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Please select the best answer True/False and Multiple choice

Please aide me in creating a mock test for my study group

Question 1 5 points Save
The primary difference between "Financial Accounting" and "Managerial Accounting" is that Managerial Accounting gives an historical perspective.
True
False

Question 2 5 points Save
Accounting has frequently been referred to as the "language of business" .
True
False

Question 3 5 points Save
"Current", "Near-term" and "short-term" all mean the same thing (are synonomous. in accounting terminology.
True
False

Question 4 5 points Save
"Risk" is generally thought to be the big trade-off in maximizing profits/return.
True
False

Question 5 5 points Save
"Cash" basis accounting is the best method for matching revenue with expenses.
True
False

Question 6 5 points Save
An intangible asset can have physical form i.e. can be seen and touched.
True
False

Question 7 5 points Save
Goodwill is a Tangible Asset.
True
False

Question 8 5 points Save
"Current" Assets means those which are convertible into Cash within 6 months..
True
False

Question 9 5 points Save
Payments make Liability accounts go down.
True
False

Question 10 5 points Save
The "Time Value of Money" concept basically states that a dollar today is worth less than a dollar in the future.
True
False

Question 11 5 points Save
GAAP prepared Financial Statements require that they be accompanied by Notes.
True
False

Question 12 5 points Save
"GAAP" stands for "Generally Accepted Auditing Principles"..
True
False

Question 13 5 points Save
Dividends paid by a firm make its Retained Earnings account go up.
True
False

Question 14 5 points Save
A payment that is exactly the same amount and made at equally spaced intervals of time is called an "Annuity".
True
False

Question 15 5 points Save
A Capital Budget usually involves the analysis of short-term projects.
True
False

Question 16 5 points Save
Capital Stock plus Paid-in-Capital plus Retained Earnings make up the Stockholders Equity section on a Balance Sheet.
True
False

Question 17 5 points Save
Under "Accrual" accounting, expenses are recognized when monies are paid out.
True
False

Question 18 5 points Save
Cost of Goods Sold is used in determining Gross profit.
True
False

Question 19 5 points Save
A Discounted Cash Flow analysis considers the time value of money in evaluating a project.
True
False

Question 20 5 points Save
"Profitability" and "Viability" are two main goals of financial management.
True
False

Question 21 5 points Save
The primary function of a Management Control System ("MCS". is to detect fraud.
True
False

Question 22 5 points Save
The difference between the actual and budgeted amounts is known as a "Variance."
True
False

Question 23 5 points Save
The rule of "Full Disclosure" requires financial reports to disclose any information needed to assure a fair presentation.
True
False

Question 24 5 points Save
When an outside accountant "certifies" i.e. gives a "clean opinion" on a company's financial statements, he is telling the reader that the statements are free of any errors.
True
False

Question 25 5 points Save
Public companies are not required to report their Earnings Per Share ("EPS"..
True
False

Question 26 5 points Save
A firm utilizing 'Operating leverage' generally incurs higher fixed costs.
True
False

Question 27 5 points Save
Contingent liabilities need not be mentioned or referred to in a company's audited financial statements.
True
False

Question 28 5 points Save
Maximizing liquidity and solvency is a good financial strategy.
True
False

Question 29 5 points Save
Leasing is considered another source of Financing.
True
False

Question 30 5 points Save
It is okay to co-mingle the assets of one entity with another as long as they have the same ownership.
True
False

Question 31 5 points Save
The mixture of debt and equity used by the firm to finance its operations is called:
working capital management.
financial depreciation.
agency cost analysis.
capital budgeting.
capital structure.

Question 32 5 points Save
The financial statement showing a firm's earnings over a period of time is the:
Income statement.
Balance sheet.
Statement of cash flows.
Tax reconciliation statement.
Shareholders' equity sheet.

Question 33 5 points Save
The financial statement showing a firm's accounting value on a particular date is the:
Income statement.
Balance sheet.
Statement of cash flows.
Tax reconciliation statement.
Shareholders' equity sheet.

Question 34 5 points Save
A current asset is:
Any item currently owned by the firm.
An item that the firm expects to own within the next year.
An item owned by the firm that it expects to convert into cash within the next 12 months.
Property, Plant and Equipment
The market value of all the items currently owned by the firm.

Question 35 5 points Save
A company's financial "viability" is measured by:
Profit and Loss
Hurdle Rate
Dividend Policy
Liquidity and Solvency
Ability to pay taxes

Question 36 5 points Save
Balance Sheet Assets __________.
I -are always equal to total liabilities minus shareholders' equity
II -are always equal to the firm's total liabilities plus equity
III -are listed in order of increasing liquidity from top to bottom
I only
II only
III only
I and III only
II and III only

Question 37 5 points Save
Under GAAP, balance sheet assets are __________.
carried on the books at historical cost
only carried on the books if they are relatively liquid
carried on the books at market value
listed in order of increasing relative liquidity from top to bottum

carried at the larger of historic cost or market value

Question 38 5 points Save
The following are considered Assets of a firm or entity:
I -Accounts Receivable
II -Accounts Payable
III -Inventory
IV -Equipment
V -Interest
II. III, and V
I, III, and IV
I, II, and III
All of the above
None of the above

Question 39 5 points Save
The following is considered the "Common Denominator" of all financial statements:
Total assets
Money or currency (dollars in the US.
Stockholder's Equity
Trade Credit
None of the above

Question 40 5 points Save
A firm has Current Assets of $7,500, Total Assets of $12,500, Current Liabilities of $4,500, and Total Liabilities of $6,500.
The firm's Net Working Capital is:
$3,000
$4,500
$6,000
$7,500
$9,500

Question 41 5 points Save
The Owner's or Stockholder's Equity is:
$3,000
$4,500
$6,000
$7,500
None of the above

Question 42 5 points Save
Its "Current Ratio" is:
0.60 to 1
1.67 to 1
1.15 to 1
2.00 to 1
None of the above.

Question 43 5 points Save
The following are areas of "Activities" found on a Statement of Cash Flows:
Investing Activities
Operating Activities
Financing Activities
All of the above
None of the above

Question 44 5 points Save
If a firm's Contribution Margin is $2,750 and its Revenue is $5,000, then its. Variable Costs must be:
$1,250
$2,250
$2,750
$4,500
$5,250

Question 45 5 points Save
The following are considered examples of a firm's Expense Accounts:
I -Interest Paid
II -Interest Earned
III -Notes Payable
IV -Depreciation
V -Wages
I and V
II, III, and IV
I, IV and V
I, III, and V
All of the above

Question 46 5 points Save
The two major types of Leverage are:
I -Operating
II -Floating
III -Financial
IV -Benchmark
V -Liquid
I and II
II and IV
I and III
III and IV
I and IV

Question 47 5 points Save
Machine A cost $15,000. Machine B cost $35,000. They both produce the same part that sells for $1 each. The variable costs to produce the part are $.75 (seventy-five cents. each for Machine A and $.50 (fifty cents) each for Machine B.)
What volume is required for Machine A to break even:
50,000 units
60,000 units
70,000 units
80,000 units
90,000 units

Question 48 5 points Save
Machine A cost $15,000. Machine B cost $35,000. They both produce the same part that sells for $1 each. The variable costs to produce the part are $.75 (seventy-five cents) each for Machine A and $.50 (fifty cents. each for Machine B.
At what volume do both machines generate an equal profit:
50,000 units
60,000 units
70,000 units
80,000 units
90,000 units

Question 49 5 points Save
Machine A cost $15,000. Machine B cost $35,000. They both produce the same part that sells for $1 each. The variable costs to produce the part are $.75 (seventy-five cents. each for Machine A and $.50 (fifty cents) each for Machine B)
What is the "Contribution Margin" per unit for Machine B:
$.25
$.50
$.75
$5,000
None of the above

Question 50 5 points Save
Gross Profit on Sales (%. i.e. Gross Profit/Sales is an example of what ratio:)
Liquidity
Asset Management
Debt (Leverage)(Solvency)
Profitability
Market Value

Question 51 5 points Save
Which one of the following is not usually regarded as a source of "Capital":
Venture Capitalists
Private Placement or Equity firms
The Stock market
Commercial Banks
The Bond market

Question 52 5 points Save
A company orders $1,000 of inventory in November to be delivered in
December. The accounting entry to record this transaction on the books in November would be as follows:
Increase Assets (Inventory. and decrease Cash
Increase Assets (Inventory. and increase Liabilities (Accounts Payable)
Increase Cost of Sales and increase Liabiliti
Increase Expenses and increase Revenues
No accounting entry is required to record this transaction in the month of November

Question 53 5 points Save
All of the following, except one, can be found in the "Operating Activities" section of a Cash Flow Statement. Please identify it:
Depreciation
Decrease in Accounts Receivable
Increase in Accounts Payable
Sale of fixed Assets
Increase in Inventory

Question 54 5 points Save
Please identify one of the following as not normally found in "Notes to Financial Statements":
The company's significant accounting policies.
Leasing commitments
Contingent Liabilites
Owners Compensation
Goodwill Impairment (if any)

Question 55 5 points Save
Which of the following is generally regarded as a potential reader or user of a company's Financial Statements:
Stockholders i.e. shareholders, investors
Competitors
Customers and Vendors (Suppliers)
Employees and Management
All of the above

Question 56 5 points Save
A good system of Internal Control is designed to:
Insure the efficiency and effectiveness of operations
Compliance with all laws, rules and regulations
Reliable reporting of financial results
Safeguard the assets of the firm
All of the above

Question 57 5 points Save
An independent auditor's Opinion can take one of the following forms:
Unqualified or "clean"
Qualified
Adverse
None of the above
All of the above (a thru c)

Question 58 5 points Save
The following are considered to be elements required in a good system of
Internal control:
1 -Having an 'audit' trail
2 -Adequate documentation
3 -Employee Rotation
4 -Proper authorization
5 -All of the above
1, 2 and 3
1, 2 and 4
2, 3 and 4
1, 3 and 4
5

Question 59 5 points Save
Under accrual basis accounting, revenue may be recognized:
When a company issues or sells its own stock
When it trades (barters. goods or services to another for equal value in goods or services
This year when selling something that is to be delivered next year
If it can document a material increase in the market value of a fixed asset
None of the above

Question 60 5 points Save
The purchase of merchandise on account would, on the buyer's books:
Increase assets and increase expenses
Increase assets and increase liabilities
Increase liabilities and decrease assets
Have no effect on assets
None of the above.

Solution Preview

1. False
2. True
3. True
4. True
5. False
6. False
7. False (Intangible Asset)
8. False (within one year)
9. True (outstanding liabilities will reduce)
10. False
11. True
12. False
13. False
14. True
15. False
16. True ( There will also be reduction of Treasury stocks if any)
17. False
18. True (Sales- Cost of goods sold = Gross profit)
19. True
20. False ( Shareholder maximization, ...

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