Question 1

What is the debt-to-assets ratio for 2011 and 2012?

Accepted Answer

A)   Option A
B)   Option B
C)   Option C
D)   Option DE) C) and D)
F) B) and C)

Question 2

Multi-step income statements display subtotals which provide important measures of profit in addition to net income.

Accepted Answer

A) True 
 B)False

Question 3

When auditors conclude that a company's financial statements conform to GAAP, the audit report is said to be:

Accepted Answer

A)   validated.
B)   qualified.
C)   relevant.
D)   unqualified.E) All of the above
F) A) and B)

Question 4

An asset turnover ratio of 0.4 means that $4 in net income is generated for every $10 in assets

Accepted Answer

A) True 
 B)False

Question 5

If we were to compare the financial statements of Microsoft Corporation for 2000, 20005 and 2010, this would be:

Accepted Answer

A)   an external audit.
B)   a cross-sectional analysis.
C)   a business model
D)   a time-series analysis.E) B) and C)
F) A) and D)

Question 6

Under IFRS, the income statement is called the Statement of Comprehensive Income.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following accurately describes how the issuance of additional shares of stock for cash would affect the ratios indicated?

Accepted Answer

A)   Option A
B)   Option B
C)   Option C
D)   Option DE) A) and D)
F) A) and C)

Question 8

Accounting information serves a governance function when it is used by:

Accepted Answer

A)   managers to make a business decision.
B)   government officials to regulate the business and its financial records.
C)   directors to oversee the business.
D)   analysts to vote on company policies.E) A) and D)
F) A) and C)

Question 9

As of the year 2009, the U.S. had not switched to IFRS.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following statements is NOT true concerning the independent external audit?

Accepted Answer

A)   The SEC requires all publicly traded companies to have their internal controls audited by external auditors.
B)   Many privately owned companies have their financial statements audited at the request of lenders.
C)   The goal of the external audit is to detect material misstatements.
D)   The auditors are required to check every transaction in order to provide assurance to financial statement users.E) A) and B)
F) B) and C)

Question 11

Which of the following is true of a company's quarterly report?

Accepted Answer

A)   Contains the same detail as is found in the annual report.
B)   Is an audited report.
C)   Does not include any discussion of financial results.
D)   Has the benefit of being released on a timelier basis.E) None of the above
F) A) and B)

Question 12

According to the Sarbanes-Oxley Act (SOX) , who are the external auditors hired by and required to report to?

Accepted Answer

A)   Audit committee
B)   Chief financial officer
C)   President of the company
D)   Internal auditorsE) None of the above
F) A) and B)

Question 13

Which of the following misstatements would cause the debt-to-assets ratio to be overstated?

Accepted Answer

A)   Capitalizing costs that should have been expensed.
B)   Failing to adjust for depreciation in the current period.
C)   Failing to accrue income taxes of the current period.
D)   Failing to accrue interest earned of the current period.E) A) and B)
F) C) and D)

Question 14

Which of the following would portray an improper and overly optimistic view of a company's net income?

Accepted Answer

A)   Counting shipments of customers' orders as revenue before payment has been received.
B)   Shipping goods to customers without receiving orders from those customers and recording the transactions as revenue.
C)   Accruing liabilities for marketing expenses before they are incurred.
D)   Making an accrual adjusting entry for interest earned on a bond investment.E) B) and C)
F) None of the above

Question 15

What is the net profit margin ratio for 2012?

Accepted Answer

A)   .10
B)   .13
C)   .33
D)   .12E) B) and D)
F) All of the above

Question 16

The group that uses accounting information to evaluate companies' past performance, predict future results, and make recommendations about the companies to current and potential investors is known as:

Accepted Answer

A)   analysts.
B)   managers.
C)   creditors.
D)   auditors.E) A) and B)
F) None of the above

Question 17

Which of the following accurately describes how the collection of cash on account from a customer would affect the ratios indicated?

Accepted Answer

A)   Option A
B)   Option B
C)   Option C
D)   Option DE) C) and D)
F) None of the above

Question 18

A net profit margin ratio of 0.2 means that $1 of profit is generated for every $5 of sales revenue

Accepted Answer

A) True 
 B)False

Question 19

For each of the following, indicate the step of the basic business model that is most appropriate for the activity listed.

Accepted Answer

The answer of For each of the following, indicate the...

Question 20

What effect will transaction (b)  have on the net profit margin ratio and the debt -to-assets ratio?

Accepted Answer

A)   Net profit margin ratio will be unaffected and the debt-to-assets ratio will increase.
B)   Net profit margin ratio will increase and the debt-to-asset ratios will not be affected.
C)   Net profit margin ratio will be unaffected and the debt-to assets ratio will decrease.
D)   Net profit margin ratio will decrease and the debt-to-assets ratio will increase.E) All of the above
F) B) and C)

Exam 5: Financial Reporting and Analysis

A net profit margin ratio of 0.2 means that $1 of profit is generated for every $5 of sales revenue

Correct AnswerverifiedShow Answer

What is the debt-to-assets ratio for 2011 and 2012?

Correct AnswerverifiedShow Answer

Multi-step income statements display subtotals which provide important measures of profit in addition to net income.

Correct AnswerverifiedShow Answer

Which of the following is true of a company's quarterly report?

Correct AnswerverifiedShow Answer

Which of the following would portray an improper and overly optimistic view of a company's net income?

Correct AnswerverifiedShow Answer

Accounting information serves a governance function when it is used by:

Correct AnswerverifiedShow Answer

What effect will transaction (b) have on the net profit margin ratio and the debt -to-assets ratio?

Correct AnswerverifiedShow Answer

Which of the following misstatements would cause the debt-to-assets ratio to be overstated?

Correct AnswerverifiedShow Answer

The group that uses accounting information to evaluate companies' past performance, predict future results, and make recommendations about the companies to current and potential investors is known as:

Correct AnswerverifiedShow Answer

When auditors conclude that a company's financial statements conform to GAAP, the audit report is said to be:

Correct AnswerverifiedShow Answer

If we were to compare the financial statements of Microsoft Corporation for 2000, 20005 and 2010, this would be:

Correct AnswerverifiedShow Answer

Under IFRS, the income statement is called the Statement of Comprehensive Income.

Correct AnswerverifiedShow Answer

Which of the following accurately describes how the collection of cash on account from a customer would affect the ratios indicated?

Correct AnswerverifiedShow Answer

Which of the following statements is NOT true concerning the independent external audit?

Correct AnswerverifiedShow Answer

According to the Sarbanes-Oxley Act (SOX) , who are the external auditors hired by and required to report to?

Correct AnswerverifiedShow Answer

An asset turnover ratio of 0.4 means that $4 in net income is generated for every $10 in assets

Correct AnswerverifiedShow Answer

For each of the following, indicate the step of the basic business model that is most appropriate for the activity listed.

Correct AnswerverifiedShow Answer

As of the year 2009, the U.S. had not switched to IFRS.

Correct AnswerverifiedShow Answer

Which of the following accurately describes how the issuance of additional shares of stock for cash would affect the ratios indicated?

Correct AnswerverifiedShow Answer

What is the net profit margin ratio for 2012?

Correct AnswerverifiedShow Answer

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