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Which of the following would most likely increase the net profit margin ratio?


A) An increase in the unit selling price.
B) A decrease in the overall sales volume.
C) An increase in operating expenses.
D) An increase in cost of goods sold.

E) A) and B)
F) None of the above

Correct Answer

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Which of the following statements correctly describe the effect of accruing interest revenue at year-end?


A) Income from operations increases.
B) The net profit margin ratio does not change.
C) The asset turnover ratio increases.
D) The return on assets ratio is affected.

E) A) and B)
F) None of the above

Correct Answer

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Which of the following statements regarding international financial reporting standards (IFRS) is false?


A) The reporting of extraordinary items is prohibited.
B) Property, plant, and equipment can be reported on the balance sheet at either fair value or historical cost.
C) The last-in first-out inventory method is permitted.
D) Inventory write-downs are permitted.

E) All of the above
F) C) and D)

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Inventories are reported on the balance sheet as a current asset.

A) True
B) False

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Which of the following transactions will decrease both the return on assets ratio and the asset turnover ratio?


A) Purchasing land by signing a note payable.
B) Accruing interest expense at year-end.
C) Accruing interest revenue at year-end.
D) Collecting cash from an account receivable.

E) B) and D)
F) B) and C)

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At the beginning of 2011,Jeffrey Company disposed of a segment of its business and incurred a pretax loss of $40,000 on the disposal.In the same year,a flood caused $15,000 of damages to the building.The flood damage qualified as an extraordinary item.Income from continuing operations before taxes was $100,000 for 2011 and a 20% tax rate applied to all of the items above.Prepare a partial income statement starting with income from continuing operations before taxes for the year ending 2011 and concluding with net income.

Correct Answer

Answered by ExamLex AI

Answered by ExamLex AI

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The return on assets ratio will increase when sales increase.

A) True
B) False

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Which of the following is an objective of the external audit of a company's financial statements?


A) To provide a forecast of the company's future earnings.
B) To assure no fraud has been committed by the company's management.
C) To provide credibility and assurance that the financial statement information conforms with generally accepted accounting principles in all material respects.
D) To detect all accounting errors made by the accounting system and employees.

E) A) and B)
F) None of the above

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For accounting information to be useful,it must be which of the following?


A) It must be consistent and comparable.
B) It must be relevant and reliable.
C) It must be comparable and reliable.
D) It must be relevant and consistent.

E) A) and B)
F) A) and C)

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Recent stock price information is a financial statement disclosure.

A) True
B) False

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A company issued 1,000 shares of $10 par value common stock in exchange for $15,000.Which of the following correctly describes the impact of this transaction on the financial statements?


A) A $15,000 gain is reported on the income statement.
B) Contributed capital in the amount of $10,000 is reported on the balance sheet.
C) Common stock is reported on the balance sheet at $15,000.
D) Additional paid-in capital of $5,000 is reported on the balance sheet.

E) B) and D)
F) A) and C)

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Determine the effect of the following transactions on the identified financial statement components and ratios.Code your answers as follows: A: If the transaction results in an increase in the financial statement component or ratio. B: If the transaction results in a decrease in the financial statement component or ratio. C.If the transaction does not affect the financial statement component or ratio. Transaction 1: A company issued common stock at a price in excess of par value. Revenues_____ Assets_____ Stockholders' equity_____ Return on assets ratio_____ Transaction 2: A company recorded depreciation expense at year-end. Net income_____ Assets_____ Stockholders' equity_____ Asset turnover ratio_____

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Which of the following statements is false when a company sells inventory costing $900 for $1,500 cash?


A) Current assets increase $600.
B) Gross profit increases $1,500.
C) Stockholders' equity increases $600.
D) Net sales increases $1,500.

E) C) and D)
F) B) and D)

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Intangible assets are reported on the balance sheet as a noncurrent asset and include goodwill.

A) True
B) False

Correct Answer

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Which of the following is true?


A) An extraordinary gain would increase income before taxes.
B) Discontinued operations would be shown as a component of continuing operations on the income statement.
C) Discontinued operations are shown on the income statement net of income tax effects.
D) Results from discontinued operations may be used to predict future company results.

E) A) and B)
F) All of the above

Correct Answer

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The Securities and Exchange Commission's (SEC) report that is required to be filed if any special event occurs is which of the following?


A) Form 10K
B) Form 8K
C) Form 10Q
D) Form 8Q

E) All of the above
F) C) and D)

Correct Answer

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Which of the following would not be added to net income in the determination of net cash flow from operations?


A) An increase in accounts payable.
B) A decrease in accounts receivable.
C) A decrease in prepaid expenses.
D) An increase in inventory.

E) None of the above
F) A) and B)

Correct Answer

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Which of the following tasks does the Financial Accounting Standards Board (FASB) perform?


A) Overseeing the work of the Securities & Exchange Commission (SEC) .
B) Overseeing the work of the Public Company Accounting Oversight Board (PCAOB) .
C) The responsibility for protecting investors and maintaining the integrity of the securities markets.
D) The development of generally accepted accounting principles.

E) A) and C)
F) B) and C)

Correct Answer

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Which of the following are the criteria used to determine whether an item is extraordinary?


A) It is unusual in nature and occurs frequently.
B) It is unusual in nature and occurs infrequently.
C) It is unusual in nature or occurs infrequently.
D) It is infrequent in occurrence only.

E) A) and B)
F) A) and C)

Correct Answer

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Which of the following would not be included within the operations section of a cash flow statement?


A) Cash paid for research and development.
B) Cash paid for insurance.
C) Cash paid for interest expense.
D) Cash paid to legalize a patent.

E) B) and D)
F) All of the above

Correct Answer

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