Preassessment

1. 1What does accounting focus on?

   1. AThe impact a business's activities have on it's overall financial performance
   2. BThe impact a business's activities have on it's public image
   3. CThe impact a business's activities have on the environment
   4. DThe impact a business's activities have on it's relationships with customers
2. 2Which report summarizes cash collections and cash expenditures from operating, investing, and financing activities over a period of time?

   1. ACash receipts and disbursements sheet
   2. BSummary of cash receipts
   3. CStatement of cash flows
   4. DCash flow schedule
3. 3Which users would have a primary concern with an organization's ability to provide health care benefits?

   1. ACompetitors
   2. BSuppliers
   3. CEmployees
   4. DVendors
4. 4Which benefit does a corporation gain by following Generally Accepted Accounting Principles (GAAP)?

   1. AA decrease in its income tax obligations
   2. BAn increase in the amount of assets it reports
   3. CA decrease in the amount of net income it reports
   4. DAn increase in it's comparability to other companies
5. 5Which body regulates a certified public accounting firm's audit practices when the firm is auditing a large publicly traded company?

   1. AAnother certified public accounting (CPA) firm
   2. BThe Financial Accounting Standards Board (FASB)
   3. CThe Internal Revenue Services (IRS)
   4. DThe Public Company Accounting Oversight Board (PCAOB)
6. 6What has had the most significant impact on accounting practices?

   1. AInformation Technology
   2. BCertification requirements
   3. CMobile Computing
   4. DNew product innovations
7. 7What two items of information are revealed on the balance sheet?
   Choose 2 answers

   1. ACosts
   2. BOwnership
   3. CRevenues
   4. DExpenses
   5. EDebt
8. 8Which term is defined as the residual interest in the net assets of a company?

   1. ALiabilities
   2. BOperating income
   3. CRevenues
   4. DOwner's equity
9. 9A corporation has total liabilities of $300 million, total equity of $100 million, and current assets of $50 million.
   What is the value of the firm's long-term assets?

   1. A$250 million
   2. B$350 million
   3. C$400 million
   4. D$450 million
10. 10Which situation should result in revenue recognition on the income statement for the year ending 12/31/14 if the firm is using accrual-basis accounting?

    1. AIn 2014, a company enters into a contract whereby it agrees to provide services to a customer next year (2015).
    2. BIn 2014, a company provides services to a customer for which cash will be collected the next year (2015).
    3. CIn 2014, a company collects cash from a customer for services it will provide next year (2015).
    4. DIn 2014, a company collects cash from a customer for services it provided in the previous year (2013).

11. 11Which category on the statement of cash flows summarizes cash receipts and payments to owners and creditors of the company?

    1. ACash flows from business activities
    2. BCash flows from investing activities
    3. CCash flows from operating activities
    4. DCash flows from financing activities
12. 12Where would an investor find a summary of a company's significant accounting policies?

    1. AIn the balance sheet
    2. BIn the statement of cash flows
    3. CIn the notes to financial statements
    4. DIn the income statement
13. 13Which assurance does an external audit report provide for its readers?

    1. AThe company will generate positive cash flows
    2. BThe company will generate net income
    3. CThe company will be a good credit risk
    4. DThe company's financial statements fairly reflect its financial position
14. 14Conservatism is:

    1. AInformation related to recognizing losses as they occur
    2. BInformation that is important enough to make a difference
    3. CInformation that has to do with the matter at hand
    4. DInformation that can be verified
15. 15Material is:

    1. AInformation related to recognizing losses as they occur
    2. BInformation that is important enough to make a difference
    3. CInformation having to do with the matter at hand
    4. DInformation that can be verified
16. 16Relevant is:

    1. AInformation related to recognizing losses as they occur
    2. BInformation that is important enough to make a difference
    3. CInformation having to do with the matter at hand
    4. DInformation that can be verified
17. 17Reliable is:

    1. AInformation related to recognizing losses as they occur
    2. BInformation that is important enough to make a difference
    3. CInformation having to do with the matter at hand
    4. DInformation that can be verified
18. 18Steps in the decision cycle?
    1. [blank_start]-[blank_end]
    2. [blank_start]-[blank_end]
    3. [blank_start]-[blank_end]
    4. [blank_start]-[blank_end]
    5. [blank_start]-[blank_end]

    1. APrepare financial statements
    2. BAnalyze financial statements
    3. CGather information
    4. DMake decision
    5. EImplement decision
19. 19What does it mean if a company has a debt ration of 101.5%?

    1. AThe company has 1.5% more total liabilities than gross sales.
    2. BThe company has 1.5% more total liabilities than net income.
    3. CThe company has 1.5% more current liabilities than current assets.
    4. DThe company has 1.5% more total liabilities than total assets.
20. 20What is consistent with a continual decline in gross profit if the firm's cost of goods sold remains the same?

    1. AContinual decrease in sales
    2. BContinual increase in taxes
    3. CContinual decrease in salaries
    4. DContinual increase in interest
21. 21Which two cash flow adequacy ratios represent a cash cow?
    Choose two answers.

    1. A$5,220/$1,875
    2. B$8,091/$9,374
    3. C$4,510/$4,932
    4. D$6,991/$5,486
    5. E$7,589/$9,210
22. 22Which formula yields a cash times interest earned ratio of 11?

    1. ACash before interest and taxes of $11,000 / cash paid for income taxes of $1,000
    2. BCash before interest and taxes of $11,000 / cash paid for interest of $1,000
    3. CCash before interest and taxes of $11,000 / cash paid for acquisitions of $1,000
    4. DCash before interest and taxes of $11,000 / cash from operations of $1,000
23. 23Which form of debt should be reported in the long-term liability category?

    1. ANotes payable expected to be paid in 18 months
    2. BAccounts payable due in 30 days
    3. CSalaries payable due in 2 weeks
    4. DUnearned revenue that will be earned in 9 months
24. 24January 5
    The corporation purchased equipment to be used in the business for $200,000 cash.
    
    What will be the impact of the January 5 event on the company's balance sheet on that date?

    1. AEquipment will increase $200,000 and retained earnings will decrease $200,000
    2. BCash will decrease $200,000 and paid in capital will decrease $200,000
    3. CCash will decrease $200,000 and loan payable will decrease $200,000
    4. DEquipment will increase $200,000 and cash will decrease $200,000
25. 25January 31
    The corporation paid $6,000 cash for a one-year insurance policy. The policy period will begin on February 1, year 1.
    
    What will the impact of the January 31 event on the company's balance sheet on that date?

    1. ACash will decrease $6,000, and paid-in capital will decrease $6,000
    2. BCash will decrease $6,000, and accounts receivable will increase $6,000
    3. CPrepaid insurance will decrease $6,000, and accounts payable will decrease $6,000
    4. DPrepaid insurance will increase $6,000, and cash will decrease $6,000
26. 26Which two values affect the measurement of net income?

    1. AOperating expenses
    2. BDividends paid
    3. CStockholder contributions
    4. DOrdinary gains and losses
27. 27Which two items subtotals are included in a multi-step income statement?

    1. AIncome from operations
    2. BTotal assets
    3. CGross profit
    4. DCurrent liabilities
28. 28A furniture company using accrual accounting... Sold sofas in November and December 2011. Customers paid via contracts and paid through March 2012.
    
    The company paid $3,000 for advertising that ran in the local newspaper in November 2011.
    In which month should advertising costs be expensed?

    1. AFebruary 2012
    2. BJanuary 2012
    3. CDecember 2011
    4. DNovember 2011
29. 29On May 1, 2011, a company using accrual accounting purchased equipment costing $500,00. It expects the equipment to have a useful life of five years. At the time of purchase, the company also purchased a one-year insurance policy on this equipment, which cost $6,000.
    
    How much insurance expense should the company have recognized for the year ending in 2011?

    1. A$3,000
    2. B$4,000
    3. C$6,000
    4. D$8,000
30. 30In January of year 1, a company began doing business as a corporation in order to sell technology-related accessories and services. During it's first month of operations, it focused on obtaining the financing needed to start its operations. In February of year 1, the company sold inventory costing $25,000 for $75,000 cash.
    
    In February of year 1, the company provided technology-related services worth $10,000. Customers paid a total of $4,000 in cash for these services and promised to pay the remainder the following month.
    
    What will be the total impact of these services provided on the company's balance sheet other than an increase in cash of $4,000.
    
    Choose two answers.

    1. AAccounts receivable will decrease $6,000.
    2. BRetained earnings will increase $10,000.
    3. CRetained earnings will decrease $2,000.
    4. DRetained earnings will increase $6,000.
    5. EAccounts receivable will increase $6,000.
31. 31What was the 2012 net profit amount if the 2013 pro-forma net profit of $187,000 was based on a 22% increase?

    1. A$228,140
    2. B$182,975
    3. C$153,279
    4. D$145,860
32. 32What is a common category in a statement of cash flows?

    1. ACash from marketing activities
    2. BCash from investing activities
    3. CCash from planning activities
    4. DCash from production activities
33. 33Which cash flow category would include "cash received from investors"?

    1. ACash from charitable activities
    2. BCash from financing activities
    3. CCash from investing activities
    4. DCash from sponsoring activities
34. 34Which item is an investing activity?

    1. ACash payments for dividends
    2. BCash receipts from dividend revenue
    3. CCash receipts from issuance of stock
    4. DCash payment for purchase of plant assets
35. 35What impact does the sale of equipment have on the statement of cash flows?

    1. AIncrease in cash from investing activities
    2. BIncrease in cash from financing activities
    3. CDecrease in cash from operating activities
    4. DIncrease in cash from operating activities
36. 36What is known about the direct and indirect methods of preparing statements of cash flows?

    1. ANeither method is very popular among large U.S. Companies.
    2. BBoth methods have the same popularity among large U.S. Companies.
    3. CThe indirect method is more popular among large U.S. Companies.
    4. DThe direct method is more popular among large U.S. Companies.
37. 37A company's statement of cash flows includes the following cash transactions:
    
    Sales: 1,250,000
    Inventory purchase: -750,000
    Property and equipment purchase: -270,000
    Interest payment on long-term debt: -25,000
    Payment of wages: -315,000
    Payment of rent: -40,000
    Borrowing Long-term debt: 200,000
    Payment of cash dividends: -15,000
    Repurchase of Treasury Stock: -40,000
    
    Total Cash Flows: -5,000
    
    Assuming the company uses US GAAP standards, what is the total cash flow from financing activities?

    1. A$175,000
    2. B$160,000
    3. C$145,000
    4. D$120,000
38. 38Which two examples represent financial statement errors?

    1. AAn accounting employee overpays a supplier and receives a portion of the excess as a kickback
    2. BThe outside auditor disagrees with the amount reported as an allowance for uncollectible accounts receivable
    3. CThe accountant unintentionally records amounts as revenue that were prepaid by customers but not yet earned
    4. DThe accounting department miscalculates the payroll tax due at year-end, resulting in an inaccurate liability
39. 39Which internal control is intended to ensure that a company does not mistakenly pay a supplier for an invoice that includes more items than were actually received?

    1. AThe purchasing department authorizes the order of all items before they occur.
    2. BThe company requires two signatures on each check in order for a payment to be sent.
    3. CThe inventory department counts and inspects items as received and forwards the receiving record to accounts payable.
    4. DThe accounts payable department utilizes prenumbered checks in the payment of supplier invoices.

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Masters Accounting for Decision Makers C213 Quiz on Preassessment, created by Melissa Walker on 11/07/2016.

Author

Melissa Walker

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