ACC111 - Financial Accounting 1

Which of the following statements about the partnership structure is not true?

The partnership is recognized as a separate legal entity of the state.

The most significant accounting implication of having multiple owners/partners is?

keeping individual capital accounts for each owner

The partnership and proprietorship structures differ mainly in that...

the partnership will have multiple owners

Which of the following does not accurately discuss the debt to equity ratio?

Communicates company's ability to pay interest on borrowed funds

Which of the following does not accurately discuss horizontal analysis?

Compares changes in reporting based on a line item within the income statement or balance sheet

Which of the following statements about vertical analysis is not true?

Compares financial reporting results over multiple periods of operations

Market ratios can answer all the following except...

How well the company has rewarded investment in prior accounting periods

Which of the following statements does not accurately discuss the impact of new ownership in a partnership structure?

Operations will cease until the new agreement has been approved by the state

Where can we find the information that establishes percentage of ownership and allocation of earnings to partners?

Partnership Agreement

Which of the following types of ratios relate to the company's ability to effectively use its assets to generate revenue?

Profitability Ratio

Which of the following would not be a benefit of ratio analysis?

Reliability for forecasting use as it does not account for operational or cost changes

When financial statements are converted to percentages, they are referred to as?

Common size financial statements

The evaluation of a corporation's financial performance based on the restatement of financial reporting dollar amounts as percentages is referred to as?

Trend Analysis

In addition to results of application of ratio analysis, which of the following considerations/comparisons would be relevant to gaining additional, useful insight into performance?

All of the Above

Which of the following is not an example of a liquidity ratio?

Debt to Equity Ratio

Assume Larry, Moe, and Curly each own 33.33 % of a general partnership. The partnership shows $126,000 in net income for the 2018 year. Which of the following statements is true?

Larry, Moe, and Curly will each report $42,000 of taxable income on their personal tax returns (126,000*33.33%=42,000)

Which of the following types of ratios would help communicate how well a company can meet its current liabilities?

Liquidity ratios

Which of the following types of ratios relate to the relationship of company assets among creditors and shareholder/owners?

Leverage Ratios

Which of the following does not accurately describe the acid test ratio?

Tells us how many times the company can meet its current liabilities with all current asset in consideration

Assume the following partnership scenario: Alfalfa (50%), Darla (25), Spanky (12.5%) and Stymie (12.5%) share ownership in their company. Upon establishing this company, the following details capital contribution; Alfalfa contributed 40% of capital, Darla contributed 30% of capital, and Spanky and Stymie each contributed 15% of capital. Assuming that earnings are allocated based on the contribution base method, how would the annual earnings of $78,000 be distributed?

$31,200 increases Alfalfa's capital account. $23,400 increases Darla's capital account. Spanky and Stymie's capital accounts are each increased by $11,700. (78,000*40%=31,200; 78,000*30%=23,400; 78,000*15%=11,700)

Assume the following partnership scenario: Alfalfa (50%), Darla (25), Spanky (12.5%) and Stymie (12.5%) share ownership in their company. Upon establishing this company, the following details capital contribution; Alfalfa contributed 40% of capital, Darla contributed 30% of capital, and Spanky and Stymie each contributed 15% of capital. Assuming that earnings are allocated based on % of ownership, how would the annual earnings of $78,000 be distributed?

Alfalfa's capital account increases by $39,000. Darla's capital account increases by $19,500. Spanky and Stymie's capital accounts each increase by $9,750. (78,000*50%=39,000; 78,000*25%=19,500; 78,000*12.5%=9,750)