ACCT 1003 MID TERM

·         Question 1

What document is required by the SEC to solicit shareholder votes.

·         Question 2

What information can be found on an income statement?

·         Question 3

What type of audit report indicates that the financial statements have not been presented fairly?

·         Question 4

Which item would be included in the account "Accumulated other comprehensive income (expense)"?

·         Question 5

Why does the management discussion and analysis help the analyst?

·         Question 6

What information can be found on a balance sheet?

·         Question 7

Which of the following statements about a common-size balance sheet is true?

·         Question 8

What is the required reporting for discontinued operations?

·         Question 9

What types of information cannot be found in the financial statements?

·         Question 10

The inventory of a retail company is comparable to which type of inventory of a manufacturing company?

·         Question 11

How is a firm's average income tax rate calculated?

·         Question 12

Which of the following items is NOT discretionary in nature?

·         Question 13

Which item below does not describe a balance sheet?

·         Question 14

Which of the following statements is false?

·         Question 15

Which of the following statements is false?

·         Question 16

Despite the enactment of the Sarbanes-Oxley Act of 2002, corruption and unethical behavior continued in the 2000s.

·         Question 17

The management discussion and analysis is of potential interest to the analyst because it contains information that cannot be found in the financial data.

·         Question 18

The management discussion and analysis should contain a discussion of the commitments for capital expenditures, the purpose of such commitments, and expected sources of funding.

·         Question 19

Selling and administrative expenses include such items as advertising, salaries, and interest expense.

·         Question 20

Financial statements are currently prepared according to generally accepted accounting principles in the U.S.

·         Question 21

The amount and trend of each operating expense should be evaluated as well as its relationship to the volume of activity that is relevant to the expense.

·         Question 22

Accounting choices and estimates rarely have a significant impact on financial statement numbers.

·         Question 23

The shareholders' letter from the CEO of a firm offers factual information needed to analyze the financial statements.

·         Question 24

A decline in accounts receivable when sales are increasing is a red flag that the firm is not collecting cash from its customers.

·         Question 25

Marketable securities should be valued at fair market value.

·         Question 26

If the cost of goods sold percentage increases, this means that the cost to acquire products has increased.

·         Question 27

Accounts receivable are balances owed to suppliers.

·         Question 28

Current assets include those assets expected to be converted into cash within one year or operating cycle.

·         Question 29

Consolidated statements are the combined financial statements of separate legal entities when the parent controls 100% of the subsidiary.

·         Question 30

The gross profit margin and cost of goods sold percentage are complements of each other and always add to 100%.

·         Question 31

Most manufacturing firms use the accelerated depreciation method while retailers use the straight-line depreciation method for financial reporting purposes.

·         Question 32

The FASB was given Congressional authority to write accounting rules.

·         Question 33

The common size income statement expresses each income statement item as a percentage of net sales.

·         Question 34

The goal of the International Accounting Standards Board is the adoption of uniform international accounting standards.

·         Question 35

A basic understanding of financial statements is needed due to ongoing financial turmoil and major corporate failures.

·         Question 36

Sales volume changes in firms with high fixed costs will result in stable gross profit margins.

·         Question 37

Goodwill arises when one company acquires another company for a price in excess of the fair market value of the net identifiable assets acquired.

·         Question 38

Inventory valuation is based on an assumption regarding the flow of goods and has nothing to do with the actual order in which products are sold. 

·         Question 39

Management is responsible for the preparation of the financial statements, including the notes, and the auditor’s report attests to the fairness of the presentation.

·         Question 40

Marketable securities are also referred to as short-term investments.

·         Question 41

The equity method of accounting should be used when the parent company owns 100% of the voting stock in its subsidiaries.

·         Question 42

A common size balance sheet expresses each item on the balance sheet as a percentage of either total assets or total liabilities.

·         Question 43

Operating profit measures the overall performance of the company's operations separate from items that are not directly related to operations.

·         Question 44

Since other income or expense items are not part of daily operations there is no need to analyze these accounts.

·         Question 45

A multiple-step income statement presents several intermediate profit measures.