ACCT 3311 - Ch. 5
Supplemental balance sheet information that addresses material events with uncertain outcomes is referred to as a. contingencies. b. fair values. c. accounting policies. d. contractual situations.
a
Which of the following statements regarding the statement of cash flows is incorrect? a. Due to its format and level of detail, most individuals have difficulty comprehending the information reported in the statement of cash flows. b. The income statement, the statement of stockholders' equity, and the balance sheet each present some information about the cash flows of an enterprise during a period. c. The statement of cash flows presents a detailed summary of all the cash inflows and outflows, or the sources and uses of cash during the period. d. The statement of cash flows reports the following: (1) the cash effects of operations during a period, (2) investing transactions, (3) financing transactions, and (4) the net increase or decrease in cash during the period.
a
If additional explanations cannot be conveniently shown as parenthetical explanations, the information should be disclosed by: a. cross reference. b. notes. c. supporting schedules. d. a contra account.
b
Monroe Enterprises uses IFRS and has property and equipment on an historical cost basis of $1,000,000. At the end of the year, Monroe appraises its property and equipment and determines it has a revaluation increase of $110,000. Which of the following statements is correct? a. Under IFRS, Monroe cannot record the revaluation increase. b. Under IFRS, Monroe records the revaluation increase with increases to property and equipment and a valuation reserve in equity. c. Under IFRS, Monroe records the revaluation increase by increasing property and equipment and increasing a gain that will be reported on the income statement in the current year. d. Under IFRS, Monroe records the revaluation increase with a decrease to a valuation reserve in equity and an increase to a contra asset account.
b
Which of the following is not a type of information that is supplemental to amounts presented in the balance sheet? A. Accounting policies. B. Balance sheet format. C. Contingencies. D. Contractual situations.
b
Which of the following would be added back to net income in the operating activities section of the statement of cash flows? a. Payment of a cash dividend. b. Increase in accounts payable. c. Gain on sale of equipment. d. Increase in inventory.
b
Companies are not required to disclose information about: A. inventory cost flow methods. B. depreciation methods. C. the identity of all stockholders. D. the use of estimates.
c
Net cash provided by operating activities divided by average current liabilities is the formula to compute: a. financial flexibility. b. cash debt coverage ratio. c. current cash debt coverage ratio. d. free cash flow.
c
The balance sheet format listing liabilities and stockholders' equity directly below assets is called the: A. account form. B. financial position form. C. report form. D. solvency form.
c
__________________ ratios measure the degree of success or failure of a given company or division for a given period of time. a. Coverage b. Activity c. Profitability d. Liquidity
c
current assets
cash and other assets expected to be converted into cash, sold, or consumed either in one year or in the operating cycle, whichever is longer
All of the following are stockholders' equity sections reported in the balance sheet except: A. additional paid-in-capital. B. capital stock. C. retained earnings. D. dividends.
d
All of the following would be classified as current liabilities at December 31, 2012 except: A. accrued warranty costs. B. advances received from customers. C. current portion of long-term debt. D. note payable due January 1, 2014.
d
The balance sheet format listing liabilities and stockholders' equity directly below assets is called the: a. solvency form. b. financial position form. c. account form. d. report form.
d
The cash effects of transactions that enter into the determination of net income are a. financing activities. b. investing activities. c. income activities. d. operating activities.
d
Which of the following investments should always be reported as current assets? A. Available-for-sale securities. B. Held-to-maturity securities. C. Long-term investments. D. Trading securities.
d
valuations and accounting policies
explanations of the valuation methods used or the basic assumptions made concerning inventory valuations, depreciation methods, investments in subsidiaries, etc.
Current assets are presented in the balance sheet in order of ______________.
liquidity
contingencies
material events that have an uncertain future
long-term liabilities
obligations that are not reasonably expected to be liquidated within a year or the normal operating cycle, whichever is longer, but instead, are payable at some date beyond that time
current liabilities
obligations that are reasonably expected to be liquidated either through the use of current assets or the creation of other current liabilities within the longer of 1 year or the operating cycle
solvency
the ability of an enterprise to pay its debts as they mature
financial flexibility
the ability of an enterprise to take effective actions to alter the amounts and timing of cash flows so it can respondto unexpected needs and opportunities
liquidity
the amount of time that is expected to elapse until an asset is realized or otherwise converted into cash or untila liability has to be paid
retained earnings
the corporation's undistributed earnings
additional paid-in capital
the excess of amounts paid in over the par or stated value
working capital
the excess of total current assets over total current liabilities
capital stock
the par or stated value of the shares issued
