Quiz_2_Fall_2010-1 - GROUP 1 1. Which of the following is...

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GROUP 1
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1. Which of the following is true regarding balance sheets? A. They report, for a certain interval of time, the net assets generated, the net assets consumed, and the net income. B. They report, for a certain interval of time, the resources of a company, the obligations of a company, and the equity of the owners. C. They report, for a certain interval of time, the amount of cash generated and consumed by a company. D. They report, as of a certain point in time, the resources of a company, the obligations of a company, and the equity of the owners. E. They report, as of a certain point in time, the resources and net income of a company. ANSWER: D 2. Which of the following is true regarding income statements? A. They report, as of a certain point in time, the company’s assets, liabilities, and net income B. They report, for a certain interval of time, the net assets generated, the net assets consumed, and the net income C. They report, as of a certain point in time, the amount of cash and net income generated D. They report, as of a certain point in time, the net assets generated, the net assets consumed, and the net income E. They report, for a certain interval of time, the resources of a company, the obligations of a company, and the equity of the owners ANSWER: B
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GROUP 2 3. The Matching Principle in GAAP: A. Matches sales to inventory shipments B. Matches the expenses related to a sale in the same period C. Matches ROE to a firm's capital investment D. Matches costs of goods sold with the inventory on the balance sheet E. Matches revenues with profits on the income statement Answer: B 4. According to the Revenue Recognition Principle in GAAP: A. Dividends can be paid only after taxable income is positive B. Expenses can be realized when cash payment is made C. Companies can realize revenue only if the transaction is profitable D. Revenue is recognized when a good or service is provided, not when the money is received E. Companies can realize certain gains on their operating books, while omitting them from their tax books Answer: D GROUP 3 5.
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Given the following data, identify the correct gross profit and operating profit. Assume no outside information other than that which is provided. Sales: $1500 Depreciation: $100 Interest Expense: $100 Cost of Goods Sold: $800 Taxes: $100 A. Gross Profit = $700, Operating Profit = $400 B. Gross Profit = $500, Operating Profit = $200 C. Gross Profit = $600, Operating Profit = $300 D. Gross Profit = $600, Operating Profit = $500 E. Gross Profit = $700, Operating Profit = $200 ANSWER: A 6. Given the following data, identify the correct gross profit and operating profit. Assume no outside information other than that which is provided. Sales: $2000
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This note was uploaded on 10/19/2010 for the course FIN 301 taught by Professor Andelin,stevenle during the Fall '07 term at Pennsylvania State University, University Park.

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Quiz_2_Fall_2010-1 - GROUP 1 1. Which of the following is...

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