accounting review - chapter 2
Which of the following statements is true? A. Net income is not adjusted when computing earnings per share. B. By comparing earnings per share of a single corporation over time, a stockholder can evaluate the corporation's relative earnings performance. C. Earnings per share is an internal measure and is not used by stockholders. D. The denominator used in computing earnings per share represents the shares of common stock outstanding on the last day of the accounting period.
B. By comparing earnings per share of a single corporation over time, a stockholder can evaluate the corporation's relative earnings performance.
Which of the following is generally not classified as a current liability? A. Salaries and Wages Payable B. Accounts Payable C. Taxes Payable D. Bonds Payable
D. Bonds Payable
consistency
a company's use of the same accounting principles and methods from year to year
Comparibility
ability to easily evaluate one company's results relative to another's
going concern
belief that a company will continue to operate for the foreseeable future
interest payable
current liability
salaries and wages payable
current liability
unearned service revenue
current liability
goodwill
intangible assets
investment in real estate
long term investment
mortgage payable (due in 3 years)
long term liability
depreciation expense
not on balance sheet
service revenue
not on balance sheet
accumulated depreciation
property, plant, and equipment
equipment
property, plant, and equipment
monetary unit
reporting only those things that can be measured in dollars
retained earings
stockholders equity
Cash, and other resources that are reasonably expected to be realized in cash or sold or consumed in the business within one year or the operating cycle, are called: A. Current assets. B. Intangible assets. C. Long-term investments. D. Property, plant, and equipment.
A. Current Assets
In which balance sheet section would trademarks be reported? A. Intangible assets B. Investments C. Property, plant, and equipment D. Current assets
A. Intangible Assets
The two fundamental qualities of useful information are A. relevance and faithful representation. B. verifiability and timeliness. C. comparability and flexibility. D. understandability and consistency.
A. relevance and faithful representation.
The convention of consistency refers to consistent use of accounting principles A. among firms. B. from period to period. C. throughout the current accounting period. D. within industries.
B. from period to period.
The agency of the United States Government that oversees the U.S. financial markets is the A. International Auditing Standards Committee. B. Internal Revenue Service. C. Security Exchange Commission. D. Financial Accounting Standards Board.
C. Security Exchange Commission.
What is the primary criterion by which accounting information can be judged? A. Consistency B. Predictive value C. Usefulness for decision making D. Comparability
C. Usefulness for decision making
On a classified balance sheet, companies usually list current assets A. in alphabetical order. B. with the largest dollar amounts first. C. in the order in which they are expected to be converted into cash. D. in the order of acquisition.
C. in the order in which they are expected to be converted into cash.
The information needed to determine if companies can pay their current obligations is the A. net income for this year. B. projected net income for next year. C. relationship between current assets and current liabilities. D. relationship between short-term and long-term liabilities.
C. relationship between current assets and current liabilities.
Which accounting assumption assumes that an enterprise will continue in operation long enough to carry out its existing objectives and commitments? A. Monetary unit assumption B. Economic entity assumption C. Periodicity assumption D. Going concern assumption
D. Going concern assumption
Free cash flow represents A. cash provided by operations less adjustments for capital expenditures and dividends. B. a measurement of a company's cash generating ability. C. a measure of solvency. D. all of these answer choices are correct.
D. all of these answer choices are correct.
In a classified balance sheet, assets are usually classified as A. current assets; long-term assets; property, plant, and equipment; and intangible assets. B. current assets; long-term investments; property, plant, and equipment; and common stocks. C. current assets; long-term investments; tangible assets; and intangible assets. D. current assets; long-term investments; property, plant, and equipment; and intangible assets.
D. current assets; long-term investments; property, plant, and equipment; and intangible assets.
Most companies that follow IFRS present balance sheet (statement of financial position) information in this order. A. current assets; investments; property; plant and equipment; intangible assets; current liabilities; long-term liabilities; owners' equity. B. intangible assets; property; plant and equipment; investments; current assets; current liabilities; owners' equity; long-term liabilities. C. current assets; noncurrent assets; current liabilities; noncurrent liabilities; equity. D. noncurrent assets; current assets; equity; noncurrent liabilities; current liabilities.
D. noncurrent assets; current assets; equity; noncurrent liabilities; current liabilities.
historical cost
belief that items should be reported on the balance sheet at the price that was paid to acquire them
debt investments (short term)
current asset
faithful representation
the desire to minimize errors and bias in financial statements
materiality
the judgement concerning whether an item is large enough to matter to decision-makers
periodicity
the practice of preparing financial statements at regular intervals
relavance
the quality of information that indicates the information makes a difference in a decision
full disclosure
the reporting of all information that would make a difference to financial statement users
economic entity
tracing accounting events to particular companies
