Question 1

Mitchell Corporation has current assets of $1,600,000 million and current liabilities of $750,000. If they pay $250,000 of their accounts payable what will their new current ratio be?

Accepted Answer

A)   2.7:1
B)   3.2:1
C)   1.69:1
D)   2.1:1E) B) and D)
F) B) and C)

Question 2

Which of the following is the least likely consideration that management uses when deciding whether to pay a dividend?

Accepted Answer

A)   Does the company have more cash than it has opportunities?
B)   Is the company's average number of common shares outstanding decreasing?
C)   Does the company have uses for cash that will increase its value?
D)   What are the company's cash needs?E) A) and B)
F) A) and C)

Question 3

Revenues have the effect of increasing retained earnings.

Accepted Answer

A) True 
 B)False

Question 4

These items are taken from the financial statements of Donovan Company. at December 31, 2014.  Instructions
Prepare a classified balance sheet. Assume that $13,600 of the mortgage payable will be paid in 2015.

Accepted Answer

The answer of These items are taken from the financial...

Question 5

A liquidity ratio measures the

Accepted Answer

A)   income or operating success of a company over a period of time.
B)   ability of a company to survive over a long period of time.
C)   short-term ability of a company to pay its maturing obligations and to meet unexpected needs for cash.
D)   percentage of total financing provided by creditors.E) B) and C)
F) A) and D)

Question 6

Which of the following would not be classified as a long-term liability?

Accepted Answer

A)   Current maturities of long-term debt
B)   Bonds payable
C)   Mortgage payable
D)   Lease liabilitiesE) None of the above
F) A) and B)

Question 7

Identify and briefly explain the two fundamental qualities of useful information.

Accepted Answer

Relevance and faithful representation ar...

Question 8

Cash and supplies are both classified as current assets.

Accepted Answer

A) True 
 B)False

Question 9

Different companies using the same accounting principles is an application of

Accepted Answer

A)   consistency.
B)   materiality.
C)   full disclosure.
D)   comparability.E) B) and D)
F) B) and C)

Question 10

The following information is available for Cooke Corporation:  What is the cash and equivalents amount at year-end?

Accepted Answer

A)   $1,290
B)   $730
C)   $1,830
D)   $2,730E) None of the above
F) A) and B)

Question 11

The following information is available for Bradshaw Corporation and Newell Corporation:  Based on the information for both Bradshaw and Newell over the two-year period, the earnings per share calculations (rounded to two decimals)  indicate that

Accepted Answer

A)   Bradshaw is seeing a greater performance improvement than Newell.
B)   the earnings available to common stockholders is decreasing for Newell and increasing for Bradshaw.
C)   the earnings per share calculations for both companies assume that changes in shares between 2013 and 2014 occur in the middle of the year.
D)   Newell is more financially stable than Bradshaw.E) A) and B)
F) A) and C)

Question 12

Using the following balance sheet and income statement data, what is the total amount of working capital?  Average common shares outstanding was 10,000.

Accepted Answer

A)   $7,000
B)   $5,000
C)   $3,000
D)   $2,000E) A) and D)
F) B) and C)

Question 13

The retained earnings statement describes the changes in retained earnings during the period.

Accepted Answer

A) True 
 B)False

Question 14

Accounting information is relevant to business decisions because it

Accepted Answer

A)   has been verified by external audit.
B)   is prepared on an annual basis.
C)   confirms prior expectations.
D)   is neutral in its representations.E) None of the above
F) B) and C)

Question 15

Earnings available to common stockholders is equal to

Accepted Answer

A)   total revenues
B)   net income + preferred dividends.
C)   preferred dividends - net income.
D)   net income - preferred dividends.E) A) and D)
F) A) and C)

Question 16

The relationship between current assets and current liabilities is important in evaluating a company's

Accepted Answer

A)   profitability.
B)   liquidity.
C)   market value.
D)   solvency.E) C) and D)
F) None of the above

Question 17

Identify the two parts of stockholders' equity in a corporation and indicate the purpose of each.

Accepted Answer

The two parts of stockholders' equity an...

Question 18

Both IFRS and GAAP require disclosure about

Accepted Answer

A)   accounting policies followed.
B)   judgements that management has made in the process of applying the entity's accounting policies.
C)   the key assumptions and estimation uncertainty.
D)   all of the above.E) B) and C)
F) A) and C)

Question 19

The advantage of accounting information is that it provides exact and completely reliable measures.

Accepted Answer

A) True 
 B)False

Question 20

In 2014 Grider Corporation had cash receipts of $56,000 and cash disbursements of $32,000. Grider's ending cash balance at December 31, 2014 was $88,000. What was Grider's beginning cash balance?

Accepted Answer

A)   $64,000
B)   $80,000
C)   $120,000
D)   $112,000E) None of the above
F) B) and C)

Exam 2: A Further Look at Financial Statements

Cash and supplies are both classified as current assets.

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Accounting information is relevant to business decisions because it

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Different companies using the same accounting principles is an application of

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Earnings available to common stockholders is equal to

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Mitchell Corporation has current assets of $1,600,000 million and current liabilities of $750,000. If they pay $250,000 of their accounts payable what will their new current ratio be?

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The following information is available for Bradshaw Corporation and Newell Corporation: Based on the information for both Bradshaw and Newell over the two-year period, the earnings per share calculations (rounded to two decimals) indicate that

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The retained earnings statement describes the changes in retained earnings during the period.

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Which of the following would not be classified as a long-term liability?

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The relationship between current assets and current liabilities is important in evaluating a company's

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Using the following balance sheet and income statement data, what is the total amount of working capital? Average common shares outstanding was 10,000.

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In 2014 Grider Corporation had cash receipts of $56,000 and cash disbursements of $32,000. Grider's ending cash balance at December 31, 2014 was $88,000. What was Grider's beginning cash balance?

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Identify the two parts of stockholders' equity in a corporation and indicate the purpose of each.

Correct AnswerverifiedThe two parts of stockholders' equity an...View AnswerShow Answer

The following information is available for Cooke Corporation: What is the cash and equivalents amount at year-end?

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A liquidity ratio measures the

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Identify and briefly explain the two fundamental qualities of useful information.

Correct AnswerverifiedRelevance and faithful representation ar...View AnswerShow Answer

The advantage of accounting information is that it provides exact and completely reliable measures.

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Which of the following is the least likely consideration that management uses when deciding whether to pay a dividend?

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Both IFRS and GAAP require disclosure about

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Revenues have the effect of increasing retained earnings.

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These items are taken from the financial statements of Donovan Company. at December 31, 2014. Instructions Prepare a classified balance sheet. Assume that $13,600 of the mortgage payable will be paid in 2015.

Correct AnswerverifiedShow Answer

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The two parts of stockholders' equity an...
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Relevance and faithful representation ar...
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