ACCT 301 Smartbook Chapter 3 The Balance Sheet and Financial Disclosures solutions complete answers

ACCT 301 Smartbook Chapter 3 The Balance Sheet and Financial Disclosures solutions complete answers 

 

Which of the following financial statements shows a firm’s financial position on a particular date?

 

The financial statement that provides information about liquidity and long-term solvency is the

 

Assets minus liabilities, measured according to GAAP, is not likely to be representative of the        value of the entity. (Enter only one word.)

 

In a balance sheet, how are assets classified?

 

Cash and other assets that are reasonably expected to be converted to cash or consumed within 1 year or the current operating cycle are classified as

 

The financial statement that displays a firm’s financial position on a particular date is the              . (Enter one word per blank)

 

The time period necessary to convert cash to raw materials, convert raw materials into finished products, sell the products, and collect on the account receivable is referred to as the ______ cycle.

 

Classifying items on the balance sheet as current and noncurrent assists financial statement users in assessing what aspects about a company?

 

A temporary investment or short-term marketable security should be reported in which section of the balance sheet?

 

A company’s total assets minus its total liabilities as shown on the balance sheet is known as the        value. (Enter only one word.)

 

The current versus noncurrent classification applies to what in the financial statements?

 

              result from the sale of goods or services on credit. (Enter one word per blank.)

 

Current        include cash and other items that will be converted to cash or consumed within the coming year. (Enter only one word.)

 

The        cycle refers to the period of time necessary to convert cash to raw materials, raw materials to a finished product, the finished product to receivables, and then receivables back to cash. (Enter only one word.)

 

Inventories include which of the following items? (Select all that apply.)

 

Which of the following items should be classified as a short-term investment?

 

Which of the following items represents an expense paid in advance that creates benefits used in the future?

 

Assets not used directly in the operations of the business are referred to as       . (Enter only one word.)

 

True or false: Accounts receivable result from the sale of goods or services for cash.

 

Which of the following items are included in investments? (Select all that apply.)

 

Which of the following are common characteristics of property, plant, and equipment? (Select all that apply.)

 

Schwinn is a company that makes bicycles. Which of the following items would be included in Schwinn’s inventory? (Select all that apply.)

 

Which of the following transactions would be recorded as a prepaid expense? (Select all that apply.)

 

Obligations to other entities are known as what?

 

Assets not used directly in the operations of the business are called what?

 

What is the purpose of additional financial disclosures in an annual report?

 

Land held for speculation, noncurrent receivables, and cash set aside for future plant expansion are all examples of       . (Enter only one word.)

 

The full-disclosure principle requires that financial statements report which of the following?

 

Which of the following are characteristics of plant, property, and equipment? (Select all that apply.)

 

Which of the following are included in inventory? (Select all that apply.)

 

The Management Discussion and Analysis section of the financial statements includes a perspective on which of the following? (Select all that apply.)

 

Obligations to other entities are classified as        on the balance sheet. (Enter only one word.)

 

Who is responsible for the information in the annual report?

 

Additional        are critical to understanding financial statements and to evaluating a firm’s performance. (Enter only one word.)

 

The SEC requires disclosures on compensation for which of the following? (Select all that apply.)

 

What is the principle that requires that financial statements provide all material relevant information concerning the entity?

 

The role of a(n)   is to attest to the fairness of the financial statements they have examined. (Enter only one word.)

 

Which type of risk is the risk of a company not being able to pay its obligations when they come due?

 

An analysis provided by the company’s management is included in the

 

A ratio used to measure liquidity is the

 

Responsibility for the financial statements and other information found in the annual report lies with        . (Enter only one word.)

 

If a company has a large amount of long-term debt in its capital structure, this will affect the firm’s ______.

 

Which of the following are required SEC disclosures? (Select all that apply.)

 

Companies that operate in more than one significant business must provide which of the following?

 

What is the role of the auditor?

 

Default risk refers to the ability of a company to

 

The current ratio and the quick ratio are used to measure        of a company indicating the ability to pay current obligations. (Enter only one word.)

 

What refers to the riskiness of a company with regard to the amount of liabilities in its capital structure?

 

The FASB requires that companies that engage in more than one significant business must provide supplemental information concerning individual operating       .

 

 

1.
The ability to pay its long-term debts as they become due is referred to as ______ of the company.
 
 
2.
Accounts receivable represents which of the following?
 
 
3.
The account that represents the amount of money owed by customers is called _________________ ______________________.
 
 
7.
Book Value of a company formula:
 
 
9.
A company’s assets minus its liabilities shown on the balance sheet is referred to as its ______ value.
 
 
11.
____________________ consist of assets that a retail or wholesale company acquires for resale or goods that manufacturers produce for sale.
 
 
12.
Current assets include which of the following?
 
 
18.
The full-disclosure principle requires financial statements to provide all _______________ __________________ information regarding the company.
 
 
24.
A prepaid expense represents a ____________ recorded when an expense is paid in advance.
 
 
27.
The risk that a company will not be able to pay its obligations when they come due is referred to as ________________ risk.
 
 
29.
Schwinn is a company that makes bicycles.

Which of the following items would be included in Schwinn’s inventory?
 
 
30.
SEC requirements provide for disclosures on executive and director compensation, particularly concerning _____________________ options.
 
 
32.
Short-term investments are sometimes called which of the following?
 
 
34.
True or false: 

Default risk refers to how adept a company is at withstanding various events that might impair its ability to earn profits.
 
 
35.
True or False:

The balance sheet will directly measure the company’s market value.
 
 
36.
True or False: 

The operating cycle for most firms is 1 year or less.
 
 
37.
What does a liability represent?
 
 
38.
What is considered a short-term investment?
 
 
 
 
 
 
 
 
 
 
 

44.
Which document is required to provide information on executive and director compensation?
 
 
45.
Which of the following are liquidity ratios?
 
 
48.
Which of the following is true regarding disclosure notes?
 
 
 

 

1.
The ability of a company to convert its assets to cash to pay its current obligations is referred to as _____________.
 
 
2.
The ability to pay its long-term debts as they become due is referred to as ________ of the company.
 
 
3.
The account that represents the amount of money owed by customers is called _________ __________.
 
 
4.
The accumulated net income earned since the inception of the corporation and not yet paid to shareholders is referred to as __________ _________.
 
 
8.
Cash and other assets that are reasonable expected to be converted to cash or consumed within 1 year of the current operating cycle are classified as
 
 
9.
The criteria used to determine if a liability should be classified as long-term is
 
 
10.
The current ratio is expressed as current __________ divided by current ___________.
 
 
11.
Indicate the order of the following current assets on the balance sheet.
 
 
12.
The mathematical formula for working capital is current assets ________ current liabilities.
 
 
14.
An obligation to pay a supplier within 30 days should be recorded in _________ payable, whereas a signed promise to pay cash at some point in the future should be recorded as _________ payable.
 
 
15.
Other assets represents
 
 
16.
Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events are referred to as __________.
 
 
17.
Property, plant, and equipment is a(n) _________ asset.
 
 
20.
Short-term investments are sometimes called which of the following?
 
 
21.
Simply put, _______ are the obligations of a company.
 
 
23.
The two sources of stockholders’ equity are amounts _________________.
 
 
24.
What account is affected when customer pays in advance for services to be performed in the future?
 
 
25.
What is included in a company’s paid in capital?
 
 
26.
Which document is required to provide information on executive and director compensation?
 
 
27.
Which of the following are liquidity ratios?
 
 
29.
Which of the following items are required disclosures in the notes to financial statements?
 
 
30.
Which of the following may be recorded on the balance sheet as intangible assets?
 
 
 
 
 
 
 
 
 
 
 

 

1.
The ability to pay its long-term debts as they become due is referred to as ______ of the company.
 
 
2.
The account that represents the amount of money owed by customers is called ______ _______.
 
 
6.
Classifying items on the balance sheet as current and non-current assists financial statement users in assessing what aspects about a company?
 
 
7.
A company’s assets minus its liabilities shown on the balance sheet is referred to as its ______ value.
 
 
9.
__________ consist of assets that a retail or wholesale company acquires for resale or goods that manufacturers produce for sale.
 
 
11.
The current versus non-current classification applies to what in the financial statements ______.
 
 
16.
The full-disclosure principle requires financial statements to provide all 
________ __________ information regarding the company.
 
 
18.
How should liquid investments expected to be converted to cash within the current operating cycle be reported in the balance sheet?
 
 
20.
Investments in stock and debt securities of other corporations are included as _____ if the company has the ability and intent to sell them within the next 12 months.
 
 
24.
A prepaid expense represents a(n) _________
recorded when an expense is paid in advance.
 
 
29.
SEC requirements provide for disclosures on executive and director compensation, particularly concerning _______ options.
 
 
33.
True or false: Default risk refers to how adept a company is at withstanding various events that might impair its ability to earn profits.
 
 
34.
True or false: The operating cycle for most firms is 1 year or less.
 
 
35.
What does a liability represent?
 
 
38.
What is the role of the auditor’s attest function?
 
 
39.
Which document is required to provide information on executive and director compensation?
 
 
40.
Which of the financial statements shows a firm’s financial position on a particular date?
 
 
41.
Which of the following are examples of prepaid expenses?
 
 
42.
Which of the following are liquidity ratios?
 
 
43.
Which of the following is included with the annual report to help evaluate a firm’s financial performance and financial health?
 
 
 
 
 
 
 
 
 
 
 

 

 

6.
The ability to pay its long-term debts as they become due is referred to as ______ of the company.
 
 
9.
Accounts receivable represents which of the following?
 
 
24.
A company’s assets minus its liabilities shown on the balance sheet is referred to as its ______ value.
 
 
27.
consist of assets that a retail or wholesale company acquires for resale or goods that manufacturers produce for sale. (Enter only one word.)
 
 
28.
Current assets include which of the following? (Select all that apply.)
 
 
35.
discloses the choice the company has made under equally acceptable alternatives (inventory costing choice, depreciation method, what securities are cash equivalents) pg 123 3-9
 
 
36.
each item in the financial statement is expressed as a % of the same item in another year (base amount)
 
 
37.
each item in the financial statements is expressed as a % of a corresponding total within the same year (base amount)
 
 
39.
event that has a material affect on the company financial position that occurs after the end of the accounting period but before the financial statements are issued. (issuance of debt/ equity securities, business combo, sale of assets, event that gives info on a loss continency)
 
 
40.
Expected to provide economic benefits beyond the current year.
 
 
41.
expenses have been incurred but the amounts owed will not be paid until a subsequent period (payables)
 
 
44.
The full-disclosure principle requires financial statements to provide all        information regarding the company. (Enter one word per blank.)
 
 
45.
highly liquid investments that are easily and quickly convertible into cash. (commercial paper, money market funds, T-Bills)
 
 
46.
included liquid investment not classified a cash equivalents and investments in stocks or debt of other corporation if the company has the ability and intent to sell it in the next 12 months
 
 
 
 
 
 
 
 
 
 
 

61.
Ownership of an exclusive right to something such as a product, a process, or a name is called what?
 
 
65.
Property, plant, and equipment is a(n) ______ asset. (Select all that apply.)
 
 
66.
The purpose of the balance sheet is to report
 
 
75.
The risk that a company will not be able to pay its obligations when they come due is referred to as
 
 
79.
“Snap shot” of financial position at the end of a particular day marking the end of the accounting period
 
 
80.
Something needs to be emphasized (lack of consistency, going concern, emphasis of a matter)
 
 
81.
Stock and bonds of other companies, land held for investment, restricted cash, L-T receivables
 
 
 
 
 
 
 
 
 

86.
True or false: Investments are assets used directly in the operations of the business.
 
 
98.
what most often refers to the ability of a company to convert its assets to cash to pay its current liabilities?
 
 
99.
what refers to an assessment of whether a company will be able to pay all its liabilities, which includes L-T liabilities as well
 
 
100.
Which document is required to provide information on executive and director compensation?
 
 
104.
Which of the following are liquidity ratios? (Select all that apply.)
 
 
106.
Which of the following items should be classified as investments on the balance sheet? (Select all that apply.)
 
 
107.
Which of the following may be recorded on the balance sheet as intangible assets? (Select all that apply.)
 
 
 
 
 
 
 
 
 
 

 

1.
The accounts common stock and paid-in capital in excess of par are classified as_____________
 
 
3.
Accounts receivable represents which of the following?
 
 
4.
The accumulated net income earned since the inception of the corporation and not yet paid to shareholders is referred to as__________
 
 
5.
Another term for a trade receivable that occurs in the course of a company’s normal trade or business is__________
 
 
6.
Any receivable not expected to be collected within one year or the operating cycle, whichever is longer, is classified as a ____________
 
 
7.
Assets are classified as long-term if:
 
 
8.
Assets are probable _____ economic benefits as a result of _____ transactions or events.
 
 
10.
An asset that has no physical substance is referred to as a(n) ______ asset.
 
 
11.
The balance sheet provides useful information about a company’s_________ and long-term solvency.
 
 
12.
Barsky Corp. has the following items:
Cash = $5,000
Prepaid expenses = 2,000
Building = 40,000
Land = 20,000
Inventory = 15,000

Total noncurrent assets on the balance sheet is______
 
 
13.
Bear Corp. has $100,000 cash in the bank restricted to repay a note payable that matures in 2 years. How should this $100,000 be reported?
 
 
16.
Cash set aside for future plant expansion and a 3 year note receivable are both examples of what on a company’s balance sheet?
 
 
18.
Common practice requires that current assets are presented on the balance sheet in the order of_______
 
 
19.
Current assets include which of the following?
 
 
21.
A customer pays in advance for services to be performed in a future period. In which account should the transaction be recorded?
 
 
23.
An expense that has been incurred but not yet paid results is a(n)
 
 
25.
Goodwill is calculated as_______
 
 
26.
Goodwill is shown on the balance sheet_________
 
 
27.
How are current liabilities satisfied? (Select all that apply.)
 
 
28.
If an accounts receivable is due within 60 days, it is classified on the balance sheet as a(n)__________ asset.
 
 
30.
Indicate the order of the following current assets on the balance sheet.
 
 
31.
Inventories held for sale in the normal course of business are classified in the balance sheet as____________
 
 
33.
Investments are reported as current when the company has both the 
__________ and to sell within one year (or operating cycle).
 
 
35.
An investment should be classified as current on the balance sheet if (Select all that apply.)
 
 
 
 
 
 
 
 
 
 
 

36.
Investments in stock and debt securities of other corporations are included as _____ if the company has the ability and intent to sell them within the next 12 months.
 
 
37.
A ______ is satisfied within 1 year or the current operating cycle, whichever is longer.
 
 
39.
Land is listed separately on the balance sheet because__________
 
 
40.
Long-term ______________ are obligations that will not be satisfied in the next year or operating cycle, whichever is longer.
 
 
41.
Money on hand and in banks that is available for use in the operations of the business is shown in the ___________ account on the balance sheet.
 
 
42.
Mueller Company reports a long-term notes payable on its balance sheet. In its financial statement notes, Mueller Company should disclose___________
 
 
45.
An obligation to pay a supplier within 30 days should be recorded in 
__________payable, whereas a signed promise to pay cash at some point in the future should be recorded as _________ payable.
 
 
46.
On January 1 of the current year, Lafferty signs a contract to rent a building for $1,000 per month for the next three years. On that date, Lafferty pays $36,000 for rent. On January 1 when payment is made, what is the amount of the prepaid rent that should be classified as a current asset?
 
 
47.
On January 1 of the current year, Lafferty signs a contract to rent a building for $1,000 per month for the next three years. On that date, Lafferty pays $36,000 for rent. On January 1 when payment is made, what is the amount of the prepaid rent that should be classified as a noncurrent asset?
 
 
48.
On January 1, Year 1, Renquist Corp. borrowed $100,000 by signing a 5-year interest bearing note payable with annual interest of 8%. The terms of the contract require Renquist to repay the principal over 5 years with a payment of $20,000 made at the end of each year. On December 31, Year 1, Renquist made the first payment plus interest. What portion of the note should be classified as current liabilities?
 
 
49.
A prepaid expense represents a(n)_____________ recorded when an expense is paid in advance.
 
 
50.
Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events are referred to as____________
 
 
52.
Retained earnings represents the accumulated ____________ ____________reported since the inception of the corporation and not yet paid to shareholders as dividends.
 
 
53.
Rice Company purchases a building for $500,000, which will be used as a production facility. How should the building be classified on the balance sheet?
 
 
55.
Shareholders’ equity arises primarily from amounts invested by shareholders and amounts ______.
 
 
56.
Shareholders’ equity is composed of which of the following accounts? (Select all that apply.)
 
 
 
 
 
 
 
 
 

57.
Short-term investments are sometimes called which of the following?
 
 
58.
The three primary elements found on a balance sheet are assets, 
__________, and shareholders’ equity.
 
 
61.
True or false: Investments are assets used directly in the operations of the business.
 
 
62.
The two classifications used for assets and liabilities on the balance sheet are ______ and ______.
 
 
63.
Unearned revenue represents cash received from a customer for goods or services to be provided in a(n)___________ period
 
 
64.
What account is affected when a customer pays in advance for services to be performed in the future?
 
 
65.
What are the primary elements found on a balance sheet?
 
 
66.
What asset is listed as a separate item on the balance sheet because it has an unlimited life and is not depreciated?
 
 
67.
What is included in a company’s paid in capital? (Select all that apply.)
 
 
68.
What is the criterion to classify an investment as a cash equivalent versus a short-term investment?
 
 
69.
What is the difference between an account payable and a note payable?
 
 
70.
When a receivable is supported by a formal agreement that specifies payment terms, it is called a _________________.
 
 
71.
Which of the following accounts represent amounts shareholders have invested in the company? (Select all that apply.)
 
 
73.
Which of the following are accrued liabilities? (Select all that apply.)
 
 
77.
Which of the following are classified as long-term liabilities? (Select all that apply.)
 
 
80.
Which of the following are examples of prepaid expenses? (Select all that apply.)
 
 
82.
Which of the following are noncurrent assets? (Select all that apply.)
 
 
 
 
 
 
 
 
 

84.
Which of the following describe long-term liabilities? (Select all that apply.)
 
 
85.
Which of the following investments would be classified as a cash equivalent?
 
 
87.
Which of the following items are considered cash equivalents?
 
 
89.
Which of the following items are included in property, plant, and equipment? (Select all that apply.)
 
 
90.
Which of the following items is classified as cash?
 
 
92.
Which of the following items should be classified as investments on the balance sheet? (Select all that apply.)
 
 
93.
Which of the following items should be included in cash on the balance sheet?
 
 
94.
Which of the following items should not be included in cash and cash equivalents in the balance sheet?
 
 
95.
Which of the following may be recorded on the balance sheet as intangible assets? (Select all that apply.)
 
 
96.
Which of the following represents the net income earned by a corporation and not yet paid to shareholders?
 
 
97.
Which of the following should be classified as current liabilities? (Select all that apply.)
 
 
102.
Why are inventories reported as current assets?
 
 
103.
Zantron Corp. pays $100,000 for robotic equipment to be used in its production facility. Zantron should include this transaction as
 
 
 
 
 
 
 
 
 
 

 

1.
Accounts receivable represents which of the following?
 
 
2.
The account that represents the amount of money owed by customers is called
 
 
5.
Assets not used directly in the operation of the business are referred to as ____________.
 
 
8.
The balance sheet provides useful information about a company’s _______ and long term solvency.
 
 
9.
The balance sheet provides useful information about a company’s ______ and long term solvency.
 
 
10.
Balance sheets often include a catch all classification of non current assets called __________ long-term assets.
 
 
11.
Bear Corp, has $100,000 cash in the bank restricted to repay a note payable that matures in 2 years. How should this $100,000 be reported?
 
 
12.
Cash and other assets that are reasonable expected to be converted to cash or consumed within 1 year or the current operating cycle are classified as
 
 
13.
classifying items on the balance sheet as current and non current assists financial statement users in assessing what aspects about a company?
 
 
16.
The current versus non current classification applies to what in the financial statements?
 
 
19.
the financial statement that displays a firm’s financial position on a particular date is the
 
 
21.
How are account receivable classified on the balance sheet?
 
 
22.
How are current liabilities satisfied?
 
 
24.
If an accounts receivable is due within 60 days, it is classified on the balance sheet as an ________ asset
 
 
27.
Investments in stock and debt securities of other corporations are included as _______if the company has the ability and intent to sell them withing the next 12 months.
 
 
28.
Land held for speculation, non current receivables, and cash set aside for future plant expansion are all examples of ________
 
 
29.
A liability is classified as current if it is due
 
 
31.
Money on hand and in banks that is available for use in the operations of the business is shown in the ______ account on the balance sheet
 
 
34.
An obligation to pay a supplier within 30 days should be recorded in _________ payable, whereas a signed promise to pay cash at some point in the future should be recorded as __________ payable.
 
 
35.
On the balance sheet, current assets are listed in the order of their what?
 
 
36.
Ownership of an exclusive right to something such as a product , a process or a name is called what?
 
 
37.
The purpose of the balance sheet is to report
 
 
42.
Short term investments are sometimes called which of the following?
 
 
 
 
 
 
 
 
 
 
 

43.
(T/F) Default risk refers to how adapt a company is at withstanding various events that might impair its ability to earn profits
 
 
44.
(T/F) Investments are assets used directly in the operation of the business.
 
 
45.
(T/F) The balance sheet will directly measure the company’s market value
 
 
47.
What is the difference between an account payable and a note payable?
 
 
48.
What is the order of the following current assests on the balance sheet? Inventory, A/R, Prepaid Expenses, Cash and Cash Equivalents
 
 
53.
Which document is required to provide information on executive and director compensation?
 
 
54.
Which of the following are characteristics of plant, property and equipment?
 
 
55.
Which of the following are common characteristics of PPE?
 
 
56.
Which of the following are examples of prepaid expenses?
 
 
57.
Which of the following is included with the annual report to help evaluate a firms financial performance and financial health?
 
 
58.
Which of the following items are considered cash equivalents?
 
 
61.
Which of the following items should be included in cash on the balance sheet?
 
 
62.
Which of the following items should not be included in cash and cash equivalents in the balances sheet?
 
 
63.
Which of the following may be recorded on the balance sheet as intangible assets?
 
 
 
 
 
 
 
 
 

 

1.
The ability to pay its long-term debts as they become due is referred to as ______ of the company.
 
 
2.
Accounts receivable represents which of the following?
 
 
3.
The account that represents the amount of money owed by customers is called _________________ ______________________.
 
 
7.
Book Value of a company formula:
 
 
9.
A company’s assets minus its liabilities shown on the balance sheet is referred to as its ______ value.
 
 
11.
____________________ consist of assets that a retail or wholesale company acquires for resale or goods that manufacturers produce for sale.
 
 
12.
Current assets include which of the following?
 
 
16.
The financial statement that displays a firm’s financial position on a particular date is the ________________ _______________________.
 
 
18.
The full-disclosure principle requires financial statements to provide all _______________ __________________ information regarding the company.
 
 
24.
A prepaid expense represents a ____________ recorded when an expense is paid in advance.
 
 
27.
The risk that a company will not be able to pay its obligations when they come due is referred to as ________________ risk.
 
 
29.
Schwinn is a company that makes bicycles.

Which of the following items would be included in Schwinn’s inventory?
 
 
30.
SEC requirements provide for disclosures on executive and director compensation, particularly concerning _____________________ options.
 
 
32.
Short-term investments are sometimes called which of the following?
 
 
34.
True or false: 

Default risk refers to how adept a company is at withstanding various events that might impair its ability to earn profits.
 
 
35.
True or False:

The balance sheet will directly measure the company’s market value.
 
 
36.
True or False: 

The operating cycle for most firms is 1 year or less.
 
 
37.
What does a liability represent?
 
 
38.
What is considered a short-term investment?
 
 
 
 
 
 
 
 
 
 
 

44.
Which document is required to provide information on executive and director compensation?
 
 
47.
Which of the following financial statements shows a firm’s financial position on a particular date?
 
 
48.
Which of the following is true regarding disclosure notes?
 
 
 

 

 
 
 
_____________________ __________________ result from the sale of goods and services on credit
 
 
 
increasing over time (usually dealing with interest)
 
 
 
obligations created when expenses have been incurred but amounts owed will not be paid until a subsequent reporting period
 
 
 
Which of the following items are required disclosures in the notes to financial statements?: (Select all that apply)
a. description of subsequent events
b. marketing strategies
c. related third-party transactions
d. significant accounting policies
 
 
 
Related third-party transactions ________ required to be disclosed in the notes to the financial statements.
a. are not
b. are
 
 
 
Which of the following is in the number of the quick ratio?
a. current assets
b. quick assets
c. quick liabilities
d. current liabilities
 
 
 
Cash set aside for future plant expansion and a 3 year note receivable are both examples of what on a company’s balance sheet?:
a. Intangible assets
b. Investments
c. Other assets
d. Property, plant, and equipment
 
 
 
Current assets include which of the following?: (Select all that apply)
a. Property and equipment
b. Short term investments
c. Cash
d. Intangible assets
 
 
 
Another term for equity is ___________________.
a. revenue less expenses
b. total assets
c. net assets
d. retained earnings
 
 
 
What is the formula for the current ratio?
 
 
 
A ________________ satisfied within 1 year or the current operating cycle, whichever is longer.
a. noncurrent asset
b. noncurrent liability
c. current asset
d. current liability
 
 
 
Short term investments are sometimes called which of the following?: (Select all that apply)
a. Short-term marketable securities
b. Non marketable securities
c. Primary investments
d. Temporary investments
 
 
 
What is included in a company’s paid in capital?: (Select all that apply)
a. Common stock
b. Retained earnings
c. Comprehensive income
d. Additional paid-in capital
 
 
 
The two sources of stockholders’ equity are amounts ______________.: (Select all that apply)
a. earned by the corporation
b. borrowed from related companies
c. borrowed from banks
d. paid in from shareholders
 
 
 
The risk that a company will not be able to pay its obligations when they come due is referred to as _______________ risk.
 
 
 
Specifies a minimum list of items to be presented
 
 
 
Unearned revenue represents cash received from a customer for goods or services to be provided in a(n) __________________ period.
 
 
 
The debt to equity ratio is calculated as total _____________ divided by shareholders’ equity.
 
 
 
Long-term __________________ are obligations that will not be satisfied in the next year or operating cycle, whichever is longer.
 
 
 
ability to convert assets into cash to pay its debts that are coming due (current liabilities)
 
 
 
The full-disclosure principle requires financial statements to provide all _______________ _______________ information regarding the company.
 
 
 
Retained earnings represents the accumulated ______________ _____________ reported since the inception of the corporation and not yet paid to shareholders as dividends.
 
 
 
Invested capital consisting of primarily of amounts invested by shareholders when they purchase shares of stock from the corporation
 
 
 
Amounts earned by the corporation on behalf of its shareholders and not yet distributed as dividends
 
 
 
ability to pay long term debts; allows one to assess the company’s FINANCIAL FLEXIBILITY
 
 
 
T or F?: Operational risk refers to how adept a company is at withdrawing various events that might impair its ability to earn profits.
 
 
 
 
 
 
 
 
 

 
 
 
Does not specify a minimum list of items to be presented
 
 
 
A popular measure of a company’s ability to pay its short-term debt that is measured as current assets minus current liabilities is _______________ ______________.