Saranyas

Topics: Balance sheet, Accounts receivable, Generally Accepted Accounting Principles Pages: 12 (1976 words) Published: July 16, 2011
Name____________________________________________________
Bus 220
Quiz Chapters 5 and 6

1.The primary responsibility for the information reported by a company rests with A)the Internal Revenue Service.
B)the company's auditors.
C)the local city council.
D)the sales clerk supervisor.
E)the company's management.
Answer: E

2.The qualitative characteristic that says accounting information can influence users' decisions is A)comparability.
B)materiality.
C)reliability.
D)relevance.
E)None of the above is correct.
Answer: D

3.In addition to the four required financial statements, which of the following is a required disclosure in the annual report of a publicly traded company? A)A five year summary of financial data.

B)Notes (footnotes).
C)Management's discussion and analysis.
D)Only B and C are required disclosures.
E)All of the above are required disclosures.
Answer: E

4.Current liabilities are defined as
A)obligations which are incurred during the past year. B)debts at the balance sheet date which must be paid within two years. C)accounts payable and bonds payable.

D)debts at the balance sheet date which are expected to be paid with the current assets listed on the same balance sheet. E)obligations (debts) related only to normal operations. Answer: D

5.Polk Company suffered a loss from earthquake damage at its plant in Nebraska. The loss meets the criteria for an extraordinary item. Where will the company present the extraordinary item in the income statement? A)With other revenues and expenses.

B)Following sales revenue, but before cost of goods sold. C)Following the section for discontinued operations, but before the section for the cumulative effect of a change in accounting principles. D)After the section for the cumulative effect of a change in accounting principles, but before the section for discontinued operations. E)None of the above is correct.

Answer: C

6.The debt-to-equity ratio is computed by taking
A)current liabilities divided by total stockholders' equity. B)total liabilities divided by total stockholders' equity. C)long-term liabilities divided by total stockholders' equity. D)total liabilities divided by total assets.

E)none of the above is the correct calculation.
Answer: B

7.On the statement of cash flows, where would it show cash paid for equipment? A)Operating activities.
B)Investing activities.
C)Financing activities.
D)Footnote to the statement of cash flows.
E)It would be on the balance sheet not the statement of cash flows. Answer: B

8.When a company ships product to a customer with the terms f.o.b. (free on board) destination, which of the following is true? A)The seller will pay the shipping charges and title will not be exchanged until goods are received by the customer. B)The buyer will pay the shipping charges and title is exchanged at point of shipment. C)The seller will pay the shipping and title is exchanged at point of shipment. D)The buyer will pay the shipping and title is exchanged when the goods are received by the customer. Answer: A

9.Credit terms of 2/10, n/30 indicate that a
A)two percent discount for early payment is available if the invoice is paid before the tenth day of the month following the month the sale. B)two percent discount for early payment is available within ten days of the invoice date. C)ten percent discount for early payment is available if the invoice is paid within two days of the date of the...
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