Intermediate Accounting Ch 4
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.