Download C213 Practice test.docx....C213 Practice test.docx and more Exams Nursing in PDF only on Docsity!
C213 Practice test
What does accounting focus on? The impact a business's activities have on its relationships with customers The impact a business's activities have on the environment The impact a business's activities have on its public image The impact a business's activities have on its overall financial performance - correct answer The impact a business's activities have on its overall financial performance What was the 2012 net profit amount if the 2013 pro-forma net profit of $187, was based on a 22% increase? $228, $182, $153, $145,860 - correct answer $153, Which report summarizes cash collections and cash expenditures from operating, investing, and financing activities over a period of time? Statement of cash flows Summary of cash receipts Cash flow schedule Cash receipts and disbursements sheet - correct answer Statement of cash flows Which users would have a primary concern with an organization's ability to provide healthcare benefits?
Competitors Vendors Employees Suppliers - correct answer Employees Which benefit does a corporation gain by following Generally Accepted Accounting Principles (GAAP)? A decrease in the amount of net income it reports An increase in its comparability to other companies An increase in the amount of assets it reports A decrease in its income tax obligations - correct answer An increase in its comparability to other companie Which body regulates a certified public accounting firm's audit practices when the firm is auditing a large publicly traded company? The Financial Accounting Standards Board (FASB) Another certified public accounting (CPA) firm The Internal Revenue Service (IRS) The Public Company Accounting Oversight Board (PCAOB) - correct answer The Public Company Accounting Oversight Board (PCAOB) What has had the most significant impact on accounting practices? Certification requirements Mobile computing Information technology New product innovations - correct answer Information technology
In 2014, a company collects cash from a customer for services it provided in the previous year (2013). In 2014, a company collects cash from a customer for services it will provide next year (2015). In 2014, a company enters into a contract whereby it agrees to provide services to a customer next year (2015). - correct answer In 2014, a company provides services to a customer for which cash will be collected the next year (2015). Accrual accounting - correct answer ***Accrual accounting is a method of accounting where revenues and expenses are recorded WHEN THEY ARE EARNED (service performed), regardless of when the money is actually received or paid. *** For example, you would record revenue when a project is complete, rather than when you get paid. This method is more commonly used than the cash method. Which category on the statement of cash flows summarizes cash receipts and payments to owners and creditors of the company? Cash flows from business activities Cash flows from financing activities Cash flows from investing activities Cash flows from operating activities - correct answer Cash flows from financing activities Cash Flow from Financing Activities - correct answer Cash Flow from Financing Activities is the net amount of funding a company generates in a given time period, used to finance its business. Finance activities include the issuance and repayment of equity. ... Types include: cash, common, preferred, stock, property, issuance and repayment of debt. Cash Flow from Investing Activities - correct answer Cash Flow from Investing Activities is the section of a company's cash flow statement. ...
that displays how much money has been used in (or generated from) making investments in a specific time period. Investing activities include purchases of long- term assets (such as property, plant and equipment) Where would an investor find a summary of a company's significant accounting policies? In the income statement In the balance sheet In the notes to financial statements In the statement of cash flows - correct answer *** In the NOTES to financial statements *** The first note in almost every company's financial report gives you the information you need to understand the accounting policies used to develop the financial statements. This note explains the accounting rules the company used to develop its numbers. The note is usually called the "Summary of significant accounting policies." Which assurance does an external audit report provide for its readers? The company will generate net income The company's financial statements fairly reflect its financial position The company will be a good credit risk The company will generate positive cash flows - correct answer The company's financial statements fairly reflect its financial position 14 Match each accounting term with its definition. Answer options may be used more than once or not at all. Reliable Material
Continual increase in taxes Continual decrease in sales Continual increase in interest Continual decrease in salaries - correct answer Continual decrease in sales Which two cash flow adequacy ratios represent a cash cow? Choose 2 answers $7,589 / $9, $8,091 / $9, $4,510 / $4, $6,991 / $5, $5,220 / $1,875 - correct answer ***answer: any ratio > 1.
$6,991 / $5, $5,220 / $1, Which formula yields a cash times interest earned ratio of 11? Cash before interest and taxes of $11,000 / cash paid for acquisitions of $1, Cash before interest and taxes of $11,000 / cash paid for interest of $1, Cash before interest and taxes of $11,000 / cash paid for income taxes of $1, Cash before interest and taxes of $11,000 / cash from operations of $1,000 - correct answer Cash before interest and taxes of $11,000 / cash paid for interest of $1,
"material" in accounting - correct answer Information that is important enough to make a difference "Conservatism" in Accounting - correct answer principle of conservatism states that the accountant will be conservative in the measurement of financial data, thus understating, rather than overstating, organizational income and assets. The practice of recognizing all losses but not recognizing gains until they are certain. Which two cash flow adequacy ratios represent a cash cow? - correct answer
- Anything above "1"
- Cash Flow Adequacy Ratio = Cash from operations / Cash required for investing activities Which form of debt should be reported in the long-term liability category? Unearned revenue that will be earned in 9 months Salaries payable due in 2 weeks Accounts payable due in 30 days Notes payable expected to be paid in 18 months - correct answer Notes payable expected to be paid in 18 months In January of year 1, a company began doing business as a corporation in order to sell technology-related accessories and services. During its first month of operations, the following events occurred: January 1 The corporation received $1,000,000 in cash in exchange for stock issued to stockholders. January 3
January 8 The corporation purchased inventory costing $200,000 by paying $120,000 in cash. The remainder was put on credit accounts with suppliers. January 15 The corporation hired five employees. Each employee will be paid $1,000 at the end of each month. January 31 The corporation paid $6,000 cash for a one-year insurance policy. The policy period will - correct answer Cash will decrease $6,000, and paid-in capital will decrease $6,000. Which two values affect the measurement of net income? Choose 2 answers: Stockholder contributions Dividends paid Operating expenses Ordinary gains and losses - correct answer ?????????? Operating expenses Ordinary gains and losses Which two items' subtotals are included in a multi-step income statement? Choose 2 answers: Gross profit Income from operations Current liabilities Total assets - correct answer ???
Income from operations Current liabilities multi-step income statement - correct answer Income statement format that contains subtotals to highlight significant relationships. In addition to net income, it reports gross profit and operating income. it uses multiple subtractions in computing the NET INCOME shown on the bottom line. A furniture company using accrual accounting purchased 20 sofas in November
- In December 2011, 8 of the 20 sofas were sold to customers. The customers all signed contracts agreeing to pay half the amount owed in February 2012 and the remaining half in March 2012. At the time of sale, the company was reasonably sure the customers would pay the amount owed. The furniture company pays its salespeople a commission on each sofa sold, with commissions for December 2011 sales paid in January 2012. The furniture company paid $3,000 for advertising that ran in the local newspaper in November 2011. In which month should advertising costs be expensed? February 2012 January 2012 December 2011 November 2011 - correct answer November 2011 27 On May 1, 2011, a company using accrual accounting purchased equipment costing $500,000. It expects the equipment to have a useful life of five years. At the time of purchase, the company also purchased a one-year insurance policy on this equipment, which cost $6,000.
- Implement decision What was the 2012 net profit amount if the 2013 pro-forma net profit of $187, was based on a 22% increase? $228, $182, $153, $145,860 - correct answer $153, What is a common category in a statement of cash flows? Cash from production activities Cash from planning activities Cash from investing activities Cash from marketing activities - correct answer ????? Cash from production activities Which cash flow category would include "cash received from investors"? Cash from investing activities Cash from financing activities Cash from charitable activities Cash from sponsoring activities - correct answer Cash from financing activities Which item is an investing activity? Cash payments for purchase of plant assets Cash payments for dividends Cash receipts from dividend revenue
Cash receipts from issuance of stock - correct answer Cash payments for purchase of plant assets What impact does the sale of equipment have on the statement of cash flows? Increase in cash from investing activities Increase in cash from operating activities Increase in cash from financing activities Decrease in cash from operating activities - correct answer ????Increase in cash from investing activities What is known about the direct and indirect methods of preparing statements of cash flow? Both methods have the same popularity among large U.S. companies The direct method is more popular among large U.S. companies The indirect method is more popular among large U.S. companies Neither method is very popular among large U.S. companies - correct answer *** The indirect method is more popular among large U.S. companies *** Why is the indirect method is more popular among large U.S. companies? - correct answer The indirect method is a little more difficult to understand. It essentially presents a reconciliation of accrual accounting net income to cash from operating activities. Accrual accounting records revenues and expenses when they occur regardless of when cash changes hands. For example, in accrual accounting, a company records a sale even if the customer has yet to pay his invoice. Under the indirect method, the company starts with net income as reported on the income statement and adjusts net income on an accrual basis rather than cash basis. For instance, since depreciation is a non-cash expense, the indirect method adds the amount to net income. An increase in accounts receivable is a use of cash because, essentially, the company is providing a good to a client on credit. Most companies opt to report the cash flow statement using the indirect method because accrual accounting provides a better measure of the ebbs and flows of business activity.
The accountant unintentionally records amounts as revenue that were prepaid by customers but not yet earned The accounting department miscalculates the payroll tax due at year-end, resulting in an inaccurate liability - correct answer The accountant unintentionally records amounts as revenue that were prepaid by customers but not yet earned The accounting department miscalculates the payroll tax due at year-end, resulting in an inaccurate liability Which internal control is intended to ensure that a company does not mistakenly pay a supplier for an invoice that includes more items than were actually received? The inventory department counts and inspects items as received and forwards the receiving record to accounts payable. The purchasing department authorizes the order of all items before they occur. The accounts payable department utilizes pre-numbered checks in the payment of supplier invoices. The company requires two signatures on each check in order for a payment to be sent. - correct answer ??? The inventory department counts and inspects items as received and forwards the receiving record to accounts payable. What are two common reasons for managers to manipulate reported earnings? Choose 2 answers: They are preparing to qualify for a bank loan. They are feeling pressured to meet internal sales goals. They are feeling pressured to comply with an external auditor. They are preparing to meet Sarbanes-Oxley requirements. - correct answer They are preparing to qualify for a bank loan. They are feeling pressured to meet internal sales goals.
Which two requirements must accounting firms that audit public companies meet under the Sarbanes-Oxley Act? Choose 2 answers: Firms must report to and be retained by the audit committee rather than the CFO or other company management. Firms must help to develop and enforce a code of ethics on audit clients. Firms must not provide certain non-audit services to audit clients, such as management functions or legal services. Firms must not audit the same public company for more than five consecutive years. - correct answer Firms must not provide certain non- audit services to audit clients, such as management functions or legal services. Firms must report to and be retained by the audit committee rather than the CFO or other company management. Which two requirements must management of public companies meet under the Sarbanes-Oxley Act? Choose 2 answers: They must authorize any loans to members of the board of directors. They must be rotated every five years. They must support a stronger board and audit committee. They must provide an assessment of the effectiveness of internal controls with each annual report. - correct answer ????? They must support a stronger board and audit committee. They must provide an assessment of the effectiveness of internal controls with each annual report. Which two actions do internal auditors perform to assist in maintaining the integrity of financial statements?
The insight that outside stakeholders need to choose a company that has a competitive advantage over competitors The information needed by the IRS to decide if a company should have a tax audit performed - correct answer The insight that management needs so the business can perform more effectively The detailed data that managers need to make decisions that will give the business a competitive edge How does management accounting differ from financial accounting? Management accounting is restricted to providing financial rather than non- financial data. Management accounting is used primarily for internal planning, control, and evaluation. Management accounting presents an unbiased view of a company's economic performance. Management accounting is not used to gain a competitive advantage in the marketplace. - correct answer Management accounting is used primarily for internal planning, control, and evaluation. Which account is seen on the balance sheet of a manufacturing company but not on the balance sheet of a service-oriented company? Accounts receivable Equipment Cash Inventory - correct answer Inventory What is a cost that will change in the future based upon the decision made? Sunk cost Out-of-pocket cost Opportunity cost
Differential cost - correct answer Opportunity cost Which two examples are period costs? Choose 2 answers: Selling expenses Direct labor Manufacturing overhead Administrative expenses - correct answer Selling expenses Administrative expenses A company manufactures custom-built wooden bookshelves. Which two costs would the company classify as period costs? Choose 2 answers: Advertising cost Salary cost of the receptionist Salary cost of the craftsperson Wood cost - correct answer Advertising cost Salary cost of the receptionist What role do ethical standards have in management accounting? To prevent all unethical behavior of anyone the management accountant may work with To provide the management accountant with the ability to work with only companies that follow strict ethical principles
