chp 5 accounting

54 terms by mgiloi 

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The balance sheet reports

C. Assets and equities at a point in time

Current assets include cash and all other assets expected to become cash or be consumed:

D. within one year or one operating cycle, whichever is longer

Red Onion Restaurant classifies a six-month prepaid insurance policy as a current asset. Its rationale is based on

C. Definition

An asset that is not expected to be converted to cash or consumed within one year or the operating cycle is

A. Goodwill

Which of the following accounts are closed at the end of the accounting period

D. Income tax expense

Which is a shareholders' equity account in the balance sheet?

B. Paid-in-capital

Rent collected in advance is

B. A liability account in the balance sheet

Notes payable

D. cannot determine its classification without additional information

Which of the following is never a current liability account?

C. Prepaid rent

New Oaks Winery requires two months to make wine, two years to age it, one month to bottle it, two months to sell it, and one month the collect the receivable. Its operating cycle is

B. 30 months

Noncurrent assets include

D. Land held for a possible future plant site

What would Symphony report as total current assets?

A. 823

What would Symphony report as total assets

D. 2303

What would Symphony report as total shareholders' equity

B. 808

What is the amount of working capital for Symphony?

C. 128

Assets do not include

C. Paid in capital

Cash equivalents would not include:

A. Cash not available for current operations

Cash equivalents would include

D. Debt instruments with maturity dates of less than three months from the date of the purchase

Accrued expenses:

C. Result from services received before payment

Janson Corporation Co.'s trial balance included the following account balances at December 31, 2011: Investments consist of treasury bills that were purchased in November and mature in January. Prepaid insurance is for the next two years. What amount should be included in the current asset section of Janson's December 31, 2011, balance sheet?

B. 85000

Janson Corporation Co.'s trial balance included the following account balances at December 31, 2011: What amount should be included in the current liability section of Janson's December 31, 2011, balance sheet?

C. 61000

The usual difference between accounts payable and notes payable is

D. Explicitly stated interest

Which of the following would be disclosed in the summary of significant account policies disclosure note?

A. Option A

Which of the following is not a required disclosure for related party transactions?

D. The impact of the transactions on current year's income

Disclosure notes would not include

D. Data to adjust the financial statements so that they are not misleading

The principal concern with accounting for related party transactions is

B. Difference between economic substance and legal form

A subsequent event for an entity with a Dec 31, 2011 year end would not include

A. A change in the estimated useful lives of equipment in Jan 2012

How are management's responsibility and the auditor's opinion on internal controls represented in the standard auditor's report?

B. Option b (explicit)

The final paragraph of the audit report

B. Provides the auditor's opinion on the effectiveness of internal control

The Management Discussion and Analysis section of the annual report can be best be described as

D. Biased but informative

An example of fraud would be

C. Knowingly classifying a material non-current receivable as a current receivable

An example of an error would be

B. Counting an inventory item twice when taking a physical inventory

An exception that is so serious that even a qualified opinion is not justified would result in

C. An adverse opinion

Liquidity refers to

B. The readiness of an asset to be converted to cash

Lack of long-term solvency refers to

a. Risk of non-payment relative to liabilities in the capital structure

The current ration is given by

C. Current assets divided by current liabilities

The acid-test ration is also known as the

D. Quick ratio

The quick ratio is

C. Current assets minus inventory and prepaid items divided by current liabilities minus accounts payable

Working capital is equal to

D. Current assets minus liabilities

Which of the following is not a financing ratio

C. The current ratio

When a company pays its bill from a plumber for previous services on account

A. Its debt to equity ratio always decreases

When a company accrues federal income taxes at the end of the accounting period

D. Its debt to equity ratio increases

Assume a company's liquidity and financing ratios all are less than 1.0 before it purchases inventory on credit. When it makes the purchase

B. Its quick ratio decreases

When a company sells land for cash and recognizes a 25000 gain

C. Its debt to equity ratio decreases

Paisano Seafood Inc. current ratio

B. 1.58

Paisano Seafood Inc. working capital

C. 185

Paisano Seafood Inc. quick assets total

C. 280

Paisano Seafood Inc. acid-test ratio is (rounded)

B. 0.88

HHF's debt-to-equity ratio is (rounded)

B. 1.13

HHF's times interest earned ratio is (rounded)

A. 3.47

HHF's long term debt-to-equity ratio equity is

B. 75%

Which of the following is not a required segment reporting disclosure according to US GAAP?

C. Segment liabilities

Which of the following is not a required segment reporting disclosure according to IFRS?

D. All are required disclosures

Which of the following is not a characteristic that defines a reportable operating segment according to US GAAP?

D. Represents more than 20% of total company revenues, assets, or net income

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