1.External users of accounting information, like the Internal Revenue Service, are most commonly known as

Select one:

a. taxing authorities

b. regulatory agencies

c. customers

d. labor unions

2.What is the order in which assets are generally listed on a classified balance sheet?

Select one:

a. Current, long-term investments, property, plant and equipment, intangibles

b. Current, property, plant and equipment, intangibles, long-term investments

c. Current and long-term

d. Current, property, plant and equipment, long-term investments, intangibles

3.Which of the following are internal reports that accounting provides to internal users?

Select one:

A. Both forecasts of cash needs and financial comparisons are internal reports

b. Neither forecasts of cash needs or financial comparisons is an internal report

c. Forecasts of cash needs for next year

d. Financial comparisons of operating activity alternatives

4.Which of the following statements is true?

Select one:

a. the denominator used in computing earnings per share represents the shares of common stock outstanding on the last day of the accounting period

b.Net income is not adjusted when computing earnings per share

c. Earnings per share is an internal measure and is not used by stockholders

d. By comparing earnings per share of a single corporation over time, a stockholder can evaluate the corporation's relative earnings performance

5.Ace Company is a retail store. Due to competition, it is having trouble selling its products. Thus, inventory has been building up. Ace's current ratio has not changed for the past three years, in spite of the inventory build up. Which of the following statements is true?

Select one:

a. The composition of current assets and current liabilities does not matter

b. As long as the current ratio remains constant, there is no need for concern

c. Since inventory is a current asset, any increases should automatically cause the current ratio to rise

d. The management of Ace should consider the effect of slow moving inventory on its liquidity

6.Which of the following is not a principal type of business activity?

Select one:

a. Operating

b. Investing

c. Delivering

d. Financing

7.Bathlinks Corporation has a debt to assets ratio of 73%. This tells the user of Bathlinks's financial statements that

Select one:

a. Bathlinks is getting a 27% return on its assets

b. 73% of the assets are financed by the stockholders

c. there is a risk that Bathlinks cannot pay its debts as they come due

d. based on this measure, the user should not invest in Bathlinks

8.Which of the following statements is true?

Select one:

a. Amounts received from issued stock are reported on the income statement

b. Amounts paid out as dividends are not expenses

c. Amounts received from issuing stock are revenues

d. Amounts paid out as dividends are reported on the income statement

9.An income statement

Select one:

a. presents the revenues and expenses for a specific period of time

b. reports the assets, liabilities, and stockholders' equity at a specific date

c. reports the changes in assets, liabilities, and stockholders' equity over a period of time

d. summarizes the changes in retained earnings for a specific period of time

10.Which of the following is not an advantage of the corporate form of business organization?

Select one:

a. Easy to raise funds

b. Favorable tax treatment

c. No personal liability

d. Easy to transfer ownership

11.How can a company improve its current ratio?

Select one:

a. Work with a creditor to reclassify some current debt into long-term debt

b. Nothing can ethically be done to improve the current ratio

c. Use cash to reduce current liabilities

d. Use excess cash to buy new equipment

12.Earnings per share is calculated by dividing

Select one:

a. gross profit by average common shares outstanding

b. (net income less preferred dividends) by average common shares outstanding

c. net sales by average common shares outstanding

d. net income by average common shares outstanding

13. The common characteristic possessed by all assets is

Select one:

a. future economic benefit

b. great monetary value

c. long life

d. tangible nature

14.Which of the following is the most appropriate and modern definition of accounting?

Select one:

a. The information system that identifies, records, and communicates the economic events of an organization to interested users

b. A means of collecting information

c. The interconnected network of subsystems necessary to operate a business

d. Electronic collection, organization, and communication of vast amounts of information

15.The relationship between current assets and current liabilities is important in evaluating a company's

Select one:

a. liquidity

b. profitability

c. market value

d. solvency