18. Under the equity method, the Stock Investments account is increased when the

a. investee company reports net income.

b. investee company pays a dividend.

c. investee company reports a loss.

d. stock investment is sold at a gain.

19. The account, Stock Investments, is

a. a subsidiary ledger account.

b. a long-term liability account.

c. a general ledger control account.

d. another name for Debt Investments.

20. Which of the following would not be considered a motive for making a stock investment in another corporation?

a. Appreciation in the market value of the stock investment

b. Use of the investment for expanding its own operations

c. Use of the investment to diversify its own operations

d. An increase in the amount of interest revenue from the stock investment

21. Revenue is recognized when cash dividends are received under

a. the controlling interest method.

b. the cost method.

c. the equity method.

d. both the cost and equity methods.

22. In addition to the three basic financial statements, which of the following is also a required financial statement?

a. the "Cash Budget"

b. the Statement of Cash Flows

c. the Statement of Cash Inflows and Outflows

d. the "Cash Reconciliation"

23. The statement of cash flows will not report the

a. amount of checks outstanding at the end of the period.

b. sources of cash in the current period.

c. uses of cash in the current period.

d. change in the cash balance for the current period.

24. The statement of cash flows reports each of the following except

a. cash receipts from operating activities.

b. cash payments from investing activities.

c. the net change in cash.

d. cash sales.

25. Each of the following are particularly interested in the statement of cash flows except

a. creditors.

b. employees.

c. shareholders.

d. government agencies.

26. Lending money and collecting the loans are

a. operating activities.

b. investing activities.

c. financing activities.

d. Non-cash investing and financing activities.

27. The cash effects of transactions that create revenues and expenses are

a. financing activities.

b. investing activities.

c. operating activities.

d. processing activities.

28. The acquisition of land by issuing common stock is

a. a noncash transaction which is not reported in the body of a statement of cash flows.

b. a cash transaction and would be reported in the body of a statement of cash flows.

c. a noncash transaction and would be reported in the body of a statement of cash flows.

d. only reported if the statement of cash flows is prepared using the direct method.

29. In analyzing the financial statements of a company, a single item on the financial statements

a. should be reported in bold-face type.

b. is more meaningful if compared to other financial information.

c. is significant only if it is large.

d. should be accompanied by a footnote.

30. Short-term creditors are usually most interested in evaluating

a. solvency.

b. liquidity.

c. marketability.

d. profitability.

31. Long-term creditors are usually most interested in evaluating

a. liquidity and solvency.

b. solvency and marketability.

c. liquidity and profitability.

d. profitability and solvency.

32. Stockholders are most interested in evaluating

a. liquidity and solvency.

b. profitability and solvency.

c. liquidity and profitability.

d. marketability and solvency.

33. A stockholder is interested in the ability of a firm to

a. pay consistent dividends.

b. appreciate in share price.

c. survive over a long period.

d. All of these answer choices are correct.

34. Comparisons of financial data made within a company are called

a. intracompany comparisons.

b. interior comparisons.

c. intercompany comparisons.

d. intramural comparisons.

35. A technique for evaluating financial statements that expresses the relationship among selected items of financial statement data is

a. common size analysis.

b. horizontal analysis.

c. ratio analysis.

d. vertical analysis.

36. Management accountants would not

a. assist in budget planning.

b. prepare reports primarily for external users.

c. determine cost behavior.

d. be concerned with the impact of cost and volume on profits.

37. Internal reports must be communicated

a. daily.

b. monthly.

c. annually.

d. as needed.

38. Financial statements for external users can be described as

a. user-specific.

b. general-purpose.

c. special-purpose.

d. managerial reports.