F030 Lesson 3 Exam SCORE 95 PERCENT

      

Question   1

5 / 5 points

Which of the following statements is FALSE?

Question options:

  

Common-size balance sheets allow   for comparison of firms with different levels of total assets by introducing   a common denominator.

 

The common-size balance sheet   reveals the composition of assets within major categories.

 

Each item on a common-size balance   sheet is expressed as a percentage of sales.

 

The common-size balance sheet   reveals the capital and the debt structure of the firm.

 

Question 2

5 / 5 points

       

Companies that use IFRS may switch the order of presentation of __________, listing noncurrent items before current items.

Question options:

  

assets and liabilities

 

liabilities and owner's equity

 

assets and owner's equity

 

owner's equity only

 

Question 3

5 / 5 points

       

Temporary differences are a result of recording revenues or expenses on financial statements in an accounting period __________ when these items are recorded on the firm's tax return.

Question options:

  

before the time

 

after the time

 

the same as

 

different from

 

Question 4

5 / 5 points

       

A __________ expresses each item on the balance sheet as a percentage of total assets.

Question options:

  

ratio balance sheet

 

common-size balance sheet

 

relative balance sheet

 

usual and customary

 

Question 5

5 / 5 points

       

__________ are those assets expected to be converted into cash within one year or operating cycle, whichever is longer.

Question options:

  

Marketable securities

 

Future assets

 

Current assets

 

Short-lived

 

Question 6

5 / 5 points

       

The valuation of marketable securities on the balance sheet requires the separation of investment securities into three categories:

Question options:

  

held to maturity, negotiable   securities, and securities available for sale.

 

held to maturity, negotiable   securities, and securities available for purchase.

 

held to maturity, trading   securities, and securities available for purchase.

 

held to maturity, trading   securities, and securities available for sale.

 

Question 7

5 / 5 points

       

Which of the following statements is true?

Question options:

  

The straight-line method of   depreciation allocates a decreasing amount of depreciation expense each year.

 

Straight-line depreciation is the   least used method for financial reporting purposes.

 

Fixed assets are reported at   historical cost less accumulated depreciation on the balance sheet.

 

The total amount of depreciation   over the asset's life is larger when using an accelerated method of   depreciation.

 

Question 8

5 / 5 points

       

Companies that are paid in advance for services or products record a(n) __________ on the receipt of cash referred to as unearned revenue or deferred credits.

Question options:

  

liability

 

receivable

 

asset

 

accrued asset

 

Question 9

5 / 5 points

       

Which item below does NOT describe a balance sheet?

Question options:

  

Assets = Liabilities +   Stockholders' Equity

 

Financial position at a point in   time

 

Assets – Liabilities =   Stockholders' Equity

 

Assets + Liabilities =   Stockholders' Equity

 

Question 10

5 / 5 points

       

Use the information below to answer the following question.
 

ABC Company purchases five products for sale in the order and at the costs shown below

   

Unit

Cost   per Unit

 

1

$10

 

2

$12

 

3

$15

 

4

$18

 

5

$13

 Assume ABC sells two items and uses the LIFO method of inventory valuation. What amount would appear for cost of goods sold on the income statement?

Question options:

  

$37

 

$41

 

$22

 

$31

 

Question 11

5 / 5 points

       

__________ are also referred to as short-term investments.

Question options:

  

Real estate

 

Annuities

 

Non-term life insurance

 

Marketable securities

 

Question 12

5 / 5 points

       

The net realizable value of accounts receivable is the actual amount of the account less an allowance for __________ accounts.

Question options:

  

future

 

questionable

 

unknown

 

doubtful

 

Question 13

5 / 5 points

       

Assume the following purchases of inventory for ABC Company and use this information to answer the following question.

   

Purchase   #

Purchase   Price

 

1

$3

 

2

$4

 

3

$5

 

4

$6

 

5

$7

 Assume ABC uses the average cost method of inventory valuation. What unit cost would be used to determine the amount in ending inventory or cost of goods sold?

Question options:

  

$3

 

$5

 

$7

 

$25

 

Question 14

0 / 5 points

       

Most manufacturing firms use the accelerated depreciation method and retailers use the __________ method for financial reporting purposes.

Question options:

  

reverse accelerated depreciation

 

accelerated depreciation   (also) (Incorrect)

 

straight-line depreciation

 

incremental depreciation

 

Question 15

5 / 5 points

       

Which item below would NOT be a quality of financial reporting issue related to the balance sheet?

Question options:

  

Mismatching the type of debt   (short or long-term) used to finance assets

 

Discretionary expenses

 

Overvaluation of assets

 

Off-balance sheet financing

 

Question 16

5 / 5 points

       

The balance sheet is also called the:

Question options:

  

statement of future.

 

statement of welfare.

 

statement of condition.

 

statement of potential position.

 

Question 17

5 / 5 points

       

A (n) __________ balance sheet means that the asset and liability sections are categorized into key areas.

Question options:

  

classified

 

systematic

 

organized

 

legend

 

Question 18

5 / 5 points

       

A common-size balance sheet is useful to the analyst because it facilitates the __________ analysis of the firm.

Question options:

  

functional

 

structural

 

operational

 

cost

 

Question 19

5 / 5 points

       

Additional information helpful to the analysis of accounts receivable and the allowance account is provided in the schedule of:

Question options:

  

deductions accounts.

 

valuation and qualifying accounts.

 

additions to costs and expenses   accounts.

 

allowance for unknown accounts.

 

Question 20

5 / 5 points

       

Which of the following accounts could be categorized as either a current or noncurrent liability depending on date the debt is due?

Question options:

  

Notes payable and deferred taxes

 

Accounts payable and current   portion of long-term debt

 

Deferred taxes and mortgages due   in 30 years

 

Long-term warranties and accounts   payable