Hello xiangronglian,
Answers, search strategy used and URLs are provided inline:
1. The basic financial statements include a
a. Balance sheet, income statement, statements of retained earnings,
and statement of changes in retained earnings.
b. Statement of financial position, income statement, statement of
retained earnings, statement of changes in retained earnings.
c. Balance sheet, statement of financial position, and statement of
changes on retained earnings
d. Statement of financial position, income statement, statement of
cash flows, and statement of retained earnings.
CORRECT CHOICE B
Search Strategy (all searches done on Google): basic financial
statements "statement of retained earnings"
URL: http://www.bouffordca.com/FS/Understanding%20of%20Basic%20Financial%20Statements.htm
2. Notes to financial statements are beneficial in meeting the
disclosure requirements of financial reporting. The note should not
be used to
a. Describe significant accounting policies
b. Describe depreciation methods employed by the company
c. Describe principles and methods peculiar to the industry in which
the company operates, when these principles and methods are
predominantly followed in that industry.
d. Correct an improper presentation in the financial statements.
CORRECT CHOICE D
Search: site:.edu notes financial statements
URL: http://www.law.uc.edu/CCL/regS-X/SX4-08.html
3. The primary purpose of the statement of financial position is to
reflect
a. The fair value of the firm’s assets at some moment in time
b. The status of the firm’s asset in case of forced liquidation of the
firm
c. The firm’s potential for growth values in the stock market
d. Items of value, debts, and net worth.
CORRECT CHOICE D
Search: purpose "statement of financial position"
URL: http://www.ibm.com/investor/financialguide/sb/sb3.phtml
4. Which of the following items is specifically included in the body
of a statement of cash flows?
a. Operating and non-operating cash flow information
b. Conversion of debt to equity
c. Acquiring an asset through a capital leases
d. Purchasing a building by giving a mortgage to the seller.
CORRECT CHOICE A
Search: "statement of cash flows" format body
URL: ://www.google.ca/search?q=cache:gP0-jwMuCOcC:people.uis.edu/bmoe1/ch24.ppt+%22statement+of+cash+flows%22+format+body&hl=en&ie=UTF-8
5. SFAS 95, Statement of Cash Flows, classifies business transactions
into operating, investing, and financial activities. Which one of the
following transaction should be classified as a financing activity?
a. Purchase of equipment.
b. Purchase of treasury stock
c. Sale of trademarks
d. Income tax refund
CORRECT CHOICE B
Search: sfas 95 "financing activities" "purchase of treasury stock"
URL: http://credit.wharton.upenn.edu/acct201/day6_scf2.pdf
6. When classifying assets as current and non-current for reporting
purposes,
a. The amount at which current assets are carried and reported must
reflect realizable cash values.
b. Prepayments for items such as insurance or rent are included in an
“other assets” group rather than as current assets as they will
ultimately be expensed.
c. The time period by which current assets are distinguished from
non-current assts is determined by the seasonal nature of the
business.
d. Assets are classified as current if they are reasonably expected to
be realized in cash, or consumed during the normal operating cycle.
CORRECT ANSWER: D
Search: "Assets are classified as current if"
URL: http://faculty.gsm.ucdavis.edu/~jdlyon/duck.htm
7. The balance sheet allows investors to assess all of the following
except
a. How efficient the company’s assets are used.
b. The liquidity and financial flexibility of the company.
c. The capital structure of the company
d. The net realizable value of the company.
CORRECT ANSWER: C
Search: "balance sheet" "uses of"
URL: http://ohioline.osu.edu/cd-fact/1154.html (includes all but C)
8. When treasury stock is accounted for at cost, the cost is reported
on the balance sheet as a(n)
a. Asset
b. Reduction of retained earnings
c. Reduction of additional paid-in-capital
d. Unallocated reduction of equity
CORRECT CHOICE: D
Search: "treasury stock" cost
URL: http://beginnersinvest.about.com/library/lessons/bl-lesson3cc.htm
9. When determining how liquid a company is which ratio best provides
the indication:
a. Debt to worth ratio
b. Dupont ratio
c. Quick ratio
d. Current ratio
CORRECT CHOICE: D
Search: company liquid ratio
URL: http://gold.globeinvestor.com/public/help/flat/help_financials_report_ratios.html
10. Which is the best ratio indicator for the solvency of a company
a. Cash flow to debt
b. Return of average assets
c. Current ratio
d. Debt to equity ratio
CORRECT CHOICE: D
Search: solvency company ratio
URL: ://www.google.ca/search?q=cache:3Z9I0y-bDTcC:www.schwab.com/SchwabNOW/SNLibrary/SNLib123/SN123Article/0,5637,874%257C412,00.html+solvency+company+ratio&hl=en&ie=UTF-8
If you need any clarifications regarding any of the answers above,
please let me know and I will do my best to further assist you.
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