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Which of the following is not an example of a decision or




1. Which of the following is not an example of a decision or informed judgment that a potential investor would make from accounting information?;A) Future profitability based on past profitability.;B) Probability of success of a new product development.;C) A forecast of dividends.;D) Assessment of risk that a company may have more debt than it can repay if the economy enters a recession.;2. On January 31, an entity's balance sheet showed total assets of $750 and liabilities of $250. Owners' equity at January 31 was;A) $ 500;B) $1,000;C) $ 750;D) $ 250;3. The term, "earned," in revenue recognition refers to which of the following?;A) The entity has completed, or substantially completed, the activities it must perform to be entitled to the revenue benefits.;B) The product or service has been exchanged for cash, claims to cash, or an asset that is readily convertible to a known amount of cash or claims to cash.;C) The entity has received an irrevocable order for goods or services.;D) Cash has been received with an irrevocable order for goods or services.;E) None of the above.;4. Management's use of resources can best be evaluated by focusing on measures of;A) liquidity.;B) activity.;C) leverage.;D) book value.;5. An entity's current ratio will be influenced by;A) the inventory cost flow assumption used.;B) writing off an overdue account receivable against the allowance for uncollectible accounts.;C) the depreciation method used.;D) issuance of a stock dividend.;6. The comparison of activity measures of different companies is complicated by the fact that;A) different inventory cost flow assumptions may be used.;B) dollar amounts of assets may be significantly different.;C) only one of the companies may have preferred stock outstanding.;D) the number of shares of common stock issued may be significantly different.;7. The inventory turnover calculation;A) is wrong unless cost of goods sold is used in the numerator.;B) is wrong unless sales is used in the numerator.;C) is an alternative way of expressing the number of days' sales in inventory.;D) requires knowledge of the inventory cost flow assumption being used.;8. If a firm's payment terms for sales made on account to its customers were 2/10, n30, the number of days' sales in accounts receivable would be expected to be;A) less than 10.;B) between 10 and 25.;C) between 25 and 40.;D) over 40.


Paper#26260 | Written in 18-Jul-2015

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