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Accounting II Exam 1

STUDY
PLAY
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