1. Management should select the depreciation method that is easiest to apply OR best measures the plant asset's market vale over its useful life OR best measures the plant asset's contribution to revenue over its useful life OR has been used most often in the past by the company?
2. Corporations invest in other companies for all of the following reasons except to
a. house excess cash until needed
b. generate earnings
c. meet strategic goals
d. increase trading of the other companies' stock
3. A typical investment to house excess cash until needed is
stocks of companies in a related industry
a. debt securities
b. low-risk, highly liquid securities
c. stock securities
4. A company may purchase a noncontrolling interest in another firm in a related industry
a. to house excess cash until needed
b. to generate earnings
c. for strategic reasons
d. for speculative reasons
5. Under the equity method of accounting for long-term investments in common stock, when a dividend is received form the investee company,
a. the Dividend Revenue account is credited
b. the Stock Investments account is increased
c. the Stock Investments account is decreased
d. no entry is necessary
6. Which of the following would not be classified as a temporary investment? Short-term commercial paper or Idle cash in a bank checking account or Marketable equity securities or Marketable debt securities
7. What is the primary purpose of the statement of cash flows is to
a. provide information about the investing and financing activities during a period
b. prove that revenues exceed expenses if there is a net income
c. provide information about the cash receipts and cash payments during a period
d. facilitate banking relationships
8. If a company reports a net loss, it
a. may still have a net increase in cash
b. will not be able to pay cash dividends
c. will not be able to get a loan
d. will not be able to make capital expenditures
9. The category that is generally considered to be the best measure of a company's ability to continue as a going concern is
a. cash flows from operation activities
b. cash flows from investing activities
c. cash flows from financing activities
d. usually different form year to year
10. Cash receipts from interest and dividends are classified as financing activities or investing activities or operation activities OR either financing or investing activities
11. Which of the following transactions does not affect cash during a period?
a. Write-off of an uncollectible account
b. Collection of an accounts receivable
c. Sale of treasury stock
d. Exercise of the call option on bonds payable
12. If accounts receivable have increased during the period,
a. revenues on an accrual basis are less than revenues on a cash basis
b. revenues on an accrual basis are greater than revenues on a cash basis
c. revenues on an accrual basis are the same as revenues on a cash basis
d. expenses on an accrual basis are greater than expenses on a cash basis
13. If accounts payable have increased during a period,
a. revenues on an accrual basis are less than revenues on a cash basis
b. expenses on an accrual basis are less than expenses on a cash basis
c. expenses on an accrual basis are greater than expenses on a cash basis
d. expenses on an accrual basis are the same as expenses on a cash basis
14. Using the indirect method, patent amortization expense for the period
a. is deducted form net income
b. causes cash to increase
c. causes cash to decrease
d. is added to net income
15. Using the indirect method, if equipment is sold at a gain, the
a. sale proceeds received are deducted in the operating activities section
b. sale proceeds received are added in the operation activities section
c. amount of the gain is added in the operation activities section
d. amount of the gain is deducted in the operation activities section
16. Lorette Company had credit sales of $700,000. The beginning accounts receivable valance was $40,000 and the ending accounts receivable balance was $140,000. What were3 the cash collections from customers during the period?
17. Short-term creditors are usually most interested in evaluating
18. Long-term creditors are usually most interested in evaluating liquidity and solvency OR solvency and marketability OR liquidity and profitability OR profitability and solvency
19. Stockholders are most interested in evaluating liquidity and solvency OR profitability and solvency OR liquidity and profitability OR marketability and solvency
20. Ratios are used as tools in financial analysis
a. instead of horizontal and vertical analyses
b. because they may provide information tat is not apparent from inspection of the individual components of the ratio
c. because even single ratios by themselves are quite meaningful
d. because they are prescribed by GAAP
21. What effect did the borrowing transaction have on the amount of Cory and Alvin Company's working capital?
a. No effect
b. $90,000 increase
c. $135,000 increase
d. $90,000 decrease
22. What effect did the borrowing transaction have on Cory and Alvin Company's current ratio?
a. The ratio remained unchanged
b. The change in the current ratio cannot be determined
c. The ratio decreased
d. The ratio increased
23. If equal amounts are added to the numerator and the denominator of the current ratio, the ratio will always increase OR decrease OR stay the same OR equal zero
24. A general rule to use in assessing the average collection period is
a. that it should not exceed 30 days
b. it can be any length as long as the customer continues to buy merchandise
c. that it should not greatly exceed the discount period
d. that is should not greatly exceed the credit term period
25. A company has an average inventory on hand of $40,000 and the average days to sell inventory is 29.2 days. What is the cost of goods sold?
26. A successful grocery store would probably have
a. a low inventory turnover
b. a high inventory turnover
c. zero profit margin
d. low volume
The solution explains various multiple choice questions in accounting
What is the impact of a trade deficit on the exchange rate value of the dollar? Address the economic motivations underlying international trade. Provide an actual (real-world) example that could be used to demonstrate the price inelasticity of demand for a given good.
D Q week 5
1. What is the impact of a trade deficit on the exchange rate value of the dollar? Make sure you explain how transactions in the foreign exchange market (as a result of the trade deficit) result in price pressures placed on this change exchange rate.
2. Address the economic motivations underlying international trade. Under what circumstances would two countries have no incentives to trade?
3. Provide an actual (real-world) example that could be used to demonstrate the price inelasticity of demand for a given good. Be sure to provide a quantitative definition of price inelastic demand as well as support for the real-world example you provide.
4. What is the purpose of anti-trust legislation? In your answer, be sure to include explicit benefits that can be realized by consumers as a consequence of the enforcement of this legislation. What are some potential costs (to consumers)?
5. Explain the Keynesian perspective with respect to deficit spending by the federal government.
6. Assume the banking system is in reserve equilibrium. The Fed conducts an open market purchase of Treasury securities in the amount of $1 billion. The reserve requirement against deposits is 10%. Identify the potential amount of the money supply increase as a consequence of the Fed's action and describe fully how money is created by the banking system subsequent to the Fed's open market purchase of Treasury securities in the amount of $1 billion.
7. Why does the Monetarist school of economic thought maintain that monetary stimulus is doomed to be ineffective in the long run?
8. Identify and explain significant aspects associated with the task of measuring unemployment. What people are not counted as being unemployed in the U.S. economy? Note: Do not merely describe how the unemployment rate is calculated; instead, make sure you explain the problems associated with measuring the unemployment rate.
9. A country operates under a flexible exchange rate system and is experiencing a deficit in its Current (trade) Account. Ignoring all other Balance of Payments categories, what should be the net effect of the trade deficit on the country's Capital Account? Explain.
10. Explain why, at one point in time, a Keynesian approach to managing the macro-economy might be appropriate while, at another point in time, a Classical approach might be more likely to produce a superior outcome. Make sure the outcome you address includes inflation and employment issues.
What are the advantages and limitations of International Trade
b. What are the effects on international trade on the U.S. economy?
c. Explain how changes in fiscal and monetary policies affect exchange rate.