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Exam 5: Communicating and Interpreting Accounting Information

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Question 31

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Which of the following is false?

A) Relevance is the characteristic of accounting information that says the information would make a difference in a user's decision.
B) Accounts receivable would normally be classified as a current asset.
C) Accumulated depreciation would normally appear on the income statement.
D) The matching principle holds that all expenses incurred in the generation of revenue should be recognized in the same period as the revenue is earned.

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Question 32

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The Financial Accounting Standards Board (FASB)oversees the work of the Public Company Accounting Oversight Board (PCAOB).

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Question 33

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Which of the following is not a responsibility of the chief executive officer (CEO) and the chief financial officer (CFO) ?

Which of the following would not be classified as a current asset?

The return on assets ratio is calculated by dividing income from continuing operations by average total assets.

The balance sheet for Glenwood Corporation at December 31,2011,showed the following subtotals: $\begin{array} { l r } \text { Current assets } & \$ 140,000 \\\text { Current liabilities } & 80,000 \\\text { Property, plant and equipment } & 420,000 \\\text { Total stockholders' equity } & 420,000 \\\text { Retained earnings } & 120,000 \\\text { Total liabilities } & 210,000 \\\text { Other long-term assets } & 70,000\end{array}$ Based on the above data,calculate the following amounts: A. Total assets $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ $------- B. Long-term liabilities $\quad$$\quad$$\quad$ $\quad$$\quad$$\quad$$\quad$$\quad$ $------- C. Contributed capital $\quad$$\quad$$\quad$ $\quad$$\quad$$\quad$$\quad$$\quad$ $------- D. Total liabilities and stockholders' equity $\quad$$\quad$ $-------

In which of the following classifications would cash dividend payments to stockholders be reported?

The Nellie Company has provided the following information: Operating expenses were $115,000; Gross profit was $629,000; Cost of goods sold was $470,000 Interest expense was $17,000; Extraordinary loss was $29,000; Income tax expense was $199,000. What was Nellie's income before taxes?

Which of the following statements is false?

Conservatism requires that special care must be taken to avoid which of the following?

Where are acquisitions of previously issued stock for cash reported on a statement of cash flows?

The Nellie Company has provided the following information: Operating expenses were $115,000; Gross profit was $629,000; Cost of goods sold was $470,000 Interest expense was $17,000; Extraordinary loss was $29,000; Income tax expense was $199,000. What was Nellie's operating income?

Which of the following statements is false?

Superior has provided the following information for its recent year of operation: The common stock account balance at the beginning of the year was $20,000 and the year-end balance was $25,000. The additional paid-in capital account balance increased $2,500 during the year. The retained earnings balance at the beginning of the year was $75,000 and the year-end balance was $91,000. Net income was $26,000. How much were Superior's dividend declarations during its recent year of operation?

Huron has provided the following year-end balances: Cash,$25,000 Patents,$7,900 Accounts receivable,$9,300 Property,plant,and equipment,$98,700 Prepaid insurance,$3,600 Accumulated depreciation,$10,000 Inventory,$37,000 Trademarks,$12,600 Goodwill,$11,000 How much are Huron's current assets?

Marino Company has provided the following information: Net sales,$480,000 Net income,$24,000 Average total assets,$200,000 What is Marino's return on assets ratio?

Common stock and additional-paid in capital represent the capital contributed by shareholders.

The form 10-Q contains an unaudited set of quarterly financial statements containing a condensed income statement and balance sheet.

The primary responsibility for the information in a corporation's financial statements lies with the chief executive officer (CEO)and the chief financial officer (CFO).

Discontinued operations and extraordinary items are reported on the income statement as a component of income from continuing operations.