Chapte r 3 balance sheet - rhaburn

Chapte r 3 balance sheet - rhaburn - Chapter 3 The Balance...

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Chapter 3 The Balance Sheet True/False Questions 1. The balance sheet reports a company's financial position at a point in time. Answer: True Learning Objective: 1 Level of Learning: 1 2. Liquidity refers to the riskiness of a company with regard to the amount of liabilities in its capital structure. Answer: False Learning Objective: 9 Level of Learning: 1 3. All current assets are either cash or assets that will be converted into cash within twelve months or the operating cycle, if that is longer than one year. Answer: False Learning Objective: 2 Level of Learning: 1 4. The criteria for determining which items comprise cash equivalents must be disclosed in the summary of significant accounting policies. Answer: True Learning Objective: 5 Level of Learning: 1 5. The balance of net receivables represents the amount expected to be collected. Answer: True Learning Objective: 3 Level of Learning: 1 6. All prepaid expenses are classified as current assets because they are expected to be converted into cash within twelve months or the operating cycle, if that is longer. Answer: False Learning Objective: 3 Level of Learning: 1 7. Operational assets include property, plant, equipment and inventories. Answer: False Learning Objective: 3 Level of Learning: 1 8. The cost of intangible assets reported in the balance sheet mainly consists of the research and development costs incurred to develop them. Answer: False Learning Objective: 3 Level of Learning: 2 9. Accrued payroll liabilities represent salary and wages that have been earned by employees prior to their payment. Answer: True Learning Objective: 4 Level of Learning: 1 10. Payment terms, interest rates, and other details of long-term liabilities usually are reported in disclosure notes. Answer: True Learning Objective: 5 Level of Learning: 2 Spiceland/Sepe/Tomassini, Intermediate Accounting, Fourth Edition 77
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Chapter 3 The Balance Sheet 11. Subsequent events are significant developments that take place after a firm's year-end, and after the financial statements are issued. Answer: False Learning Objective: 5 Level of Learning: 1 12. A payment on account has no effect on working capital but will increase the current ratio if it is already greater than 1.0. Answer: True Learning Objective: 9 Level of Learning: 2 Matching Pair Questions Use the following to answer questions 13-17: 13-17. Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term placing the letter designating the best term in the space provided by the phrase. Terms: A. Accrued liabilities B. Current liabilities C. Intangible asset D. Liquidity E. Long-term solvency F. Notes receivable G. Qualified opinion H. Segment information I. Times interest earned ratio J. Unqualified opinion Phrases: 13. ____ Will be satisfied through the use of working capital accounts. 14.
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Chapte r 3 balance sheet - rhaburn - Chapter 3 The Balance...

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