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28 Questions

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Customer Care Quizzes & Trivia

Questions and Answers
  • 1. 
    The most widely used measure of a company’s liquidity is the:
    • A. 

      Acid-test ratio

    • B. 

      Current ratio

    • C. 

      Quick ratio

    • D. 

      Comprehensive income liquidity ratio

  • 2. 
    The cumulative effect of an accounting change:
    • A. 

      Shows the total of the difference between the prior income a company actually reported and the income the company would have reported if it had used the newly adopted principle or change all along

    • B. 

      Requires that the company’s income statements in prior years be restated for the effect of the change

    • C. 

      Is presented on the company’s balance sheet in the year of the change

    • D. 

      Is only shown in the footnotes to the financial statements in the year in which the change occurs

  • 3. 
    Current assets are defined as:
    • A. 

      Assets that are expected to benefit the organization for more than one year or one operating cycle

    • B. 

      Assets that are either cash or will be consumed within the longer of one year or one operating cycle

    • C. 

      Special funds set aside to pay for pension obligations, plant expansion, or repay debt

    • D. 

      Securities such as stock and bonds that are held for more than one year or one operating cycle

  • 4. 
    A company has recognized a gain on discontinued operations of $500,000. The applicable tax rate for the period is 40%. How much will the firm show as the gain on the income statement?
    • A. 

      $500,000

    • B. 

      $700,000

    • C. 

      $300,000

    • D. 

      $200,000

  • 5. 
    If a company has discontinued operations for the accounting period, the company’s income from continuing operations on the income statement would be identified as:
    • A. 

      Income from continuing operations

    • B. 

      Income before cumulative effect of changes in accounting principle

    • C. 

      Income before extraordinary items

    • D. 

      Net income

  • 6. 
    Nonrecurring items on the income statement are listed in order of:
    • A. 

      Cumulative effect of changes in accounting principles, discontinued operations, and extraordinary items

    • B. 

      Discontinued operations, cumulative effect of changes in accounting principles, and extraordinary items

    • C. 

      Discontinued operations, extraordinary items, and cumulative effect of changes in accounting principles

    • D. 

      Extraordinary items, cumulative effect of changes in accounting principles, and discontinued operations

  • 7. 
    When an item is either unusual in nature or infrequent in occurrence, but not both, the company should:
    • A. 

      Ignore the item

    • B. 

      List the item separately with other gains or losses on the income statement

    • C. 

      Determine if the item can still be shown as an extraordinary item

    • D. 

      List the item separately on the income statement, net of tax

  • 8. 
    Which of the items below is not considered a nonrecurring item?
    • A. 

      Extraordinary items

    • B. 

      Sale of fully depreciated equipment

    • C. 

      Cumulative effect of changes in accounting principles

    • D. 

      Discontinued operations

  • 9. 
    The systematic allocation of the cost of an intangible asset to the periods benefited by the asset is known as:
    • A. 

      Depreciation

    • B. 

      Impairment

    • C. 

      Articulation

    • D. 

      Amortization

  • 10. 
    The company’s cost of items that have future value, but lack physical presence, are called:
    • A. 

      Cash or cash equivalents

    • B. 

      Intangible assets

    • C. 

      Special funds established to set aside financial resources to pay for pension obligations, plant expansion, or to repay debt

    • D. 

      Property, plant, and equipment

  • 11. 
    Liabilities are listed on a classified balance sheet in order of:
    • A. 

      Alphabetical order

    • B. 

      How quickly the liabilities must be paid

    • C. 

      The dollar amounts (size) of liabilities

    • D. 

      None of these answers is correct.

  • 12. 
    The names “McDonald's” and “McDonald’s Golden Arches” are examples of:
    • A. 

      Owners' equity

    • B. 

      Investments

    • C. 

      Current assets

    • D. 

      Intangibles

  • 13. 
    When considering whether an event is “infrequent in occurrence,” accountants must:
    • A. 

      Count the number of times the event has occurred in the last seven years in the company

    • B. 

      Consider the operating environment of the entity when applying the criterion

    • C. 

      Consider the statistical probability of the event occurring

    • D. 

      Count the number of times the event has occurred nationwide in the last year

  • 14. 
    When a business experiences a gain from a nonrecurring item:
    • A. 

      The gain has no income tax effect on the company

    • B. 

      The gain increases the amount of taxes owed, which in turn reduces the amount of the gain

    • C. 

      The gain must always be shown without any income tax effect

    • D. 

      The gain decreases the amount of taxes owed, which in turn increases the amount of the gain

  • 15. 
    Which one of the following items below is considered a recurring item?
    • A. 

      Extraordinary item

    • B. 

      Gain on sale of a building

    • C. 

      Discontinued operations

    • D. 

      Change in accounting principle

  • 16. 
    The Harold Supply Company had net income for the year of $250,000. Harold started the period with 10,000 shares of common stock outstanding and on April 1 issued another 5,000 shares. What is Harold’s earnings per share this year?
    • A. 

      $18.18

    • B. 

      $20.00

    • C. 

      $16.67

    • D. 

      $25.00

  • 17. 
    An item that should be shown separately from the continuing operations of a company on an income statement is:
    • A. 

      Utilities expense

    • B. 

      A non-recurring item

    • C. 

      Recurring item

    • D. 

      Wages expense

  • 18. 
    Liabilities are listed on a classified balance sheet in order of:
    • A. 

      Alphabetical order

    • B. 

      How quickly the liabilities must be paid

    • C. 

      The dollar amounts (size) of liabilities

    • D. 

      None of these answers is correct.

  • 19. 
    The ratio that tells us the average time it takes a company to receive payments from its credit customers is the:
    • A. 

      Current ratio

    • B. 

      Quick ratio

    • C. 

      Average accounts receivable collection period in days

    • D. 

      Average sales of account turnover ratio

  • 20. 
    A company may disclose its comprehensive income by:
    • A. 

      Comprehensive income included in the statement of changes in stockholders’ equity

    • B. 

      A separate statement of comprehensive income

    • C. 

      A combined statement of comprehensive income

    • D. 

      All of these answers are correct.

  • 21. 
    One asset that is never systematically expensed in the accounting periods benefited by the asset is known as:
    • A. 

      Machinery

    • B. 

      Goodwill

    • C. 

      A patent

    • D. 

      Equipment

  • 22. 
    Accounting rules define an extraordinary item as an event that is:
    • A. 

      Both unusual in nature and infrequent in occurrence

    • B. 

      Infrequent in occurrence

    • C. 

      Neither unusual in nature nor infrequent in occurrence

    • D. 

      Unusual in nature

  • 23. 
    The Robert B. Company had net income for the year of $47,840. The company had 18,000 shares of common and 2,500 shares of preferred stock outstanding all year.  The company paid a preferred dividend of $5,000.  What is the company’s earnings per share this year?
    • A. 

      $2.38

    • B. 

      $47,840

    • C. 

      $2.66 (rounded)

    • D. 

      $2.33 (rounded)

  • 24. 
    Determining the amount of income tax to be paid on income from ongoing activities is complex. Generally speaking, accountants must:
    • A. 

      Subtract the deductible costs from taxable revenue to determine taxable income

    • B. 

      Determine the costs that IRS allows to be deducted from taxable revenue to arrive at taxable income

    • C. 

      Determine the revenue that is taxable according to income tax regulations

    • D. 

      All of these answers are correct.

  • 25. 
    Income statements broadly separate the activities they report into:
    • A. 

      Elements of income associated with assets and elements associated with liabilities

    • B. 

      Those expected to recur and those that are not

    • C. 

      Operating, financing, and investing activities

    • D. 

      None of these answers is correct.

  • 26. 
    The amount that is paid by owners for the purchase of company stock is called:
    • A. 

      Contributed capital

    • B. 

      Paid-in capital

    • C. 

      Retained earnings

    • D. 

      Answers a and b are both correct.

  • 27. 
    If a company has an extraordinary loss of $400,000 in a period where the tax rate is 40%, how much will the firm show on the income statement for the loss this period?
    • A. 

      $160,000

    • B. 

      $400,000

    • C. 

      $560,000

    • D. 

      $240,000

  • 28. 
    Financial statements, which show the results for two or more years, are commonly known as:
    • A. 

      Comparative financial statements

    • B. 

      Duplicate financial statements

    • C. 

      Multiple financial statements

    • D. 

      Answers a and b are both correct.