life
Note: This Question is unanswered, help us to find answer for this one
388. Internal users are individuals and organizations outside a company who want financial information about the company.
Answer
Correct Answer:
False
Note: This Question is unanswered, help us to find answer for this one
389. What do negative amounts on the Statement of Cash Flow depict?
Answer
Correct Answer:
Use of Cash
Note: This Question is unanswered, help us to find answer for this one
390. How do you calculate gross profit percentage?
Answer
Correct Answer:
Gross Margin divided by Sales
Note: This Question is unanswered, help us to find answer for this one
391. Assets are usually reported on the balance sheet at which amount?
Answer
Correct Answer:
cost
Note: This Question is unanswered, help us to find answer for this one
392. The Governmental Accounting Standards Board defines general capital assets as all Capital assets other than those accounted for in Proprietary funds or trust funds.
Answer
Correct Answer:
True
Note: This Question is unanswered, help us to find answer for this one
393. Which is considered to be liability?
Answer
Correct Answer:
Unearned Revenue
Note: This Question is unanswered, help us to find answer for this one
394. What is the net book value of a noncurrent asset?
Answer
Correct Answer:
the net amount reported on the balance sheet for a long-term asset.
Note: This Question is unanswered, help us to find answer for this one
395. What is the equivalent of a "real account"?
Answer
Correct Answer:
Permanent account
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396. When a sale is made with the credit terms 2/10 net 30, the 2 refers to the:
Answer
Correct Answer:
Discount rate
Note: This Question is unanswered, help us to find answer for this one
Note: This Question is unanswered, help us to find answer for this one
398. A client pays ABC Co. $10,000 in December to perform services in 45 days. ABC uses the accrual basis of accounting. In December ABC will debit Cash for $10,000. What will be the other account to balance this entry prepared by ABC?
Answer
Correct Answer:
Unearned Revenue
Note: This Question is unanswered, help us to find answer for this one
399. You issue bonds, what happens on the cash flow statement and in which section?
Note: This Question is unanswered, help us to find answer for this one
400. What type of account is Member Distributions?
Answer
Correct Answer:
Equity
Note: This Question is unanswered, help us to find answer for this one
401. What are two criteria for identifying an economic event as an Extraordinary item?
Answer
Correct Answer:
Unusual in nature and infrequent in occurrence
Note: This Question is unanswered, help us to find answer for this one
402. What are the two methods acceptable to present cash flows from operating activities?
Answer
Correct Answer:
Direct and Indirect method
Note: This Question is unanswered, help us to find answer for this one
403. The normal balance for equity accounts:
Answer
Correct Answer:
Are on the credit side
Note: This Question is unanswered, help us to find answer for this one
404. ABC Co. incurs cleanup expense of $500 on December 30, 2010. The supplier's invoice states that the $500 is due by January 10, 2011. ABC follows the accrual basis of accounting and its accounting year ends on December 31. What is the effect of the cleanup service on the December balance sheet of ABC?
Answer
Correct Answer:
Liabilities Increased
Note: This Question is unanswered, help us to find answer for this one
405. A decrease in equity from a Net Income loss will be a:
Answer
Correct Answer:
Debit to Equity
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406. Which is considered a cash expense?
Answer
Correct Answer:
Leasehold Improvements
Note: This Question is unanswered, help us to find answer for this one
407. A firm is purchasing equipment for its operations. The equipment has a useful life of 7 years. On the firm’s financial statements the equipment should be recorded as:
Answer
Correct Answer:
Debit Property, Plant & Equipment and Credit Cash.
Note: This Question is unanswered, help us to find answer for this one
408. On the cash flow statement, proceeds from issuing bonds are found in the _________ section.
Answer
Correct Answer:
Financing
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409. On the cash flow statement, repayment of long-term debt is found in the _________ section.
Answer
Correct Answer:
Financing
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410. A complete set of financial statements for Hartman Company, at December 31, 1999, would include each of the following, except:
Answer
Correct Answer:
Statement of projected cash flows for 2000.
Note: This Question is unanswered, help us to find answer for this one
411. What is another definition for "recognizing" revenue?
Answer
Correct Answer:
Recording revenue
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412. How does a company adjust its financial statements for the effect of inflation?
Answer
Correct Answer:
It does not.
Note: This Question is unanswered, help us to find answer for this one
413. What is the best definition of Expense?
Answer
Correct Answer:
The use of resources to generate revenue
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414. What is a fundamental concept of accrual accounting?
Answer
Correct Answer:
Recognizing economic activities regardless of when cash transactions occur
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415. If a newspaper company receives an annual subscription payment prior to delivering any papers, what is the initial accounting entry?
Note: This Question is unanswered, help us to find answer for this one
438. What is true about a contra account?
Answer
Correct Answer:
It has the opposite T-account orientation (Debit/Credit) as the account it offsets
Note: This Question is unanswered, help us to find answer for this one
439. What is the purpose of a subsidiary ledger?
Answer
Correct Answer:
To keep detailed information about certain accounts
Note: This Question is unanswered, help us to find answer for this one
440. On the cash flow statement, taxes paid are found in the _________ section.
Answer
Correct Answer:
Operating
Note: This Question is unanswered, help us to find answer for this one
441. On the cash flow statement, depreciation is found in the _________ section.
Answer
Correct Answer:
Operating
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442. The current ratio is an indicator of which following characteristic of an organization?
Answer
Correct Answer:
The liquidity in the short term.
Note: This Question is unanswered, help us to find answer for this one
443. For a material item to be classified as an extraordinary item on the income statement, it must be:
Answer
Correct Answer:
unusual in nature and infrequent in occurrence.
Note: This Question is unanswered, help us to find answer for this one
444. With a decrease in an expense, you must _____ the account.
Answer
Correct Answer:
Credit
Note: This Question is unanswered, help us to find answer for this one
445. The multiple-step income statement for a merchandiser shows each of the following features except:
Answer
Correct Answer:
investing activities
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446. What is the best definition of Net Working Capital?
Answer
Correct Answer:
A measure of the margin of current assets over current liabilities
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447. Which of the following defines market value?
Answer
Correct Answer:
What the property could be sold for today
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448. Which of the following assets is the hardest to liquidate?
Answer
Correct Answer:
Goodwill
Note: This Question is unanswered, help us to find answer for this one
449. What does a debit signify in bookkeeping?
Answer
Correct Answer:
an increase in assets or a decrease in liabilities
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450. What are the types of expenses that will increase and decrease in the same direction as movement in sales?
Answer
Correct Answer:
Variable expenses
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451. A snapshot of the company best correlates to which financial statement?
Answer
Correct Answer:
balance sheet
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452. What does a business owe all of its assets to?
Answer
Correct Answer:
creditors, owners
Note: This Question is unanswered, help us to find answer for this one
453. Are audited financial statements guaranteed to be free of error?
Answer
Correct Answer:
No - they are guaranteed to be presented fairly
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454. On the cash flow statement, a change in accounts receivable is found in the _________ section.
Answer
Correct Answer:
Operating
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455. If a business owner wants to protect him/herself from liabilities associated with their business, it is recommended that he/she establish a sole proprietorship.
Answer
Correct Answer:
False
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456. The difference between the balance of a plant asset account and the related accumulated depreciation account is the asset's _____.
Answer
Correct Answer:
book value
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457. Which of the following defines a fixed asset?
Answer
Correct Answer:
Property used in a productive capacity which will benefit the enterprise for longer than one year
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458. What is the correct journal entry for the purchase of merchandise on account?
Answer
Correct Answer:
debit to inventory; credit to accounts payable
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459. Plumbing companies, beauty salons, and auto repair shops are often sole proprietorships.
Answer
Correct Answer:
True
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460. The notes to the financial statement provide details that are not shown on the financial statements.
Answer
Correct Answer:
True
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461. Which of the following defines current assets on the balance sheet?
Answer
Correct Answer:
Expected to be converted to cash or consumed within a year or normal operating cycle whichever is longer
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462. The financial statement that reports the revenues and expenses for a specific period of time is the:
Answer
Correct Answer:
Income statement
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463. If a company receives cash in exchange for a note and the present value of the note is less than the amount of the note, the difference is the:
Answer
Correct Answer:
Discount
Note: This Question is unanswered, help us to find answer for this one
464. Which of the following defines book value?
Answer
Correct Answer:
Asset basis less accumulated depreciation
Note: This Question is unanswered, help us to find answer for this one
465. Which of the following is a cash expense?
Answer
Correct Answer:
Interest
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466. An increase in revenue is journaled as a ____.
Answer
Correct Answer:
Credit
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467. What is retained earnings considered?
Answer
Correct Answer:
Shareholder Equity
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468. Which accounting assumption states that an enterprise will continue in operation long enough to carry out its existing objectives and commitments?
Answer
Correct Answer:
Going concern assumption
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469. Which of these typically has a credit balance?
Answer
Correct Answer:
All of these
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470. What is an example of a semi-variable expense?
Answer
Correct Answer:
Salesperson's compensation based on both salary and commission
Note: This Question is unanswered, help us to find answer for this one
471. What is an example of a contra account?
Answer
Correct Answer:
Allowance for doubtful accounts
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472. Which cost are trading securities reported at?
Answer
Correct Answer:
Fair value
Note: This Question is unanswered, help us to find answer for this one
473. What are the components of Double Entry accounting?
Answer
Correct Answer:
At least one Debit entry and one Credit entry
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474. On the cash flow statement, change in accounts payable is found in the _________ section.
Answer
Correct Answer:
Operating
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475. At the end of the accounting period, the revenue and expense accounts of the company are moved to what account?
Answer
Correct Answer:
retained earnings
Note: This Question is unanswered, help us to find answer for this one
476. What is NOT a current liability?
Answer
Correct Answer:
Convertible debt
Note: This Question is unanswered, help us to find answer for this one
477. Which statement would you find accumulated depreciation?
Answer
Correct Answer:
Balance sheet
Note: This Question is unanswered, help us to find answer for this one
478. What type of account is Interest Receivable?
Answer
Correct Answer:
Asset
Note: This Question is unanswered, help us to find answer for this one
479. What type of ratio is Return On Assets (ROA)?
Answer
Correct Answer:
Profitability Ratio
Note: This Question is unanswered, help us to find answer for this one
480. Which of the following is an asset account?
Answer
Correct Answer:
Prepaid rent
Note: This Question is unanswered, help us to find answer for this one
481. Why are income taxes not incorporated into the breakeven unit sales calculation?
Answer
Correct Answer:
Because at breakeven there will be no profit and no income tax due.
Note: This Question is unanswered, help us to find answer for this one
482. What is the Balance Sheet version of the accounting equation?
Answer
Correct Answer:
Assets = Liabilities + Equity
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483. Which of these is a Debit account?
Answer
Correct Answer:
Expense
Note: This Question is unanswered, help us to find answer for this one
484. Which of the following is a long term asset?
Answer
Correct Answer:
On a balance sheet, the value of a company's property, equipment and other capital assets expected to be useable for more than one year, minus depreciation.
Note: This Question is unanswered, help us to find answer for this one
485. The personal assets of the owner of a company will not appear on the company's balance sheet because of which principle/guideline?
Answer
Correct Answer:
Economic entity
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486. Acme company has a beginning year Retained earnings balance of $10,000, Net income for the year of $5,000 and declares dividends totaling $3,000. What is the ending Retained earnings balance?
Answer
Correct Answer:
$12,000
Note: This Question is unanswered, help us to find answer for this one
487. What is wages payable considered?
Answer
Correct Answer:
Liability
Note: This Question is unanswered, help us to find answer for this one
488. A decrease in liabilities is recorded as a:
Answer
Correct Answer:
Debit
Note: This Question is unanswered, help us to find answer for this one
489. The following items are current assets except:
Answer
Correct Answer:
goodwill
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490. What is additional paid-in-capital considered?
Answer
Correct Answer:
Shareholder Equity
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491. What is not a typical component of A Work in Progress Account?
Answer
Correct Answer:
Sales Tax
Note: This Question is unanswered, help us to find answer for this one
492. Which one of these is financial accounting based on?
Answer
Correct Answer:
double entry bookkeeping
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493. Which of the following would NOT be included on a balance sheet?
Answer
Correct Answer:
Cost of goods sold.
Note: This Question is unanswered, help us to find answer for this one
494. What type of account is Prepaid Rent?
Answer
Correct Answer:
Asset
Note: This Question is unanswered, help us to find answer for this one
495. Another name for the balance sheet is:
Answer
Correct Answer:
Statement of Financial Position
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496. Rules governing financial accounting are for the benefit of:
Answer
Correct Answer:
All outside stakeholders
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497. Which of the following would not be a current asset?
Answer
Correct Answer:
Land
Note: This Question is unanswered, help us to find answer for this one
498. Which of the following is not a current asset?
Answer
Correct Answer:
Fixtures
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499. Which of the following accounts will be found on the balance sheet?
Answer
Correct Answer:
Inventory
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500. What is an increase in the inventory account journaled as?
Answer
Correct Answer:
Debit.
Note: This Question is unanswered, help us to find answer for this one
501. What is the purpose of an adjusting journal entry?
Answer
Correct Answer:
To adjust account balances to reflect correct amounts under accrual-based accounting
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502. Which of the following factors is likely to be an area of difficulty in a large multinational group of companies?
Answer
Correct Answer:
All of the these
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503. GAAP generally uses one of two measurement principles. Which of the following IS one of these two principles?
Answer
Correct Answer:
Fair value principal
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504. Which one of the following is NOT one of the four basic income statement components?
Answer
Correct Answer:
Depreciation
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505. Which side of a T-account is a debit recorded?
Answer
Correct Answer:
Left
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506. What is the normal balance of revenue accounts?
Answer
Correct Answer:
Credit
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507. What is the benefit of a limited liabilty corporation, LLC?
Answer
Correct Answer:
Taxation as a partnership, without personal risks, financial and legal, like a corporation.
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508. A sole proprietorship is a business owned by:
Answer
Correct Answer:
1 person
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509. What is not a component of interest computations?
Answer
Correct Answer:
Expected inflation
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510. If managers are granted the opportunity to buy additional firm shares at a predetermined price on or before a future date, they are said to be owners of:
Answer
Correct Answer:
executive stock options.
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511. What does IFRS stand for?
Answer
Correct Answer:
International Financial Reporting Standards
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512. What is goodwill considered?
Answer
Correct Answer:
Asset
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513. What is bonds payable considered?
Answer
Correct Answer:
Liability
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514. Which of the following is NOT a current asset?
Answer
Correct Answer:
Land
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515. Generally Accepted Accounting Principles may be described as:
Answer
Correct Answer:
The standards used in preparing financial statements.
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516. Prepaid rent can be found on which part of the balance sheet
Answer
Correct Answer:
Current assets
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517. How frequently should the 10-Q be filed for a public company?
Answer
Correct Answer:
Quarterly
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518. Net income =
Answer
Correct Answer:
Revenues - Expenses
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519. The statement of cash flows contains certain components of both the income statement and the balance sheet.
Answer
Correct Answer:
True
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520. What does the acronym EBITDA mean?
Answer
Correct Answer:
Earnings Before Interest, Tax, Depreciation and Amortization
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521. The listing of all of the accounts available for use in a company's accounting system is known as the ?
Answer
Correct Answer:
Chart of accounts
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522. Which reports allow the interested party to evaluate the profitability of a business?
Answer
Correct Answer:
all of these
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523. What type of account Is Rent Payable?
Answer
Correct Answer:
Liability
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524. Under which category is Mortgage Payable?
Answer
Correct Answer:
Long-term Liabilites
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525. What is the definition of LIFO for inventory valuation purposes?
Answer
Correct Answer:
It is assumed that items purchased last are sold first.
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526. What is interest payable considered?
Answer
Correct Answer:
Liability, Expense
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527. At January 1, 2010, the balance of equity was $200,000. During the year of 2010, revenue and expenses were as follows: Revenue = $300,000; Expenses = $240,000. What is the balance of equity at December 31, 2010?
Answer
Correct Answer:
$260,000
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528. What is taxes payable considered?
Answer
Correct Answer:
Liability
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529. If the accountant forgets to record salary expense in the Statement of Income, what is the result?
Answer
Correct Answer:
Net income is too high.
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530. What is the FISH inventory method?
Answer
Correct Answer:
first-in, still-here
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531. Trademarks are an example of:
Answer
Correct Answer:
Intangible assets
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532. When a bond is sold at par, what price is it sold for?
Answer
Correct Answer:
Face value
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533. Goodwill is an example of:
Answer
Correct Answer:
An intangible asset
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534. What is an example of an item that would be included in calculating comprehensive income?
Answer
Correct Answer:
All of these
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535. Property is listed under which category?
Answer
Correct Answer:
Asset
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536. What is long-term debt considered?
Answer
Correct Answer:
Liability
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537. Accounting firms generally do many things including:
Answer
Correct Answer:
All of these
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538. What does LIFO stand for?
Answer
Correct Answer:
Last in, first out
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539. What account group does 'accounts receivable' belong?
Answer
Correct Answer:
Asset
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540. what is IAS?
Answer
Correct Answer:
International accounting standards
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541. ______ consist of assets that a retail or wholesale company acquires for resale or goods that manufacturers produce for sale.
Answer
Correct Answer:
inventories
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542. Common stock is recorded where on the financial statements?
Answer
Correct Answer:
In stockholders’ equity.
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543. Which of the following gives the correct sequence of accounting procedures?
Answer
Correct Answer:
Journal, ledger, trial balance, and financial statements.
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544. Financial accounting relies on which of the following concepts?
Answer
Correct Answer:
all of these
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545. Standard costing typically includes which of the following costs?
Answer
Correct Answer:
All of these
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546. Corporations whose stock is publicly traded must have their financial statements ________ by independent certified public accountants.
Answer
Correct Answer:
audited
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547. Cash balance is found in which section of the financial statements?
Answer
Correct Answer:
Current Assets
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548. Large corporations must follow the ___________ basis of accounting.
Answer
Correct Answer:
accrual
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549. What is the definition of posting in the accounting cycle?
Answer
Correct Answer:
Posting activity moves balances of journal entries to ledger accounts
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550. You have received cash but have not provided a service, which account should be used to record this?
Answer
Correct Answer:
Unearned Revenue
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551. What is an example of a current liability?
Answer
Correct Answer:
Accounts Payable
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552. Companies registered with the Securities and Exchange Commission are required to have their financial statements audited by an external auditor.
Answer
Correct Answer:
True
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553. By law, who is the only person qualified to sign an audit report?
Answer
Correct Answer:
CPA licensed individual only
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554. Financial accounting serves the following purposes:
Answer
Correct Answer:
All of the Above
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555. Which of the following sections would you find on a balance sheet?
Answer
Correct Answer:
liabilities
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556. What must one do to record transactions?
Answer
Correct Answer:
all of these
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557. A copyright is an example of:
Answer
Correct Answer:
An intangible asset
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558. The terms 2/10, n/30 mean?
Answer
Correct Answer:
2% discount if paid within 10 days, net amount due within 30 days.
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559. How are Accounts Receivables classified on the Balance Sheet?
Answer
Correct Answer:
As an Asset
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560. If Assets = $25,000 and Liabilities = $15,000 what is the amount of equity?
Answer
Correct Answer:
$10,000
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561. The acronym for the common rules and standards that companies must follow when preparing its external financial statements is ______.
Answer
Correct Answer:
GAAP
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562. Which of the following is the correct format for the balance sheet in order of occurrence?
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563. Publicly traded companies employ _____ to audit the financial statements for their inclusion in reports to the shareholders.
Answer
Correct Answer:
CPAs
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564. What is plant (facility) considered?
Answer
Correct Answer:
Asset
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565. If Assets = $25,000 and Liabilities = $35,000 what is the amount of equity?
Answer
Correct Answer:
-($10,000)
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566. What is a patent considered?
Answer
Correct Answer:
Intangible Asset
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567. What is preferred stock considered?
Answer
Correct Answer:
Shareholder Equity
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568. Franchise Licenses are an example of:
Answer
Correct Answer:
Intangible assets
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569. What is the best definition for Salvage value?
Answer
Correct Answer:
The estimated value that an asset will realize upon its sale at the end of its useful life
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570. To what account group does 'cash on hand' belong?
Answer
Correct Answer:
Asset
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571. Under US GAAP, what constitutes an audit?
Answer
Correct Answer:
An examination of the financial reports to ensure that they represent what they claim and conform with GAAP.
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572. What does CPA stand for?
Answer
Correct Answer:
Certified Public Accountant
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573. The end product for an income statement is:
Answer
Correct Answer:
Net income or net loss
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574. Realized revenue means a transaction where goods and services are exchanged for cash or claims to cash.
Answer
Correct Answer:
True
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575. Once a discontinued operation is disposed of, the gain or loss can be disclosed in the notes to the financial statements
Answer
Correct Answer:
True
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576. What is the definition of Current Liabilities?
Answer
Correct Answer:
Liabilities that are expected to liquidate within a year or normal operating cycle, whichever is longer
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577. Tangible, long lived assets used in the operations of the business are classified as ____.
Answer
Correct Answer:
property, plant, and equipment
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578. What is a journal?
Answer
Correct Answer:
both of these
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579. Which of the following is the Control Account?
Answer
Correct Answer:
All of the listed accounts are Control Accounts
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580. What does FIFO stand for?
Answer
Correct Answer:
First in, First out
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581. What is Goodwill in financial reporting?
Answer
Correct Answer:
Goodwill is an Asset account. When a company is purchased for more than the assets are worth the off setting account is called Goodwill.
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582. What is the bottom line of an income statement?
Answer
Correct Answer:
Company's net earnings or losses
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583. Why are standard cost amounts not always equal to the actual cost amounts?
Answer
Correct Answer:
Standard cost is expected cost, actuals can be different.
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584. What is the definition of FIFO for inventory valuation purposes?
Answer
Correct Answer:
It is assumed that items purchased first are sold first.
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585. Which types of entities are considered "flow through" entities?
Answer
Correct Answer:
All of these
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586. As found on an income statement, revenue can best be defined as:
Answer
Correct Answer:
Gross receipts earned by the company selling its goods or services
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587. On the cash flow statement, buying of a stock is found in the _________ section.
Answer
Correct Answer:
Investing
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588. What is NOT one of the sections of the Cash Flow statement?
Answer
Correct Answer:
Cash flows from shareholder contribution
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589. Payments made to the shareholders of a corporation for profit are called:
Answer
Correct Answer:
Distributions or Dividends
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590. An ordinary share dividend is:
Answer
Correct Answer:
Part of the company profits used to reward the shareholders for their investment
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591. Which of the following is a category or element of the balance sheet?
Answer
Correct Answer:
Liabilities
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592. Which is an example of a Current Asset?
Answer
Correct Answer:
Cash or Bank Balance
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593. The financial statement that reports the assets, liabilities, and stockholders' (owner's) equity at a specific date is the
Answer
Correct Answer:
Balance Sheet
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594. What is the difference between the accounts 'rent receivable' and 'rent revenue'?
Answer
Correct Answer:
'Rent receivable' is a balance sheet asset account and 'Rent revenue' is an income statement account
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595. Standard costing is usually associated with:
Answer
Correct Answer:
Manufacturing cost of product
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596. What is the best definition of Retained earnings?
Answer
Correct Answer:
The remaining balance of Net Income after dividends have been subtracted.
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597. Which of these is NOT an intangible asset?
Answer
Correct Answer:
Equipment
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598. Which of the following is considered an internal user of financial information?
Answer
Correct Answer:
Board of Directors
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599. Which of these is NOT a tangible asset?
Answer
Correct Answer:
Trademarks
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600. Equity can be best defined as the amount of ownership left in the business after deducting total liabilities from total assets.
Answer
Correct Answer:
True
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601. What is the best definition of Paid-in capital?
Answer
Correct Answer:
The amount shareholders contributed to the company in exchange for the shares of common stock or preferred stock less stated par value of the securities
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602. What is considered a current asset?
Answer
Correct Answer:
Accounts Receivable
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603. Mergers and acquisitions are covered under which accounting concept?
Answer
Correct Answer:
Business Combinations
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604. What is short-term debt considered?
Answer
Correct Answer:
Liability
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605. On the cash flow statement, buying of a bond is found in the _________ section.
Answer
Correct Answer:
Investing
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606. Why is an increase in inventory shown as a negative amount in the statement of cash flows?
Answer
Correct Answer:
An increase in inventory indicates that a company has purchased more goods than it has sold. Increasing inventory requires a cash outflow. Cash outflows have a negative effect on the company’s cash balance.
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