Multiple Questions Answers

1. (TCO 4) Which of the following statements is not true? (Points : 4) 
Comparability means using the same accounting principles from year to year within a company.
Reliability is the quality of information that gives assurance that it is free of error or bias.
Relevant accounting information must be capable of making a difference in a decision.
The FASB’s overriding criterion is that the accounting rule adopted should be the one that generates the most useful financial information for making a decision. 

2. (TCO 4) Using the following balance sheet and income statement data, what is the current ratio?
Current assets $9,000 Net income $12,000
Current liabilities 4,000 Stockholders’ equity 24,000
Total assets 30,000 Total liabilities 6,000
Average common shares outstanding was 10,000 (Points : 4) 
1.75:1
2.00:1
0.44:1
2.25:1

3. (TCO4) Using the following balance sheet and income statement data, what is the total amount of working capital?
Current assets $12,000 Net income $12,000
Current liabilities 8,000 Stockholders’ equity 24,000
Total assets 32,000 Total liabilities 8,000
Average common shares outstanding was 10,000 (Points : 4) 
$4,000
$24,000
$3,000
$10,000

4. (TCO 4) Using the following balance sheet and income statement data, what is the debt to total assets ratio?
Current assets $7,000 Net income $12,000
Current liabilities 4,000 Stockholders’ equity 21,000
Total assets 30,000 Total liabilities 9,000
Average common shares outstanding was 10,000 (Points : 4) 
75%
19%
57%
30%