Unit 6 : Unit 6: Reporting and Analyzing Cash Flow and Financial


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Unit 6 : Unit 6: Reporting and Analyzing Cash Flow and Financial Statements – Final Exam Time Remaining: 1. The maturity date of a note receivable: (Points : 2) Is the day of the credit sale Is the day the note was signed Is the day the note is due to be paid Is the date of the first payment Is the last day of the month 2. Most employees and employers are required to pay: (Points : 2) Local payroll taxes State payroll taxes Federal payroll taxes Both B and C only Local, state and federal payroll taxes 3. Sales taxes payable: (Points : 2) Is an estimated liability Is a contingent liability Is a current liability for retailers Is a business expense Is a long-term liability 4. Pepsi’s accounts receivable turnover was 9.9 for this year and 11.0 for last year. Coke’s turnover was 9.3 for this year and 9.3 for last year. These results imply that: (Points : 2) Coke has the better turnover for both years Pepsi has the better turnover for both years Coke’s turnover is improving Coke’s credit policies are too loose Coke is collecting its receivables more quickly than Pepsi in both years 5. Depreciation: (Points : 2) Measures the decline in market value of an asset Measures physical deterioration of an asset Is the process of allocating to expense the cost of a plant asset Is an outflow of cash from the use of a plant asset Is applied to land 6. Times interest earned is calculated by: (Points : 2) Multiplying interest expense times income Dividing interest expense by income before interest expense Dividing income before interest expense and any income tax by interest expense Dividing interest and income tax expense by income before interest and income tax expense 7. The interest accrued on $3,600 at 7% for 60 days is: (Points : 2) $36 $42 $252 $180 $420 8. Plant assets are: (Points : 2) Tangible assets used in the operation of a business that have a useful life of more than one accounting period Current assets Held for sale Intangible assets used in the operations of a business that have a useful life of more than one accounting period Tangible assets used in the operation of business that have a useful life of less than one accounting period 9. Total asset turnover is calculated by dividing: (Points : 2) Gross profit by average total assets Average total assets by gross profit Net sales by average total assets Average total assets by net sales Net assets by total assets 10. If the times interest ratio: (Points : 2) Increases, then risk increases Increases, then risk decreases Is greater than 1.5, then the company is in default Is less than 1.5, the company is carrying too little debt 11. The matching principle requires: (Points : 2) That expenses be ignored if their effect on the financial statements are less important than revenues to the financial statement user The use of the direct write-off method for bad debts The use of the allowance method of accounting for bad debts That bad debts be disclosed in the financial statements That bad debts not be written off 12. A company had a bulldozer destroyed by fire. The bulldozer originally cost $125,000. The accumulated depreciation on it was $60,000. The proceeds from the insurance company were $90,000. The company should recognize: (Points : 2) A loss of $25,000 A gain of $25,000 A loss of $65,000 A gain of $65,000 A gain of $90,000 13. A machine originally had an estimated useful life of 5 years, but after 3 complete years, it was decided that the original estimate of useful life should have been 10 years. At that point the remaining cost to be depreciated should be allocated over the remaining: (Points : 2) 2 years 5 years 7 years 8 years 10 years 14. A company had a fixed interest expense of $6,000, its income before interest expense and any income taxes was $18,000 and its net income was $8,400. The company’s times interest earned ratio is equals to (Points : 2) 0.33 0.71 1.40 3.00 12,000 15. On October 10, 2010, Printfast Company sells a commercial printer for $2,350 with a one year

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