Accounting II Exam 1

Created by Julie-Campbell 

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On the statement of cash flows prepared by the indirect method, the cash flows from operating activities section would include

amortization of premium on bonds payable

Investing activities include

collecting cash on loans made

Which of the following is not one of the four basic financial statements?

Statement of changes in financial position

Cash paid for preferred stock dividends should be shown on the statement of cash flows under

financing activities

A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows under

Investing activities

Cash paid for equipment would be reported in the statement of cash flows in

the cash flows from investing activities section

Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in

the cash flows from operating activities section

Financing activities include

issuing debt

The order of presentation of activities on the statement of cash flows is

The order of presentation of activities on the statement of cash flows is

operating, investing, and financing.

Free cash flow is

cash flow from operations, less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends

On the statement of cash flows, the cash flows from financing activities section would include

receipts from the issuance of capital stock

On the statement of cash flows, the cash flows from operating activities section would include

cash receipts from sales activities

Which of the following can be found on the statement of cash flows?

cash flows from operating activities

Which one of the following below would not be classified as an operating activity?

payment of dividends

Cash receipts received from the issuance of a mortgage notes payable would be classified as

financing activities.

Which of the following is a measure of the liquid position of a corporation?

current ratio

The current ratio is

used to evaluate a company's liquidity and short-term debt paying ability

The tendency of the rate earned on stockholders' equity to vary disproportionately from the rate earned on total assets is sometimes referred to as

leverage

One reason that a common-size statement is a useful tool in financial analysis is that it enables the user to

make a better comparison of two companies of different sizes in the same industry.

A balance sheet that displays only component percentages is called

common-sized balance sheet

The ability of a business to pay its debts as they come due and to earn a reasonable amount of income is referred to as

solvency and profitability

Short-term creditors are typically most interested in assessing

solvency.

The percent of fixed assets to total assets is an example of

vertical analysis

In a common size balance sheet, the 100% figure is:

total assets.

Which one of the following is not a characteristic generally evaluated in ratio analysis?

marketability

Which of the following is not included in the computation of the quick ratio?

inventory

Horizontal analysis is a technique for evaluating financial statement data

over a period of time.

Which of the following below generally is the most useful in analyzing companies of different sizes

common-sized financial statements

A common measure of liquidity is

receivable turnover.

The percentage analysis of increases and decreases in individual items in comparative financial statements is called

horizontal analysis

Prime costs are

direct materials and direct labor

Cost of goods sold for a manufacturer equals cost of goods manufactured plus:

beginning finished goods inventory less ending finished goods inventory

In order to be useful to managers, management accounting reports should possess all of the following characteristics except:

be prepared in accordance with generally accepted accounting principles

What term is used to describe the process of developing the organization's objectives and translating those into courses of action?

Planning

Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as:

factory overhead cost

The cost of wages paid to employees directly involved in the manufacturing process in converting materials into finished product is classified as:

direct labor cost

Which of the following is false in regards to direct materials for an auto manufacturer?

Small plastic clips to hold on door panels, that become part of the auto, must be accounted for as direct materials

Which of the following is most associated with managerial accounting?

May rely on estimates and forecasts

Which of the following is not a factory overhead cost?

materials used directly in the manufacturing process of the product

Materials must have which two qualities in order to be classified as direct materials?

They must be an integral part of the finished product and be a significant portion of the total product cost.

Indirect costs incurred in a manufacturing environment that cannot be traced directly to a product are treated as:

product costs and expensed when the goods are sold

The cost of a manufactured product generally consists of which of the following costs?

Direct labor cost, direct materials cost, and factory overhead cost

Finished goods inventory is reported on the:

balance sheet as a current asset

Which of the following costs are referred to as conversion costs?

Direct labor cost and factory overhead cos

What term is used to describe the process of monitoring operating results and comparing actual results with the expected results?

Controlling

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