Exam 3

Which of the following balance sheet formats lists the assets on the left side of the page and the liabilities and stockholders' equity on the right side? Report form. Account form. Single step form. Multiple step form

Account form

Which of the following is not one of the classifications in owners' equity? Accumulated capital. Noncontrolling interest. Retained earnings. Capital stock.

Accumulated capital.

Similarities between IFRS and U.S. GAAP requirements for balance sheet presentation include all of the following except: both generally require the use of the current/ non-current classification for both assets and liabilities. both require the preparation of financial statements annually. both require disclosure of significant accounting policies. both require that changes to the valuation reserve be disclosed in the notes to the financial statements.

Both require that changes to the valuation reserve be disclosed in the notes to the financial statements IFRS recorded as part of stockholders equity, not notes

Short-term paper with maturities of less than 3 months should be classified as cash equivalents. receivables. investments. temporary investments.

Cash equivalents.

The correct order to present current assets is cash, accounts receivable, prepaid items, inventories. cash, inventories, prepaid items, accounts receivable. cash, accounts receivable, inventories, prepaid items. cash, inventories, accounts receivable, prepaid items

Cash, accounts receivable, inventories, prepaid items.

Supplemental balance sheet information that addresses material events with uncertain outcomes is referred to as accounting policies. contingencies. contractual situations. fair values.

Contingencies.

Companies use a ____________ to show a direct relationship between an asset and a liability on the balance sheet? cross-reference note parenthetical explanation supporting schedule

Cross-reference

T/F The balance sheet is sometimes referred to as the Statement of Net Resources.

False, Statement of Financial Position

T/F Money market savings certificates and certificates of deposit (CDs) are classified as cash.

False, temporary investments

Payment of dividends would come under which activity on the statement of cash flows? Financing. Operating. Investing. None of these answer choices are correct

Financing

Borrowing money from creditors and repaying the amounts borrowed are operating activities. liquidity activities. financing activities. investing activities

Financing activities

Current assets under IFRS are listed generally: by importance. in the reverse order of their expected conversion to cash. by longevity. alphabetically.

In the reverse order of their expected conversion to cash.

Activities that involve the cash effects of making and collecting loans and acquiring and disposing of property, plant, and equipment are classified as: financing activities. noncash activities. investing activities. operating activities.

Investing activities

Which of the following is not included in the summary of significant accounting policies? Inventory cost flow assumption. Length of operating cycle. Depreciation methods. Valuation method for investments.

Length of operating cycle

Companies that use IFRS: may report all their assets on the statement of financial position at fair value. are not allowed to net assets (assets − liabilities) on their statement of financial positions. may report non-current assets before current assets on the statement of financial position. do not have any guidelines as to what should be reported on the statement of financial position

May report non-current assets before current assets on the statement of financial position.

Which of the following is included in an owners' equity section reported in the balance sheet? Dividends. Noncontrolling interest. Accumulated capital. Working capital.

Noncontrolling interest.

If additional explanations cannot be conveniently shown as parenthetical explanations, the information should be disclosed by: a contra account. cross reference. notes. supporting schedules.

Notes

Major limitations of the balance sheet include all of the following except: it necessarily omits many items that are of financial value but cannot be recorded objectively. only amounts known with absolute certainty are reported. judgments and estimates are used to determine many of the items reported. most assets and liabilities are reported at historical cost.

Only amounts known with absolute certainty are reported.

Receipt of interest from a Note Receivable would be reported as a cash inflow in which of the following sections: financing activities. operating activities. investing activities. stock activities

Operating activities

The cash effects of transactions that enter into the determination of net income are operating activities. financing activities. investing activities. income activities.

Operating activities.

The balance sheet is useful for analyzing all of the following except solvency. liquidity. profitability. financial flexibility

Profitability

The balance sheet format listing liabilities and stockholders' equity directly below assets is called the: financial position form. report form. solvency form. account form.

Report form

Which of the following are acceptable balance sheet formats? Multiple step form and account form. Condensed form and multiple step form. Condensed form and report form. Report form and account form.

Report form and account form.

Both IFRS and GAAP list current assets in reverse order of liquidity. use the term "reserve". require presentation of noncontrolling interests in the equity section of the balance sheet. use "Share capital - ordinary" in the shareholders' equity section.

Require presentation of noncontrolling interests in the equity section of the balance sheet.

Which of the following investments should always be reported as current assets? Long-term investments. Trading securities. Available-for-sale securities. Held-to-maturity securities.

Trading securities

___________ is/are treated as receivables if collected from employees or deducted from their salaries. Short-term paper Travel advances Petty cash Bank overdrafts

Travel advances

T/F Companies frequently use judgments and estimates in valuing items on the balance sheet.

True

T/F Liquidity refers to the amount of time that is expected to elapse until a liability has to be paid.

True

The statement of cash flows provides answers to all of the following questions except What was the cash used for during the period? What is the impact of inflation on the cash balance at the end of the year? What was the change in the cash balance during the period? Where did the cash come from during the period?

What is the impact of inflation on the cash balance at the end of the year?

Cash consists of all of the following except: money orders. short-term paper with a maturity of 6 months. personal checks. certified checks.

short-term paper with a maturity of 6 months.

Companies are not required to disclose information about: depreciation methods. the use of estimates. inventory cost flow methods. the identity of all stockholders

the identity of all stockholders