Question 1

Which of the following misstatements would cause the asset turnover ratio to be overstated?

Accepted Answer

A)  Misclassifying an expense as an asset.
B)  Failing to adjust the unearned revenue account for amounts earned.
C)  Failing to accrue interest on a loan payable to the bank.
D)  Failing to accrue rent earned for the current period.E) All of the above
F) None of the above

Question 2

A net profit margin ratio of 0.2 means that $1 of profit is generated for every $5 of sales revenue.

Accepted Answer

A) True 
 B)False

Question 3

An audit report expressing an unqualified opinion is generally desired by the company presenting its financial statements.

Accepted Answer

A) True 
 B)False

Question 4

Company A has liabilities of $6,773,000 and stockholders' equity of $3,647,000 at the end of the current year,and sales revenue of $9,800,000 and net income of $899,080 for the year.Company B has assets of $1,680,000 and stockholders' equity of $978,750 at the end of the current year,and sales revenue of $1,950,000 and net income of $351,000 for the year.
A.Calculate the debt-to-assets and net profit margin ratios for each company.
B.Which company has greater financing risk?
C.Which company generates more profit per dollar of sales?

Accepted Answer

The answer of Company A has liabilities of $6,773,000 and...

Question 5

The financial results for a public company are generally first reported in a:

Accepted Answer

A)  press release issued one day after the accounting period ends.
B)  press release issued on the same day as the quarterly or annual report.
C)  quarterly or annual report issued a week or two after the accounting period ends.
D)  press release issued a few weeks after the accounting period ends.E) All of the above
F) None of the above

Question 6

When calculating a ratio that uses period data and point-in-time data,analysts typically use the:

Accepted Answer

A)  average value for the period data.
B)  starting point for the point-in-time data.
C)  ending point for the period data.
D)  average value for the point-in-time data.E) A) and B)
F) All of the above

Question 7

Accounting information serves a governance function when it is used by:

Accepted Answer

A)  managers to make a business decision.
B)  government officials to regulate the business and its financial records.
C)  directors to oversee the business.
D)  analysts to vote on company policies.E) A) and D)
F) A) and C)

Question 8

Which of the following is not one of the four main external users of financial statements?

Accepted Answer

A)  Creditors
B)  Investors
C)  Government
D)  ManagersE) A) and C)
F) A) and B)

Question 9

Which of the following entries would be found on a statement of stockholders' equity?

Accepted Answer

A)  Net loss is subtracted from contributed capital.
B)  Shares of stock issued are added to retained earnings.
C)  Dividends are subtracted from contributed capital.
D)  Repurchased shares are subtracted from contributed capital.E) B) and C)
F) A) and D)

Question 10

The asset turnover ratio for 2014 is closest to:

Accepted Answer

A)  3.80
B)  4.67
C)  4.19
D)  3.23E) B) and D)
F) A) and B)

Question 11

Using information in the income statement and balance sheets below,determine the missing amounts.Calculate the debt-to-assets ratio as of December 31,2014.Calculate the asset turnover ratio and the net profit margin ratio for the year 2014.

Accepted Answer

The answer of Using information in the income statement and...

Question 12

An accumulated deficit would appear in which financial statements?

Accepted Answer

A)  The balance sheet and the income statement.
B)  The income statement and the retained earnings statement.
C)  The balance sheet and the statement of stockholders' equity statement.
D)  The income statement and the statement of stockholders' equity.E) A) and B)
F) None of the above

Question 13

What would happen to asset turnover if additional assets were acquired at the end of 2015 for $2,000 on account?

Accepted Answer

A)  Asset turnover would decrease.
B)  Asset turnover would increase.
C)  Asset turnover may increase or decrease depending on whether the company had net income or a net loss.
D)  Asset turnover would not change.E) A) and C)
F) All of the above

Question 14

Which of the following misstatements would cause the debt-to-assets ratio to be overstated?

Accepted Answer

A)  Recording costs as assets that should have been expensed.
B)  Failing to adjust for depreciation in the current period.
C)  Failing to accrue income taxes of the current period.
D)  Failing to accrue interest earned of the current period.E) A) and B)
F) A) and C)

Question 15

The asset turnover ratio measures:

Accepted Answer

A)  the profit generated by efficient management of assets.
B)  the level of financing risk assumed by the company.
C)  the sales revenue generated by efficient management of assets.
D)  the ability to earn profit for the stockholders.E) A) and D)
F) A) and B)

Question 16

Multiple-step income statements separate core results from peripheral results.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is true?

Accepted Answer

A)  The debt-to-assets ratio requires only information found on the balance sheet.
B)  The net profit margin ratio requires only information found on the balance sheet.
C)  The asset turnover ratio requires only information found on the income statement.
D)  The debt-to-assets ratio and the asset turnover ratio are used to evaluate profitability of the company.E) B) and D)
F) B) and C)

Question 18

Which of the following would NOT be true regarding financial statements prepared using IFRS versus U.S.GAAP?

Accepted Answer

A)  The order of current and noncurrent assets differs.
B)  The order of total liabilities and total stockholders' equity differs.
C)  The financial statements have different titles.
D)  Within the current classification,there is no difference between the order in the presentation using IFRS versus U.S.GAAP.E) B) and C)
F) A) and C)

Question 19

The debt-to-assets ratio for 2014 and 2015 are closest to:

Accepted Answer

A)  Option A
B)  Option B
C)  Option C
D)  Option DE) All of the above
F) A) and B)

Question 20

When auditors conclude that a company's financial statements conform to GAAP,the audit report is said to be:

Accepted Answer

A)  validated.
B)  qualified.
C)  relevant.
D)  unqualified.E) B) and D)
F) A) and B)

Exam 5: Financial Reporting and Analysis

Correct Answer
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What would happen to asset turnover if additional assets were acquired at the end of 2015 for $2,000 on account?

Correct Answer
verified

Accounting information serves a governance function when it is used by:

Correct Answer
verified

The asset turnover ratio for 2014 is closest to:

Correct Answer
verified

Which of the following would NOT be true regarding financial statements prepared using IFRS versus U.S.GAAP?

Correct Answer
verified

A net profit margin ratio of 0.2 means that $1 of profit is generated for every $5 of sales revenue.

Correct Answer
verified

An audit report expressing an unqualified opinion is generally desired by the company presenting its financial statements.

Correct Answer
verified

Using information in the income statement and balance sheets below,determine the missing amounts.Calculate the debt-to-assets ratio as of December 31,2014.Calculate the asset turnover ratio and the net profit margin ratio for the year 2014.

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

The debt-to-assets ratio for 2014 and 2015 are closest to:

Correct Answer
verified

When calculating a ratio that uses period data and point-in-time data,analysts typically use the:

Correct Answer
verified

The financial results for a public company are generally first reported in a:

Correct Answer
verified

Which of the following entries would be found on a statement of stockholders' equity?

Correct Answer
verified

Which of the following misstatements would cause the debt-to-assets ratio to be overstated?

Correct Answer
verified

Which of the following is not one of the four main external users of financial statements?

Correct Answer
verified

The asset turnover ratio measures:

Correct Answer
verified

Which of the following misstatements would cause the asset turnover ratio to be overstated?

Correct Answer
verified

Multiple-step income statements separate core results from peripheral results.

Correct Answer
verified

When auditors conclude that a company's financial statements conform to GAAP,the audit report is said to be:

Correct Answer
verified

An accumulated deficit would appear in which financial statements?

Correct Answer
verified

Exam 5: Financial Reporting and Analysis

Correct AnswerverifiedShow Answer

What would happen to asset turnover if additional assets were acquired at the end of 2015 for $2,000 on account?

Correct AnswerverifiedShow Answer

Accounting information serves a governance function when it is used by:

Correct AnswerverifiedShow Answer

The asset turnover ratio for 2014 is closest to:

Correct AnswerverifiedShow Answer

Which of the following would NOT be true regarding financial statements prepared using IFRS versus U.S.GAAP?

Correct AnswerverifiedShow Answer

A net profit margin ratio of 0.2 means that $1 of profit is generated for every $5 of sales revenue.

Correct AnswerverifiedShow Answer

An audit report expressing an unqualified opinion is generally desired by the company presenting its financial statements.

Correct AnswerverifiedShow Answer

Using information in the income statement and balance sheets below,determine the missing amounts.Calculate the debt-to-assets ratio as of December 31,2014.Calculate the asset turnover ratio and the net profit margin ratio for the year 2014.

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

The debt-to-assets ratio for 2014 and 2015 are closest to:

Correct AnswerverifiedShow Answer

When calculating a ratio that uses period data and point-in-time data,analysts typically use the:

Correct AnswerverifiedShow Answer

The financial results for a public company are generally first reported in a:

Correct AnswerverifiedShow Answer

Which of the following entries would be found on a statement of stockholders' equity?

Correct AnswerverifiedShow Answer

Which of the following misstatements would cause the debt-to-assets ratio to be overstated?

Correct AnswerverifiedShow Answer

Which of the following is not one of the four main external users of financial statements?

Correct AnswerverifiedShow Answer

The asset turnover ratio measures:

Correct AnswerverifiedShow Answer

Which of the following misstatements would cause the asset turnover ratio to be overstated?

Correct AnswerverifiedShow Answer

Multiple-step income statements separate core results from peripheral results.

Correct AnswerverifiedShow Answer

When auditors conclude that a company's financial statements conform to GAAP,the audit report is said to be:

Correct AnswerverifiedShow Answer

An accumulated deficit would appear in which financial statements?

Correct AnswerverifiedShow Answer

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