MGMT Midterm - Score Student Name Date Class MGMT Financial...

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b0d38fb6d6a02314703b52dde044fa95f63540a7.xlsx Page 1 of 16 Score: Student Name: Date: Class: MGMT Financial Accounting Test: TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. F 1 All assets are tangible in nature. F 2 T 3 T 4 F 5 T 6 The independent auditor's report conveys whether or not the business is a good investment. Materiality deals with the size of an error in accounting information. The primary responsibility for the preparation and integrity of the financial statements in an annual report belongs to the company's independent accountants (CPAs). If a company purchases equipment by issuing a note payable, its total assets will not change. A debit entry increases assets, decreases liabilities, or decreases stockholders’ equity.
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b0d38fb6d6a02314703b52dde044fa95f63540a7.xlsx Page 2 of 16 F 7 T 8 F 9 T 10 F 11 T 12 T 13 Transactions are first recorded in a ledger account and then posted to a journal. A company that forgets to recognize depreciation for the year overstates its income and assets. The balance in the account, Rent Collected in Advance, is reported as an asset on the balance sheet of the landlord. Adjusting entries are recorded at the end of each accounting period so that net income is accurately reflected in the financial statements for the period It is important that the proper amount be assigned to ending inventory because the cost of goods sold will be wrong and thus the net sales of the period will be in error as well. Both U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) require the use of the lower-of-cost-or-market rule to value inventories. The inventory turnover ratio is a measure of how many times during a period a company sells off its inventory.
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b0d38fb6d6a02314703b52dde044fa95f63540a7.xlsx Page 3 of 16 T 14 F 15 F 16 F 17 F 18 T 19 T 20 Under the indirect method, a decrease in inventory is added to net income to determine cash flow from operating activities. Whether LIFO costing is applied at the time each sale is made or only at the end of the period, both the periodic and perpetual systems will yield the same ending inventory under LIFO. Some cash equivalents appear in the long term investment section of a balance sheet. As part of good internal control, disbursements can be made either by check or cash. If a company accepts a major credit card such as VISA from a customer, then the company is responsible for the amount of the sale in a case of nonpayment from a cardholder. Securities issued by corporations as a form of ownership in the business, such as common and preferred stock, are called equity securities. A decrease in accounts receivable represents an increase in a company's cash flow from operating activities.
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b0d38fb6d6a02314703b52dde044fa95f63540a7.xlsx Page 4 of 16 B 21 A. Sole proprietership B. Corporation C. Partnership D. All of the above D 22 A. Communicating B. Identifying C. Measuring D. Operating C 23 A. $42,000
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This note was uploaded on 07/26/2011 for the course MGMT 210 taught by Professor Manage during the Spring '10 term at Embry-Riddle FL/AZ.

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MGMT Midterm - Score Student Name Date Class MGMT Financial...

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