Question 1

Independent auditors are advisors who analyze financial statements and other economic information to formulate forecasts and stock recommendations.

Accepted Answer

A) True 
 B)False

Question 2

The return on assets ratio is affected by both the net profit margin ratio and the asset turnover ratio.

Accepted Answer

A) True 
 B)False

Question 3

Financial analysts utilize a company's financial reports to assist them in making earnings projections and earnings per share projections.

Accepted Answer

A) True 
 B)False

Question 4

In order for financial information to be relevant,it should be timely and accurate.

Accepted Answer

A) True 
 B)False

Question 5

Contributed capital consists of which of the following two accounts?

Accepted Answer

A)  Common stock and Additional paid in capital
B)  Common stock and Retained earnings
C)  Additional paid in capital and Retained earnings
D)  Retained earnings and CashE) B) and C)
F) A) and B)

Question 6

Which of the following would not be a component of income from operations?

Accepted Answer

A)  Gross profit
B)  Selling and administrative expenses
C)  Dividend income
D)  Research and development expenseE) B) and C)
F) A) and C)

Question 7

Which of the following is true about gross profit (gross margin) ?

Accepted Answer

A)  It is net sales minus operating expenses.
B)  It is net sales minus cost of goods sold.
C)  It is the same as income from continuing operations.
D)  It is net sales minus cost of goods sold and operating expenses.E) A) and B)
F) None of the above

Question 8

Which of the following statements is false?

Accepted Answer

A)  Relevant information has the ability to influence an investor's decision.
B)  Reliable information is accurate, verifiable and unbiased.
C)  Consistency refers to the use of the same accounting principles from one period to the next.
D)  Comparability refers to the use of conservatism within different time periods by a particular business.E) C) and D)
F) A) and B)

Question 9

Which of the following statements regarding earnings per share is false?

Accepted Answer

A)  It can be reported on the income statement.
B)  It increases when net income increases.
C)  It is based on the average number of common shares outstanding.
D)  It would not be affected by an extraordinary loss.E) All of the above
F) B) and C)

Question 10

Common stock and additional-paid in capital are both reported on the balance sheet as a component of shareholders' equity.

Accepted Answer

A) True 
 B)False

Question 11

Describe relevance and reliability as they pertain to financial reporting.

Accepted Answer

Relevance and reliability are two key ch...

Question 12

In order for financial information to be consistent,similar accounting methods need to be used from one period to the next.

Accepted Answer

A) True 
 B)False

Question 13

Ridgetop Corporation reported the following amounts on its balance sheet at December 31,2011:
 $$\begin{array} { l r } 
\text { Total current assets } & \$ 1,800,000 \
\text { Total long-term assets } & 900,000 \
\text { Total current liabilities } & 1,300,000 \
\text { Total long-term liabilities } & 500,000 \
\text { Total equity } & 900,000 \
\text { Net income } & 100,000
\end{array}$$ On January 1,2011,total assets were $2,000,000,total liabilities were $1,200,000 and total equity was $800,000.Calculate Ridgetop's return on assets.

Accepted Answer

To calculate Ridgetop Corporation's retu...

Question 14

In what order are current assets usually reported on the balance sheet?

Accepted Answer

A)  From the most liquid to the least liquid.
B)  From the least liquid to the most liquid.
C)  In alphabetical order of accounts.
D)  From the largest balance to the smallest balance.E) All of the above
F) A) and D)

Question 15

Which of the following best describes income from operations?

Accepted Answer

A)  It includes the results of discontinued operations.
B)  It includes extraordinary items.
C)  It is sales minus cost of goods sold and income tax expense.
D)  It is net sales minus cost of goods sold and operating expenses.E) All of the above
F) A) and B)

Question 16

Which of the following are primarily responsible for the information provided in a company's financial statements?

Accepted Answer

A)  The internal and external auditors.
B)  The Securities & Exchange Commission (SE
C)   and the external auditors.
C)  The chief executive officer (CEO)  and the chief financial officer (CFO) .
D)  The external auditors and the board of directors.E) None of the above
F) A) and D)

Question 17

The Callie Company has provided the following information:
Operating expenses were $231,000;
Cost of goods sold was $376,000;
Net sales were $940,000;
Interest expense was $32,000;
Gain on sale of a building was $76,000;
 Income tax expense was $151,000.
What was Callie's income before taxes?

Accepted Answer

A)  $564,000
B)  $188,000
C)  $377,000
D)  $232,000E) A) and B)
F) None of the above

Question 18

Which of the following journal entries is correct when common stock is sold for cash at a price greater than par value?

Accepted Answer

A)   Cash  \quad  Common stock  \quad  Gain on sale of stock
B)   CashAdditional paid-in capital   \quad  Common Stock
C)   Cash  \quad  Common Stock
D)   Cash  \quad  Common stock  \quad  Additional paid-in capital E) B) and D)
F) None of the above

Question 19

Describe the return on assets ratio and the DuPont approach for calculating return on assets.

Accepted Answer

The answer of Describe the return on assets ratio and...

Question 20

Which of the following results in an increase in the return on assets ratio?

Accepted Answer

A)  A decrease in the asset turnover ratio.
B)  An increase in the net profit margin ratio.
C)  Purchasing a building by signing a long-term mortgage payable.
D)  Using cash to purchase land.E) B) and D)
F) None of the above

Exam 5: Communicating and Interpreting Accounting Information

The return on assets ratio is affected by both the net profit margin ratio and the asset turnover ratio.

Correct Answer
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Which of the following is true about gross profit (gross margin) ?

Correct Answer
verified

Which of the following best describes income from operations?

Correct Answer
verified

Which of the following results in an increase in the return on assets ratio?

Correct Answer
verified

Financial analysts utilize a company's financial reports to assist them in making earnings projections and earnings per share projections.

Correct Answer
verified

Which of the following statements regarding earnings per share is false?

Correct Answer
verified

Contributed capital consists of which of the following two accounts?

Correct Answer
verified

Which of the following are primarily responsible for the information provided in a company's financial statements?

Correct Answer
verified

The Callie Company has provided the following information: Operating expenses were $231,000; Cost of goods sold was $376,000; Net sales were $940,000; Interest expense was $32,000; Gain on sale of a building was $76,000; Income tax expense was $151,000. What was Callie's income before taxes?

Correct Answer
verified

Describe the return on assets ratio and the DuPont approach for calculating return on assets.

Correct Answer
verified

In order for financial information to be relevant,it should be timely and accurate.

Correct Answer
verified

In order for financial information to be consistent,similar accounting methods need to be used from one period to the next.

Correct Answer
verified

Which of the following journal entries is correct when common stock is sold for cash at a price greater than par value?

Correct Answer
verified

Describe relevance and reliability as they pertain to financial reporting.

Correct Answer
Answered by ExamLex AI
Relevance and reliability are two key ch...
View Answer

Which of the following statements is false?

Correct Answer
verified

Common stock and additional-paid in capital are both reported on the balance sheet as a component of shareholders' equity.

Correct Answer
verified

Correct Answer
Answered by ExamLex AI
To calculate Ridgetop Corporation's retu...
View Answer

Which of the following would not be a component of income from operations?

Correct Answer
verified

Independent auditors are advisors who analyze financial statements and other economic information to formulate forecasts and stock recommendations.

Correct Answer
verified

In what order are current assets usually reported on the balance sheet?

Correct Answer
verified

Exam 5: Communicating and Interpreting Accounting Information

The return on assets ratio is affected by both the net profit margin ratio and the asset turnover ratio.

Correct AnswerverifiedShow Answer

Which of the following is true about gross profit (gross margin) ?

Correct AnswerverifiedShow Answer

Which of the following best describes income from operations?

Correct AnswerverifiedShow Answer

Which of the following results in an increase in the return on assets ratio?

Correct AnswerverifiedShow Answer

Financial analysts utilize a company's financial reports to assist them in making earnings projections and earnings per share projections.

Correct AnswerverifiedShow Answer

Which of the following statements regarding earnings per share is false?

Correct AnswerverifiedShow Answer

Contributed capital consists of which of the following two accounts?

Correct AnswerverifiedShow Answer

Which of the following are primarily responsible for the information provided in a company's financial statements?

Correct AnswerverifiedShow Answer

The Callie Company has provided the following information: Operating expenses were $231,000; Cost of goods sold was $376,000; Net sales were $940,000; Interest expense was $32,000; Gain on sale of a building was $76,000; Income tax expense was $151,000. What was Callie's income before taxes?

Correct AnswerverifiedShow Answer

Describe the return on assets ratio and the DuPont approach for calculating return on assets.

Correct AnswerverifiedShow Answer

In order for financial information to be relevant,it should be timely and accurate.

Correct AnswerverifiedShow Answer

In order for financial information to be consistent,similar accounting methods need to be used from one period to the next.

Correct AnswerverifiedShow Answer

Which of the following journal entries is correct when common stock is sold for cash at a price greater than par value?

Correct AnswerverifiedShow Answer

Describe relevance and reliability as they pertain to financial reporting.

Correct AnswerAnswered by ExamLex AIRelevance and reliability are two key ch...View AnswerShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

Common stock and additional-paid in capital are both reported on the balance sheet as a component of shareholders' equity.

Correct AnswerverifiedShow Answer

Correct AnswerAnswered by ExamLex AITo calculate Ridgetop Corporation's retu...View AnswerShow Answer

Which of the following would not be a component of income from operations?

Correct AnswerverifiedShow Answer

Independent auditors are advisors who analyze financial statements and other economic information to formulate forecasts and stock recommendations.

Correct AnswerverifiedShow Answer

In what order are current assets usually reported on the balance sheet?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
Answered by ExamLex AI
Relevance and reliability are two key ch...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
Answered by ExamLex AI
To calculate Ridgetop Corporation's retu...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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