1) Investments representing long-term holdings of securities would appear on the balance sheet as

A. Long-term liabilities

B. Long-term assets

C. Capital stock

D. Retained earnings

E. None of the above

2) Which of the following is a source of cash?

A. Issuance of long-term debt

B. Increase in inventories

C. Decrease in accounts payable

D. Increase in accounts receivable

E. None of the above

3) Which of the following is added to net income to calculate cash flow?

A. depreciation

B. Increase in accounts receivable

C. Increase in inventory

D. Decrease in accounts payable

E. None of the above

4) A customer pays on an account receivable. The account that should be credited is

A. Inventory

B. Cash

C. Accounts payable

D. Accounts Receivable

E. None of the above

5) Blackson Incorporated signed a three-year lease for the building that Blackson occupies and paid the first six months in advance. The account that should be debited is

A. Prepaid expenses

B. Cash

C. Building

D. Accounts payable

E. None of the above

6) Which of the following is a snapshot of the financial position of a company?

A. Balance sheet

B. Income statement

C. Statement of retained earnings

D. Cash flow statement

E. None of the above

7) Which ratio is Wall Street's favorite?

A. Inventory turnover

B. Receivables turnover

C. Current

D. Price-Earnings

E. None of the above

8) Which of the following ratios measures liquidity?

A. Current

B. Payout

C. Gross margin

D. Asset turnover

E. None of the above

9) When shares are sold from one shareholder to another in the open market; the following account is impacted

A. Capital stock

B. Retained earnings

C. Long-term liabilities

D. Current assets

E. None of the above

10) Which of the following ratios is not useful for comparison purposes?

A. Return on assets

B. Price earnings ratio

C. Return on equity

D. Earnings-per-share

E. None of the above

11) The quality that allows quantitative assessment of the similarities and differences among enterprises is known as

A. Comparability

B. Consistency

C. Reliability

D. Relevance

E. None of the above

12) Which of the following ratios depicts investment efficiency?

A. Asset turnover

B. Current

C. Quick

D. Payout

E. None of the above

13) Which of the following statements represents a flow concept?

A. Balance sheet

B. Income statement

C. Statement of retained earnings

D. Inventory statement

E. None of the above

14) Left-hand entries increase

A. asset accounts

B. liability accounts

C. owners equity accounts

D. both B and C

E. none of the above

15) The stock market values a company based on which of the following accounts?

A. Assets

B. Liabilities

C. Capital stock

D. Retained earnings

E. None of the above

16) Which of the following ratios is not a liquidity ratio?

A. times interest earned

B. current

C. quick

D. inventory turnover

E. none of the above

17) Which of the following is one gauge of the company's ability to meet its short-term obligations?

A. Gross margin

B. Asset turnover

C. Profit margin

D. Working capital

E. None of the above

18) Bart is saving for college. He needs $20,000 for the first year. How much must he invest at a 5% annual interest rate to have $20,000 in five years? Round to the nearest dollar.

A. $14,982

D. $15,016

C. $15,023

D. $15,671

E. None of the above

19) Information that can make a difference to the decision at hand is considered to be

A. Reliable

B. Comparable

C. Relevant

D. Understandable

E. None of the above

20) Which of the following increases cash?

A. Increase in inventory

B. Increase in accounts receivable

C. Increase in accounts payable

D. None of the above

21) Ellis industries is a large, multinational company located in the US. Elliss financial statements are in US dollars. This GAAP is known as

A. Monetary concept

B. Economic entity

C. Conservatism

D. Matching

E. None of the above

22) If a company pays out more than the income tax incurred as shown in the income tax liability decrease, the effect on cash is a

A. Decrease

B. Increase

C. No effect

D. None of the above

23) Which of the following is not an expense?

A. Utilities

B. Insurance

C. Dividends

D. Cost of goods sold

E. None of the above

24) Which of the following is an expense allocation scheme?

A. Cost of goods sold

B. Amortization

C. Depreciation

D. B and C

D. None of the above

25) Formis, Inc. estimates the useful life of each asset purchased and depreciates the asset over the useful life. This GAAP is known as

A. Monetary concept

B. Economic entity

C. Going concern

D. Matching

E. None of the above

26) Which of the following is not a functional area of accounting?

A. Managerial accounting

B. Tax accounting

C. Economic accounting

D. Financial accounting

E. None of the above

27) The account that reflects the amount the owners have invested in the business is

A. Capital stock

B. Retained earnings

C. Long-term liabilities

D. Long-term assets

E. None of the above

28) A gain on the sale of an asset is subtracted from net income to determine cash flow from operating activities because of

A. Double counting

B. Asset sales require a basis

C. Losses are cash flow neutral

D. None of the above

29) The following accounts are listed in order of liquidity

A. Current assets

B. Current liabilities

C. Both A and B

D. Long-term assets

E. None of the above

30) Right-hand entries decrease

A. Asset accounts

B. Liability accounts

C. Owners equity accounts

D. Both B and C

E. None of the above

31) Which of the following ratios measures operating performance?

A. Price-Earnings

B. Current

C. Receivables turnover

D. Operating cycle

E. None of the above

32) Which of the following are added to net income to determine cash flow from operating activities?

A. Depreciation

B. Amortization

C. Both A and B

D. Gain on asset sale

E. None of the above