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Test answers for Financial Reporting 2016

(76) Last updated: January 23
Elance • Fin. & Mgt.
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76 Answered Test Questions:

1. A balance sheet typically has:

Answers:

• liabilties

• assets

• (All of these)

• equity

2. True or False: The asset turnover ratio measure the firm's efficient use of its liabilities in generating sales income?

Answers:

• False

• True

3. The SEC usually deals with:

Answers:

• (None of these)

• public companies

• private companies

• (All of these)

4. True or False? There are three basic types of accounting models?

Answers:

• False

• True

5. True or False? Dividends appear on the income statement.

Answers:

• False

• True

6. Earnings per share = ?

Answers:

• (Net Income - Preferred Stock Dividends) / (Weighted Average of Common Stock Shares Outstanding)

• (Preferred Stock Dividends - Net Income) / (Weighted Average of Common Stock Shares Outstanding)

• (Net Income - Preferred Stock Dividends) / (Common Stock Shares Outstanding)

• (Preferred Stock Dividends - Net Income) / (Common Stock Shares Outstanding)

7. In 2001, the International Accounting Standards Board (IASB) took over from what prior organization?

Answers:

• International Account Standards

• International Accounting Standards Committee

• Financial Reporting Board

• International Financial Reporting Standards

8. Current Dividend Yield = ?

Answers:

• (Average Market Share Price) / (Full Year Dividend)

• (Current Share Price) / (Full Year Dividend)

• (Full Year Dividend) / (Average Market Share Price)

• (Full Year Dividend) / (Current Share Price)

9. A 10Q is a financial report for a company that is given

Answers:

• once a month

• two times a year

• four times a year

• once a year

10. If the price per share of a company is $10 and and its EPS is $1, then what is its PE ratio?

Answers:

• 100

• 10

• (None of these)

• 0.1

11. The revenue recognition principle is:

Answers:

• that a company must declare its expenses and revenues together in the same period

• when a company must disclose all pertinent information in regards to the financial statement which would affect an investors decision

• when a company will record its revenue

• when the cost of something matches up with the accounting information on the balance sheet

12. Which form corresponds to an annual summary?

Answers:

• 10k

• 8k

• 4k

• 10Q

13. Which of the following is a general purpose financial report

Answers:

• annual reports

• (All of these)

• investor reports

• shareholder reports

14. Who typically needs to approve a financial statement when they are a SEC filing?

Answers:

• lawyer

• employee

• accountant

• (None of these)

15. How do you calculate market capitalization?

Answers:

• Number of shares outstanding / share price

• Share price * total assets

• Number of shares outstanding * share price

• Share price / Number of shares outstanding

16. True or False? Charitable organizations that are required to publish financial statements do not produce income statements. Instead they publish statement of activities.

Answers:

• True

• False

17. True or False? The notes to financial statements are additional information that is added to the beginning of the financial statements

Answers:

• True

• False

18. Nowadays most financial statements can be found on

Answers:

• yahoo finance pages

• google finance pages

• the SEC website

• (All of these)

19. True or False? A form 8k is used to notify investors of some meaningful event arising.

Answers:

• True

• False

20. What does the I stand for in EBITDA?

Answers:

• Intangible

• Increase

• Interest

• Income

21. The matching principle is:

Answers:

• when a company will record its revenue

• when a company must disclose all pertininant information in regards to the financial statement which would affect an investor's decision

• when the cost of something matches up with the accounting information on the balance sheet

• that a company must declare its expenses and revenues together in the same period

22. A firm with a low profit margin indicates __________________?

Answers:

• a lower risk that a decline in sales will erase profits and result in net loss

• a higher risk that an increase in sales will erase profits and result in net loss

• a higher risk that a decline in sales will erase profits and result in net loss

• a lower risk that an increase in sales will erase profits and result in net loss

23. Net profit margin =

Answers:

• Net Profit * Margin

• Net Profit / Expenses

• Net Profit / Revenue

• Net Profit * Expenses

24. Revenue - Expenses = what?

Answers:

• Sales Revenue

• Cost of Sales

• Gross Revenue

• Net income

25. True or false? Operating margin is a good tool when deciding to invest in a company.

Answers:

• True

• False

26. True or False? The diluted earnings per share is a more reliable way to measure earnings per share.

Answers:

• False

• True

27. If a firm's payout ratio is greater than 1, the firm is __________?

Answers:

• paying more dividends out than they earned

• paying less dividends out than they earned

• not paying out any dividends

28. True or False? Only businesses use financial reports.

Answers:

• False

• True

29. An example of a financial report is a:

Answers:

• 20R

• 10Q

• 17U

• 14J

30. What was the purpose of the Sarbanes-Oxley Act of 2002?

Answers:

• decrease fraudulent activity of businesses

• lower taxes on larger corporations

• raise taxes on larger corporations

• (None of these)

31. Which activity is represented first in the Cash Flow Statements?

Answers:

• Purchasing

• Investing

• Operating

• Financing

32. Which is the correct accounting equation?

Answers:

• assets - liabilities = net worth

• asset - net worth = liabilities

• net worth - asset = liabilities

• liabilities - net worth = asset

33. The cash flow statement details  a firm's _________?

Answers:

• liquidity

• profitability

• efficiency

34. When are current liabilities due?

Answers:

• Within one year

• Within 3 months

• After one year

• Within 6 months

35. True of False? Financial statements need to be audited.

Answers:

• True

• False

36. True or False? A personal financial statement is useful when trying to obtain a loan.

Answers:

• True

• False

37. Accrual Basis Accounting matches what?

Answers:

• Cash and Expenses

• Cash

• Revenues and Expenses

• Cash and Revenues

38. The full disclosure principle indicates...

Answers:

• a company must disclose all pertininant information in regards to the financial statement which would affect an investor's decision

• when a company will record its revenue

• when the cost of something matches up with the accounting information on the balance sheet

• that a company must declare its expenses and revenues together in the same period

39. The general formula for a balance sheet is

Answers:

• Assets = Liabilities - Equity

• Assets = Liabilities * Equity

• Assets = Liabilities / Equity

• Assets = Liabilities + Equity

40. The Three Parts of the Cash Flow Statements include Operating, Investing and ______?

Answers:

• Borrowing

• Amoritizating

• Purchasing

• Financing

41. If the Net Present Value of a project is postive then __________?

Answers:

• the firm should invest in the project

• the firm should not invest in the project

• the firm should invest in more than one project

42. An example of an SEC filing is a:

Answers:

• 17U

• 10K

• 14J

• 10Z

43. What does the SEC stand for?

Answers:

• Security Exchange Commission

• Security Entitlement Commission

• Standard Exchange Commission

44. What does it mean if a company has a negative EPS?

Answers:

• Cannot happen

• The company is making money

• The company is losing money

45. True or False? A cash flow statement shows only the inflows of cash into the company.

Answers:

• False

• True

46. The balance sheet is also referred to as what?

Answers:

• Profit & Loss Report

• Statement of Comprehensive Income

• Statement of Financial Position

• Statement of Revenue & Expense

47. Which of the following is an example of a non-current asset?

Answers:

• Accounts receivable

• Prepaid expenses

• Cash

• Property

48. True or False? Financial reporting is a financial statement that is a proper documentation of the financial activities of a business.

Answers:

• False

• True

49. True or False? Creditors use financial reports to make decisions on loans.

Answers:

• True

• False

50. The single step income statement approach totals revenues and subtracts ________?

Answers:

• Equity

• Expenses

• Assets

• Liabilities

51. Financial reports are filled out based on the:

Answers:

• Direct write-off Accounting Principles

• (None of these)

• Generally Accepted Accounting Principles

52. Which of the following is a current asset?

Answers:

• Equipment

• Property

• Intangible Assets

• Accounts Receivable

53. The GAAP is comprised of:

Answers:

• cost principle

• (All of these)

• matching principle

• revenue recognition principle

54. If a bond is trading at par, what is its face value?

Answers:

• 102

• 101

• 99

• 100

55. The balance sheet reports a company's assets, liabilities and what?

Answers:

• Revenue

• Profits

• Expense

• Ownership Equity

56. Financial reports are used to find:

Answers:

• PEG ratio

• EPS

• (All of these)

• PE ratio

57. True or False? Financial reports are not important in making investment decisions.

Answers:

• False

• True

58. True or False? ROA stands for Return on Asset.

Answers:

• False

• True

59. True or False? The balance sheet is a snapshot of a firm's financial position.

Answers:

• True

• False

60. What are the three parts of a firm's balance sheet?

Answers:

• Loss, Profits, Equity

• Assets, Loss, Profit

• Assets, Liabilities, Equity

• Liabilities, Equity, Profit

61. An item needed for financial reporting is:

Answers:

• (All of these)

• income statement

• a balance sheet

• cash flow statement

62. The cost principle is:

Answers:

• when a company will record its revenue

• when the cost of something matches the accounting information on the balance sheet

• that a company must declare its expenses and revenues together in the same period

• when a company must disclose all pertininant information in regards to the financial statement which would affect an investors decision

63. True or False? Earnings per share do not include taxes for the year.

Answers:

• True

• False

64. What do you obtain from this expression: (Earnings After Tax / Net Profit After Tax) - Payable Dividends

Answers:

• Equity

• Diluted Earnings

• Diluted Equity

• Retained Earnings

65. How do you calculate goodwill?

Answers:

• total assets - total equity

• total assets - total liabilities

• total liabilities - total equity

• total liabilities - total assets

66. The financial crisis of 2008 led to more

Answers:

• transparency

• bankruptcies

• (All of these)

• (None of these)

67. Operational efficiency is measured by which part of the DuPont ratio?

Answers:

• Profit margin

• Asset turnover

• equity multiplier

68. Return on Asset = Net income / Sales * ?

Answers:

• Net income / Total assets

• Sales * Total Assets

• Total Assets / Sales

• Sales / Total Assets

69. Which of the following are not considered financial reports?

Answers:

• SEC filings

• auditor's reports

• 3rd party analysis

• press releases

70. A decrease in non-current assets is _________ net income.

Answers:

• added to

• subtracted from

• divided by

• multiplied by

71. The DuPont Analysis measures breaks down the Return of Equity into how many parts?

Answers:

• 2

• 3

• 4

• 5

• 10

72. The qualitative characteristics of financial statements include Materiality and

Answers:

• Comparability

• Faith representation

• Timeliness

73. True or False? Net operating gains are added to net income when calculating a cash flows operating activity?

Answers:

• True

• False

74. True or False? The SEC and FASB have similar duties.

Answers:

• True

• False

75. True or False? Working capital is the money it takes to pay off its current liabilities.

Answers:

• False

• True

76. True or False? Financial reporting is not needed by small companies listed on the OTC bulletin board.

Answers:

• False

• True