Intermediate Financial Accounting Ch. 5 Balance Sheet

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 the above

the balance sheet is useful for analyzing all of the following except? a. liquidity b. solvency c.profitability d. financial flexibility

Balance sheet information is useful for all of the following except to a. compute rates of return b. analyze cash inflows and outflows for the period c. evaluate capital structure d. assess future cash flows

Balance sheet information is useful for all of the following except a. assessing a company's risk b. evaluating a company's liquidity c. evaluating a company's financial flexibility d. determining free cash flows

A limitation of the balance sheet that is not also a limitation of the income statement is a. the use of judgements and estimates b. omitted items c. the numbers are affected by the accounting methods employed d. valuation of items at historical cost

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

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

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

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 stockholder's equity d. none of the answer choices are correct

The correct order to present current assets is

The basis for classifying assets as current or concurrent is conversion to cash within a. the accounting cycle or one year, whichever is shorter 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

the basis for classifying assets as current or concurrent 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

the current assets section of the balance sheet should include a. machinery b. patents c. goodwill d. inventory

which of the following is a current asset? a. cash surrender value of a life insurance policy of which of the company is the beneficiary b. Investment in equity securities for the purpose of controlling the issuing company c. cash designated for the purchase of tangible fixed assets d. trade installment receivables normally collectible in 18 months

current assets are presented in the balance sheet in a. ascending order of their balances b. descending order of their balances c. order of their liquidity d. reverse order of their liquidity

Receivables are valued based on their a. fair value b. estimated amount collectible c. lower-of-cost-or-market value d. historical cost

When a portion of inventories has been pledged as a security on a loan a. the value of the portion pledged should be subtracted from the debt b. an equal amount of retained earnings should be appropriated c. the fact should be disclosed but the amount of current assets should not be affected d. the cost of the pledged inventories would be transferred from current assets to concurrent assets.

which of the following is NOT a long-term investment? a. cash surrender value of life insurance b. franchise c. land held for speculation d. a sinking fund

A generally accepted method of valuation is: 1. trading securiteit at market value 2. accounts receivable at net realizable value 3. inventories at current cost a. 1 b. 2 c. 3 d. 1 & 2

which item below is NOT a current liability? a. unearned revenue b. stock dividends distributable c. currently maturing portion of long-term debt d. trade accounts payable

working capital is a. capital which has been reinvested in the business b. unappropriated retained earnings c. cash and receivables less current liabilities d. none of the above

an example of an item which is not an element of working capital is a. accused interest on notes receivable b. goodwill c. goods in process d. temporary investments

long-term liabilities include a. obligations not expected to be liquidated within the operating cycle b. obligations payable at some date beyond the operating cycle c. deferred income taxes and most lease obligations d. all the above

which of the following should be excluded from long-term liabilities a. obligations payable at some date beyond the operating cycle b. most pension obligations c. long-term liabilities that mature within the operating cycle and will be paid from a sinking fund d. none of the above

treasury stock should be reported as a(n) a. current asset b. investment c. other asset d. reduction of stockholder's equity

which of the following should be reported for capital stock? a. the shares authorized b. the shares issued c. the shares outstanding d. all the above

which of the following would be classified in a different major section of a balance sheet from the others? a. capital stock b. common stock subscribed c. stock dividend distributable d. stock investment in affiliate

the stockholder's equity section is usually divided into what three parts? a. preferred stock, common stock, treasury stock b. preferred stock, common stock, retained earnings c. capital stock, additional paid in capital, retained earnings d. capital stock, appropriated retained earnings, unappropriated retained earnings

which of the following is NOT an acceptable major asset classification? a. current assets b. long-term investments c. property, plan and equipment d. deferred charges