Question 1

An intangible asset has no physical existence and no life.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following would not be classified as a current asset?

Accepted Answer

A)  Accounts receivable.
B)  Goodwill.
C)  Inventories.
D)  Non-trade receivables.E) A) and D)
F) A) and C)

Question 3

Information on all contractual agreements is included in notes as a financial statement disclosure.

Accepted Answer

A) True 
 B)False

Question 4

Net sales plus cost of goods sold is reported on the income statement as income from continuing operations.

Accepted Answer

A) True 
 B)False

Question 5

For the year ending December 31, 2016, the accounts of Jackson Corporation showed the following balances:  Requirement:
Determine the components of stockholders' equity as of December 31, 2016.

Accepted Answer

Common stock: $550,000 = $500,...

Question 6

Which of the following would not be included on an income statement?

Accepted Answer

A)  Accumulated depreciation.
B)  Insurance expense.
C)  Cost of goods sold.
D)  Discontinued operations.E) A) and B)
F) All of the above

Question 7

The Securities & Exchange Commission (SEC) oversees the work of the Financial Accounting Standards Board (FASB).

Accepted Answer

A) True 
 B)False

Question 8

In what order are cash flow activities presented on the statement of cash flows?

Accepted Answer

A)  Investing activities, Operating activities, Financing activities.
B)  Financing activities, Operating activities, Investing activities.
C)  Operating activities, Investing activities, Financing activities.
D)  Operating activities, Financing activities, Investing activities.E) A) and D)
F) C) and D)

Question 9

Kryton Corp. has provided the following information: Gross profit was $620,000;
Cost of goods sold was $380,000;
Net income was $400,000.
What was Kryton's gross profit percentage?

Accepted Answer

A)  40%
B)  61.3%
C)  62%
D)  155%E) A) and B)
F) B) and D)

Question 10

Which of the following is not reported as an operating expense on the income statement?

Accepted Answer

A)  Administrative expenses.
B)  Research and development expense.
C)  Interest expense.
D)  Selling expenses.E) B) and C)
F) A) and B)

Question 11

Which of the following is not a responsibility of the chief executive officer (CEO)  and the chief financial officer (CFO) ?

Accepted Answer

A)  Overseeing the financial statement external audit.
B)  Ensuring the accuracy and completeness of all reports provided to the Securities & Exchange Commission (SE
C)  .
C)  The certification of the strength of the internal control system.
D)  The disclosure to the auditor committee of any frauds they are aware of.E) C) and D)
F) A) and B)

Question 12

Marino Company has provided the following information: Net sales, $480,000
Net income, $24,000
Average total assets, $200,000
What is Marino's net profit margin?

Accepted Answer

A)  75%
B)  12%
C)  42%
D)  5%E) None of the above
F) A) and B)

Question 13

Determine the effect of the following transactions on the financial statements components identified. Code your answers as follows:
A: If the transaction results in an increase in the financial statement component or ratio.
B: If the transaction results in a decrease in the financial statement component or ratio.
C: If the transaction does not affect the financial statement component or ratio.
Transaction 1: A company sold inventory for an amount greater than its cost.
Gross profit _____
Current assets _____
Stockholders' equity _____
Transaction 2: Advertising expense was recorded but has yet to be paid for.
Net income _____
Gross Profit _____
Stockholders' equity _____

Accepted Answer

Transaction 1: A company sold inventory ...

Question 14

Which of the following is true about gross profit (gross margin) ?

Accepted Answer

A)  It is net sales minus operating expenses.
B)  It is net sales minus cost of goods sold.
C)  It is the same as income from continuing operations.
D)  It is net sales minus cost of goods sold and operating expenses.E) All of the above
F) A) and C)

Question 15

The gross profit percentage decreases when operating expenses increase.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following would not be included within the operating activities section of a cash flow statement?

Accepted Answer

A)  Cash paid for research and development.
B)  Cash paid for insurance.
C)  Cash paid for interest expense.
D)  Cash paid to acquire a patent.E) B) and C)
F) A) and C)

Question 17

The following information was taken from the income statement and balance sheet of The Mickey Company for the years 2016 and 2017:  Requirements:
Compute the following ratios for 2017: 
A.Net profit margin
B.Total asset turnover
C.Return on assets

Accepted Answer

A. Net profit margin ($2,345 ÷ $30,752) ...

Question 18

Which of the following statements is true?

Accepted Answer

A)  A decrease in net income decreases both the net profit margin ratio and the total asset turnover ratio.
B)  An increase in average total assets results in a decrease in both the total asset turnover ratio and the net profit margin ratio.
C)  A decrease in average total assets results in an increase in the total asset turnover ratio and a decrease in the net profit margin ratio.
D)  An increase in net income increases both the net profit margin ratio and the return on assets ratio.E) None of the above
F) A) and D)

Question 19

Which of the following is an objective of the external audit of a company's financial statements?

Accepted Answer

A)  To provide a forecast of the company's future earnings.
B)  To assure no fraud has been committed by the company's management.
C)  To provide credibility that the financial statements are fairly presented.
D)  To detect all accounting errors made by the accounting system and employees.E) A) and C)
F) A) and B)

Question 20

Anjou Company had 10,000 shares of common stock outstanding at December 31, 2015 and 14,000 shares of common stock outstanding at December 31, 2016. Anjou had sales of $3,600,000 in 2016 and net income of $280,000 in 2016. What is Anjou's earnings per share reported for 2016?

Accepted Answer

A)  $7.78
B)  $9.36
C)  $20.00
D)  $23.33E) A) and B)
F) All of the above

Exam 5: Communicating and Interpreting Accounting Information

The following information was taken from the income statement and balance sheet of The Mickey Company for the years 2016 and 2017: Requirements: Compute the following ratios for 2017: A.Net profit margin B.Total asset turnover C.Return on assets

Correct Answer
verified
A. Net profit margin ($2,345 ÷ $30,752) ...
View Answer

Kryton Corp. has provided the following information: Gross profit was $620,000; Cost of goods sold was $380,000; Net income was $400,000. What was Kryton's gross profit percentage?

Correct Answer
verified

Which of the following would not be classified as a current asset?

Correct Answer
verified

The gross profit percentage decreases when operating expenses increase.

Correct Answer
verified

Anjou Company had 10,000 shares of common stock outstanding at December 31, 2015 and 14,000 shares of common stock outstanding at December 31, 2016. Anjou had sales of $3,600,000 in 2016 and net income of $280,000 in 2016. What is Anjou's earnings per share reported for 2016?

Correct Answer
verified

In what order are cash flow activities presented on the statement of cash flows?

Correct Answer
verified

Which of the following would not be included on an income statement?

Correct Answer
verified

The Securities & Exchange Commission (SEC) oversees the work of the Financial Accounting Standards Board (FASB).

Correct Answer
verified

Marino Company has provided the following information: Net sales, $480,000 Net income, $24,000 Average total assets, $200,000 What is Marino's net profit margin?

Correct Answer
verified

For the year ending December 31, 2016, the accounts of Jackson Corporation showed the following balances: Requirement: Determine the components of stockholders' equity as of December 31, 2016.

Correct Answer
verified
Common stock: $550,000 = $500,...
View Answer

Net sales plus cost of goods sold is reported on the income statement as income from continuing operations.

Correct Answer
verified

An intangible asset has no physical existence and no life.

Correct Answer
verified

Which of the following is not a responsibility of the chief executive officer (CEO) and the chief financial officer (CFO) ?

Correct Answer
verified

Information on all contractual agreements is included in notes as a financial statement disclosure.

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

Which of the following is true about gross profit (gross margin) ?

Correct Answer
verified

Which of the following is not reported as an operating expense on the income statement?

Correct Answer
verified

Which of the following would not be included within the operating activities section of a cash flow statement?

Correct Answer
verified

Correct Answer
verified
Transaction 1: A company sold inventory ...
View Answer

Which of the following is an objective of the external audit of a company's financial statements?

Correct Answer
verified

Exam 5: Communicating and Interpreting Accounting Information

The following information was taken from the income statement and balance sheet of The Mickey Company for the years 2016 and 2017: Requirements: Compute the following ratios for 2017: A.Net profit margin B.Total asset turnover C.Return on assets

Correct AnswerverifiedA. Net profit margin ($2,345 ÷ $30,752) ...View AnswerShow Answer

Kryton Corp. has provided the following information: Gross profit was $620,000; Cost of goods sold was $380,000; Net income was $400,000. What was Kryton's gross profit percentage?

Correct AnswerverifiedShow Answer

Which of the following would not be classified as a current asset?

Correct AnswerverifiedShow Answer

The gross profit percentage decreases when operating expenses increase.

Correct AnswerverifiedShow Answer

Anjou Company had 10,000 shares of common stock outstanding at December 31, 2015 and 14,000 shares of common stock outstanding at December 31, 2016. Anjou had sales of $3,600,000 in 2016 and net income of $280,000 in 2016. What is Anjou's earnings per share reported for 2016?

Correct AnswerverifiedShow Answer

In what order are cash flow activities presented on the statement of cash flows?

Correct AnswerverifiedShow Answer

Which of the following would not be included on an income statement?

Correct AnswerverifiedShow Answer

The Securities & Exchange Commission (SEC) oversees the work of the Financial Accounting Standards Board (FASB).

Correct AnswerverifiedShow Answer

Marino Company has provided the following information: Net sales, $480,000 Net income, $24,000 Average total assets, $200,000 What is Marino's net profit margin?

Correct AnswerverifiedShow Answer

For the year ending December 31, 2016, the accounts of Jackson Corporation showed the following balances: Requirement: Determine the components of stockholders' equity as of December 31, 2016.

Correct AnswerverifiedCommon stock: $550,000 = $500,...View AnswerShow Answer

Net sales plus cost of goods sold is reported on the income statement as income from continuing operations.

Correct AnswerverifiedShow Answer

An intangible asset has no physical existence and no life.

Correct AnswerverifiedShow Answer

Which of the following is not a responsibility of the chief executive officer (CEO) and the chief financial officer (CFO) ?

Correct AnswerverifiedShow Answer

Information on all contractual agreements is included in notes as a financial statement disclosure.

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Which of the following is true about gross profit (gross margin) ?

Correct AnswerverifiedShow Answer

Which of the following is not reported as an operating expense on the income statement?

Correct AnswerverifiedShow Answer

Which of the following would not be included within the operating activities section of a cash flow statement?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedTransaction 1: A company sold inventory ...View AnswerShow Answer

Which of the following is an objective of the external audit of a company's financial statements?

Correct AnswerverifiedShow Answer

Correct Answer
verified
A. Net profit margin ($2,345 ÷ $30,752) ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Common stock: $550,000 = $500,...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Transaction 1: A company sold inventory ...
View Answer

Correct Answer
verified