Intermediate Accounting Ch 4

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97. Refer to Exhibit 4-1. Blue Bell's debt to equity ratio December 31 was

0.35 27.4 times

94. Refer to Exhibit 4-1. Blue Bell's quick ratio at December 31 was

1.33 times

91. Refer to Exhibit 4-1. Blue Bell's current ratio at December 31 was

2.33 times

93. Refer to Exhibit 4-1. Blue Bell's return on assets for the year was

26.9%

95. Refer to Exhibit 4-1. Blue Bell's return on common equity for the year was

27.1%

92. Refer to Exhibit 4-1. Blue Bell's accounts receivable turnover for the year was

27.4 times

96. Refer to Exhibit 4-1. Blue Bell's debt to assets ratio December 31was

33.3% 26.0 times

98. Refer to Exhibit 4-1. Blue Bell's inventory turnover for the year was

9.0 times

46. Which balance sheet account is usually reported at net realizable value?

Accounts Receivable.

39. Which of the following assets is reported at net realizable value on the balance sheet?

Accounts receivable

64. Which of the following is included in shareholders' equity?

Accumulated other comprehensive income

40. Which of the following is a measurement method that reflects historical value?

Acquisition cost

102. Which of the following is not included under the heading "Capital and reserves" for IFRS financial statements?

Allowance for uncollectible accounts

54. What is the term for the systematic allocation of the costs of intangible assets to expense?

Amortization

30. What element is a probable future economic benefit controlled and previously acquired by a company?

Asset

100. Which of the following is a measure of operating efficiency?

Asset turnover ratio

87. Which of the following formulas represents working capital?

Current assets - current liabilities

56. Which of the following is not an intangible asset?

Deferred tax asset

65. Which of the following is not a component of contributed capital?

Earned capital

101. Under IFRS, liabilities and shareholders' equity on the balance sheet usually appear in which order?

Equity, noncurrent liabilities, and current liabilities

36. Which of the following statements about executory contracts is false?

Executory contracts are contracts in the process of begin filled.

29. Which of the following elements is not recognized on the balance sheet?

Expense

41. An asset is valued by the price that would be received by selling it in an orderly transaction between market participants on the date of measurement. Which measurement method is being used in this case?

Fair value

42. Which of the following statements about fair value is true?

Fair value accounting is also known as "mark-to-market" accounting.

11. Long-term investments are listed on the balance sheet at historical cost.

False

14. All long-term investments are listed on the balance sheet at fair value.

False

16. Distributions to owners increase equity and investments by owners decrease equity.

False

19. Derivative financial instruments must be reported as either assets or liabilities on the balance sheet and be measured at their net realizable value.

False

2. The elements recognized on the balance sheet are assets, liabilities, revenues, and expenses.

False

20. Gain contingencies must be accrued if they are probable and can reasonably be estimated.

False

22. In common-size analysis, all balance sheet items and income statement items are presented as a percentage of total assets.

False

24. Time-series analysis is the same as rate of change analysis.

False

3. Equity is defined as a residual claim such that assets plus liabilities equals equity.

False

4. Asset measurement methods that reflect historical values include acquisition cost and residual value.

False

7. Net realizable value is the amount a company would have to pay currently to acquire an asset it now holds.

False

8. Adjusted present value is based on the present-day fair value adjusted to reflect the passage of time.

False

55. Which of the following would typically be recorded as an intangible asset with a finite useful life?

Franchises

103. Certain differences exist between IFRS and U.S. GAAP financial statement reporting. Which of the following is false?

IFRS does not require a statement of cash flows.

59. Which of the following is amortized over its useful life and reported at adjusted historical cost?

Intangible asset with finite useful lives

81. Cross-sectional analysis is most closely associated with

Intercompany comparisons

80. Time-series analysis is most closely associated with

Intracompany comparisons

99. A company's operating cycle might be measured as

Inventory turnover in days plus accounts receivable turnover in days minus accounts payable turnover in days.

35. Which of the following is a probable future sacrifice of economic benefits arising from present obligations as a result of past events?

Liability

47. A balance sheet account that is usually reported at fair value is

Marketable Securities.

38. Which of the following is not a general category of shareholders' equity?

Net income

48. A balance sheet account that is usually reported at present value is

Note Payable.

49. Which of the following accounts is not classified as a current asset?

Patent

63. Which of the following is not a component of shareholders' equity?

Residual capital

104. Which of the following account titles are not allowed under GAAP?

Revaluation reserves and provisions

34. Which is not a required characteristic for a liability to be recognized?

Service potential

28. Which of the following financial statements reports changes in financial position of the company during the accounting period?

Statement of cash flows

26. Which financial statement is also called the statement of financial position?

The balance sheet

1. The balance sheet reports the financial position of a company at a specific date in time whereas all other financial statements report changes in the financial position of the company over a period of time.

True

10. Current assets include cash, accounts receivable, inventory, and prepaid items.

True

12. Trademarks or acquired brand names are not amortized but are reviewed annually for impairment.

True

13. Equity of a wholly-owned company is comprised only of contributed capital and earned capital.

True

15. The SEC requires listed companies to report changes in shareholder's equity and ending balances as a separate financial statement, but smaller companies may report this information in a supporting schedule or as a note.

True

17. Distributions to owners include paying dividends, repurchasing common shares, transferring assets, rendering services, and incurring liabilities to owners.

True

18. Typically, the first note to the financial statements is the Summary of Significant Accounting Policies.

True

21. A company must make adjustments to the financial statements for certain events that occur after the end of the accounting period.

True

23. Cross-sectional analysis involves intercompany comparisons.

True

25. Financial leverage is measured by the debt-to-assets ratio.

True

5. Asset measurement methods that reflect historical values include fair value, present value, replacement cost, and net realizable value.

True

6. Companies typically recognize monetary assets and liabilities using present values.

True

9. FASB's definition of fair value of an asset is characterized as a measure of market-based exit value, which is the amount for which a company could sell the asset.

True

72. In preparing a statement of changes in shareholders' equity, the company includes land given to a shareholder as a dividend. This transaction is included in the statement because it represents

a distribution to a shareholder that decreases equity.

32. All of the following items would appear on the balance sheet except

a realized gain on the sale of a equipment

33. All of the following are non-monetary assets except

accounts receivable.

76. A subsequent event is an event that occurs

between the end of the accounting period and the date the annual report is issued.

51. Long-term investments include all of the following except

bonds payable.

60. Current liabilities are defined as obligations that will be paid

by using existing resources properly classified as current assets

67. On the balance sheet, treasury stock is presented as a

contra shareholders' equity account.

44. The amount a company would pay to acquire an asset it now holds is the asset's

current replacement cost.

66. A negative balance for retained earnings due to cumulative net losses is called a(n)

deficit.

57. The systematic allocation of the costs of natural assets to expense is called

depletion.

68. A deficit occurs when a company's

dividends and cumulative losses are greater than cumulative net income.

37. The residual interest in a company's assets after deducting liabilities is

equity.

90. Information about a company's operating capability may be helpful to external users in

evaluating the efficiency with which the company uses its resources to generate revenue.

43. The expected exit value is also referred to as the

fair value.

74. GAAP requires that all derivative financial instruments be reported at their

fair value.

84. The ability of a company to adapt its resources to create change and react to change is called

financial flexibility.

27. A balance sheet shows the

financial position of a company at a particular date.

75. A reader might find information about gain contingencies in an annual report by examining

footnote disclosures.

50. Cash equivalents are securities that

have maturity dates of three months or less.

73. A reader of a set of financial statements would expect to be able to find in the statement of changes in shareholders' equity

increases from other comprehensive income.

52. Property, plant, and equipment section of the balance sheet includes all of the following except

intangible assets

83. A comparison of a company's performance with that of its competitors is known as

intercompany comparison.

82. A comparison of a company's performance with that of its own past results is known as

intracompany analysis.

85. The ease with which an asset can be converted into cash is termed

liquidity.

86. Financial flexibility is assessed by evaluating

liquidity.

53. Intangible assets include all of the following except

natural resources.

58. The adjusted historical cost of fixed assets, calculated as historical cost minus depreciation, is called

net book value.

70. A component of equity that arises when a parent company owns a majority of the common shares of a subsidiary company is known as

noncontrolling interest.

71. Distributions to owners include all of the following except

noncontrolling interests.

61. Current liabilities includes all of the following except

notes receivable.

89. Efficiency ratios are measures of

operating capability.

45. The measurement of an asset's value based on the discounted future cash flows relating to the asset is

present value.

62. Most long-term liabilities are reported on the balance sheet at their

present value.

78. Activities between affiliated entities such as subsidiaries must be disclosed in the financial statements of a corporation as

related party transactions..

31. The primary attribute of all assets is

service potential.

69. Additional paid-in capital represents

the difference between par value and market value .

77. All of the following are examples of subsequent events that would be disclosed in the footnotes to the financial statements except

the write off of a significant uncollectible account.

79. The SEC requires disclosure of quarterly high and low market prices for

two years.


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