Acc 280

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ACC 400 Accounting for Decision Making

Name: __________________________ Date: ___________

Indicate your answer to each of the multiple choice questions by bolding your selection or typing your choice before the question number. Do not use color. Each question is worth 2 points.

1.| Which of the following items should be classified as an extraordinary item on an income statement?| A)| Gain on the sale of property, plant or equipment|
B)| Loss due to expropriation of property by a foreign government| C)| Loss due to discontinued operations|
D)| Excess of the selling price over the cost of treasury stock|

2.| Which one of the following is not an objective of a system of internal controls?| A)| Safeguard company assets|
B)| Overstate liabilities in order to be conservative|
C)| Enhance the accuracy and reliability of accounting records| D)| Reduce the risks of errors|

3.| Horizontal analysis is also known as|
A)| linear analysis.|
B)| vertical analysis.|
C)| trend analysis.|
D)| common size analysis.|

4.| Secured bonds are bonds that|
A)| are in the possession of a bank.|
B)| can be converted into common stock.|
C)| have specific assets of the issuer pledged as collateral.| D)| mature in installments.|

5.| The four subdivisions for plant assets are|
A)| land, land improvements, buildings, and equipment.|
B)| intangibles, land, buildings, and equipment.|
C)| furnishings and fixtures, land, buildings, and equipment.| D)| property, plant, equipment, and land.|

6.| The face value of a note refers to the amount|
A)| that can be received if sold to a factor.|
B)| borrowed plus interest received at maturity from the maker.| C)| at which the note receivable is recorded.|
D)| remaining after a service charge has been deducted.|

7.| All leases are classified as either|
A)| capital leases or long-term leases.|
B)| capital leases or operating leases.|
C)| operating leases or current leases,|
D)| long-term leases or current leases.|

8.| Joe's Grocery Store has the following policy. 'Only one cashier can have access to a cash drawer.' Which internal control principle supports this policy?| A)| Documentation procedures|

B)| Segregation of duties|
C)| Physical, mechanical, and electronic controls|
D)| Establishment of responsibilities|

9.| A measure of a company's solvency is the|
A)| acid-test ratio.|
B)| current ratio.|
C)| times interest earned ratio.|
D)| asset turnover ratio.|

10.| Which of the following would be considered an “Other Comprehensive Income” item?| A)| Net income|
B)| Gain on disposal of discontinued operations|
C)| Extraordinary loss related to flood|
D)| Unrealized loss on available-for-sale securities|

11.| The debt to total assets ratio measures|
A)| the company's profitability.|
B)| whether interest can be paid on debt in the current year.| C)| the proportion of interest paid relative to dividends paid.| D)| the percentage of the total assets provided by creditors.|

12.| Which of the following is not properly classified as property, plant, and equipment?| A)| Building used as a factory|
B)| Land used in ordinary business operations|
C)| A truck held for resale by an automobile dealership|
D)| Land improvement, such as parking lots and fences|

13.| In a common size income statement, the 100% figure is| A)| net income.|
B)| cost of goods sold.|
C)| gross profit.|
D)| net sales.|

14.| Which of the following income statement figures would probably be the best indicator of a company's future performance?| A)| Total revenues|
B)| Income from operations|
C)| Net income|
D)| Gross profit|

15.| Bonds that may be exchanged for common stock at the option of the bondholders are called| A)| options.|
B)| stock bonds.|...
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