MULTIPLE CHOICE ch5 - MULTIPLE CHOICEConceptual 21 Which of the following is a limitation of the balance sheet a Many items that are of financial

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MULTIPLE CHOICE —Conceptual 21. Which of the following is a limitation of the balance sheet? a. Many items that are of financial value are omitted. b. Judgments and estimates are used. c. Current fair value is not reported. d. All of these 22. The balance sheet is useful for analyzing all of the following except a. liquidity. b. solvency. c. profitability. d. financial flexibility. S 23. The balance sheet contributes to financial reporting by providing a basis for all of the following except a. computing rates of return. b. evaluating the capital structure of the enterprise. c. determining the increase in cash due to operations. d. assessing the liquidity and financial flexibility of the enterprise. S 24. One criticism not normally aimed at a balance sheet prepared using current accounting and reporting standards is a. failure to reflect current value information. b. the extensive use of separate classifications. c. an extensive use of estimates. d. failure to include items of financial value that cannot be recorded objectively. P 25. The amount of time that is expected to elapse until an asset is realized or otherwise converted into cash is referred to as a. solvency. b. financial flexibility. c. liquidity. d. exchangeability. 26. The net assets of a business are equal to a. current assets minus current liabilities. b. total assets plus total liabilities. c. total assets minus total stockholders' equity. d. none of these. 27. The correct order to present current assets is a. Cash, accounts receivable, prepaid items, inventories. b. Cash, accounts receivable, inventories, prepaid items. c. Cash, inventories, accounts receivable, prepaid items. d. Cash, inventories, prepaid items, accounts receivable. 28. The basis for classifying assets as current or noncurrent is conversion to cash within a. the accounting cycle or one year, whichever is shorter.
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b. the operating cycle or one year, whichever is longer. c. the accounting cycle or one year, whichever is longer. d. the operating cycle or one year, whichever is shorter. 29. The basis for classifying assets as current or noncurrent is the period of time normally required by the accounting entity to convert cash invested in a. inventory back into cash, or 12 months, whichever is shorter. b. receivables back into cash, or 12 months, whichever is longer. c. tangible fixed assets back into cash, or 12 months, whichever is longer. d. inventory back into cash, or 12 months, whichever is longer. 30. The current assets section of the balance sheet should include a. machinery. b. patents. c. goodwill. d. inventory. 31. Which of the following is a current asset? a. Cash surrender value of a life insurance policy of which the company is the bene- ficiary. b.
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This note was uploaded on 10/02/2011 for the course ACCOUNTING 3321 taught by Professor Sanchez during the Spring '11 term at Texas Pan American.

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MULTIPLE CHOICE ch5 - MULTIPLE CHOICEConceptual 21 Which of the following is a limitation of the balance sheet a Many items that are of financial

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