Module 4 q

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MULTIPLE CHOICE 1. The balance sheet reports: a. the assets, liabilities, gains, and losses for a period of time b. the changes in assets, liabilities, and equity for a period of time c. the assets, expenses, and liabilities as of a certain date d. the probable future benefits, probable future sacrifices, and residual interest for a period of time e. the financial condition of an accounting entity as of a particular date ANS: E PTS: 1 2. Which of the following would not appear on a conventional balance sheet? a. income taxes payable b. funds from operations c. cash surrender value of life insurance d. appropriation for contingencies (restriction of retained earnings) e. patents ANS: B PTS: 1 3. At the beginning of the year, Execon Company had total assets of $200,000, total liabilities of $110,000, and shareholders' equity of $90,000. For the year, Execon Company earned net income of $75,000 and declared cash dividends of $30,000. At the end of the year, the company had total assets of $300,000 and its shareholders' equity was at $135,000. At the end of the year, Execon Corporation had total liabilities of: a. $0 b. $45,000 c. $50,000 d. $165,000 e. none of the answers are correct ANS: D PTS: 1 4. Ownership of debt instruments of the government and other companies that can be readily converted to cash are best reported as: a. long-term investments b. cash c. marketable securities d. intangibles e. inventory of near-cash items ANS: C PTS: 1 5. Tangible assets on the balance sheet should include: a. equipment b. taxes payable c. trademarks d. bonds payable e. none of the answers are correct ANS: A PTS: 1
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The current asset section of the balance sheet should include: a. land b. trademarks c. investment in C Company (for purposes of control) d. dividends payable e. work in process inventory ANS: E PTS: 1 7. The current liability section of the balance sheet should include: a. buildings b. goodwill c. land held for speculation purposes d. accounts payable e. none of the answers are correct ANS: D PTS: 1 8. Which of the following is not a current asset? a. marketable securities b. material inventory c. unearned rent income d. prepaid interest e. prepaid insurance ANS: C PTS: 1 9. If a parent has some control over a subsidiary but the subsidiary is not consolidated, the subsidiary is accounted for as: a. a marketable security b. an investment c. a liability d. a fixed asset e. none of the answers are correct ANS: B PTS: 1 10. Which of the following is not a proper use of notes? a. To describe the nature and effect of a change in accounting principle, such as from FIFO to LIFO. b. To indicate the basis for asset valuation. c. To indicate the method of depreciation. d.
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