Question 1

Which of the following statements concerning the multiple-step income statement is false?

Accepted Answer

A)  The multiple-step income statement provides a subtotal of Income before Income Tax Expense.
B)  Income from Operations is the amount of revenues minus expenses from the company's main business activities.
C)  Any revenue and/or expense from activities other than the company's main business are peripheral results and are included in Income from Operations.
D)  Income before Income Tax Expense and Income from Operations are different if there are any peripheral revenues and expenses.E) A) and C)
F) None of the above

Question 2

Under current laws dealing with misstatements of financial results,which of the following statements is true?

Accepted Answer

A)  Managers found guilty can escape paying fines if they declare bankruptcy.
B)  Managers can be sentenced to long prison terms of up to 20 years per violation.
C)  Managers found guilty may keep any bonuses or profits from the misrepresentation if their fines are less than such bonuses or profits.
D)  If you blow the whistle on your boss for misstating financial results,you can be fired.E) A) and B)
F) A) and C)

Question 3

Form 10-Q is a quarterly report electronically filed with the SEC.

Accepted Answer

A) True 
 B)False

Question 4

Benchmarks are not

Accepted Answer

A)  points of comparison to use in evaluating financial statement amounts.
B)  prior period results of a company which provide trend information.
C)  competitor financial information to be used to evaluate a company's performance.
D)  evaluations of a single business in a single period.E) C) and D)
F) A) and B)

Question 5

What is the net profit margin ratio for 2014?

Accepted Answer

A)  .068
B)  .059
C)  .104
D)  .078E) B) and C)
F) A) and D)

Question 6

The asset turnover for 2015 is closest to:

Accepted Answer

A)  0.071
B)  0.743
C)  0.693
D)  0.124E) C) and D)
F) B) and C)

Question 7

All other things being equal,in which of the following cases would an analyst rank the company most favorably?

Accepted Answer

A)  The company has the highest debt-to-assets ratio in the industry as well as the highest profit margin ratio and asset turnover ratio.
B)  The company has the highest debt-to-assets ratio in the industry as well as the highest profit margin ratio while its asset turnover ratio is the lowest.
C)  The company has the lowest debt-to-assets ratio in the industry as well as the lowest asset turnover ratio while its profit margin ratio is the highest.
D)  The company has the lowest debt-to-assets ratio in the industry as well as the highest profit margin ratio and asset turnover ratio.E) A) and B)
F) A) and C)

Question 8

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

Accepted Answer

A)  creditors to manage financial agreements.
B)  government officials to regulate the business and its financial records.
C)  analysts to assess business risks.
D)  investors to vote on company policies.E) All of the above
F) A) and B)

Question 9

If a company negotiates a deal with creditors to exchange debt for stock,its:

Accepted Answer

A)  net profit margin ratio will increase.
B)  asset turnover ratio will increase.
C)  debt-to-assets ratio will decrease.
D)  debt-to-assets ratio will remain unchanged.E) A) and B)
F) B) and C)

Question 10

The primary purpose of an audit is to:

Accepted Answer

A)  add credibility to the financial statements.
B)  assure investors that no errors have been made.
C)  detect fraud.
D)  assure creditors that they will be repaid.E) A) and C)
F) C) and D)

Question 11

The fraud triangle identifies incentive,opportunity,and benchmarks as the requirements for a fraud to occur.

Accepted Answer

A) True 
 B)False

Question 12

Numerous accounting scandals and material financial misrepresentations resulted in the SEC:

Accepted Answer

A)  taking over responsibility for setting accounting rules in the United States.
B)  requiring companies to issue monthly reports on financial data.
C)  requiring companies to have two different accounting firms audit the financial statements included in the annual report on Form 10-K.
D)  introducing severe legal consequences for managers found guilty of such actions.E) C) and D)
F) B) and C)

Question 13

Which of the following would generally be considered an operating revenue or expense?

Accepted Answer

A)  Income from renting out extra warehouse space.
B)  Interest on a note payable.
C)  Dividends earned on an investment is another company's stock.
D)  Depreciation expense.E) B) and D)
F) All of the above

Question 14

Which of the following accurately describes how declaring but not yet paying dividends would affect the ratios indicated?

Accepted Answer

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

Question 15

What is the amount of total liabilities at December 31,2014?

Accepted Answer

A)  $11,700.
B)  $14,100.
C)  $51,618.
D)  $35,450.E) B) and C)
F) All of the above

Question 16

What is the amount of contributed capital that will be reported on the Statement of stockholders' equity at the end of 2013?

Accepted Answer

A)  $300,000
B)  $360,000
C)  $345,000
D)  $415,000E) A) and D)
F) A) and C)

Question 17

Further information about financial data,accounting methods,and financial statements is included in what part of the annual report?

Accepted Answer

A)  The balance sheet.
B)  The unaudited condensed quarterly data.
C)  The notes to the financial statements.
D)  The summarized financial data.E) All of the above
F) B) and D)

Question 18

Accountants are able to most influence which component of the fraud triangle?

Accepted Answer

A)  Incentive.
B)  Ability to rationalize the fraud.
C)  Ability to conceal the fraud.
D)  Accountants cannot influence any component.E) C) and D)
F) A) and D)

Question 19

What is the amount of current assets to be reported on the balance sheet at the end of 2014?

Accepted Answer

A)  $26,950.
B)  $34,500.
C)  $35,450.
D)  $51,618.E) A) and C)
F) All of the above

Question 20

The debt-to-assets ratio at the end of 2014 is closest to:

Accepted Answer

A)  0.273
B)  0.376
C)  0.301
D)  0.330E) A) and B)
F) A) and C)

Exam 5: Financial Reporting and Analysis

Accountants are able to most influence which component of the fraud triangle?

Correct AnswerverifiedShow Answer

Further information about financial data,accounting methods,and financial statements is included in what part of the annual report?

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

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Which of the following would generally be considered an operating revenue or expense?

Correct AnswerverifiedShow Answer

Which of the following statements concerning the multiple-step income statement is false?

Correct AnswerverifiedShow Answer

What is the net profit margin ratio for 2014?

Correct AnswerverifiedShow Answer

What is the amount of current assets to be reported on the balance sheet at the end of 2014?

Correct AnswerverifiedShow Answer

What is the amount of total liabilities at December 31,2014?

Correct AnswerverifiedShow Answer

Numerous accounting scandals and material financial misrepresentations resulted in the SEC:

Correct AnswerverifiedShow Answer

If a company negotiates a deal with creditors to exchange debt for stock,its:

Correct AnswerverifiedShow Answer

Form 10-Q is a quarterly report electronically filed with the SEC.

Correct AnswerverifiedShow Answer

Benchmarks are not

Correct AnswerverifiedShow Answer

All other things being equal,in which of the following cases would an analyst rank the company most favorably?

Correct AnswerverifiedShow Answer

The asset turnover for 2015 is closest to:

Correct AnswerverifiedShow Answer

The primary purpose of an audit is to:

Correct AnswerverifiedShow Answer

The fraud triangle identifies incentive,opportunity,and benchmarks as the requirements for a fraud to occur.

Correct AnswerverifiedShow Answer

Under current laws dealing with misstatements of financial results,which of the following statements is true?

Correct AnswerverifiedShow Answer

The debt-to-assets ratio at the end of 2014 is closest to:

Correct AnswerverifiedShow Answer

What is the amount of contributed capital that will be reported on the Statement of stockholders' equity at the end of 2013?

Correct AnswerverifiedShow Answer

Which of the following accurately describes how declaring but not yet paying dividends would affect the ratios indicated?

Correct AnswerverifiedShow Answer

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