Questão 1
Questão
Corporations purchase investments in debt or stock securities generally for one of two reasons.
Questão 2
Questão
A reason some companies purchase investments is because they generate a significant portion of their earnings from investment income.
Questão 3
Questão
The accounting for short-term debt investments and for long-term debt investments is similar.
Questão 4
Questão
When debt investments, are sold, the gain or loss is the difference between the net proceeds from the sale and the fair value of the bonds.
Questão 5
Questão
Debt investments are investments in government and corporation bonds.
Questão 6
Questão
In accordance with the cost principle, brokerage fees should be added to the cost of an investment.
Questão 7
Questão
In accordance with the cost principle, the cost of debt investments includes brokerage fees and accrued interest.
Questão 8
Questão
In accounting for stock investments of less than 20%, the equity method is used.
Questão 9
Questão
Dividends received on stock investments of less than 20% should be credited to the Stock Investments account.
Questão 10
Questão
If an investor owns between 20% and 50% of an investors common stock, it is presumed that the investor has significant influence on the investee.
Questão 11
Questão
The Stock Investments account is debited at acquisition under both the equity method and cost method of accounting for investments in common stock.
Questão 12
Questão
Under the equity method, the investment in common stock is initially recorded at cost, and the Stock Investments account is adjusted manually.
Questão 13
Questão
Under the equity method, the receipt of dividends from the investee company results in an increase in the Stock Investments account.
Questão 14
Questão
Consolidated financial statements are appropriate when an investor controls an investee by ownership of more than 50% of the investors common stock.
Questão 15
Questão
Consolidated financial statements are prepared in place of the financial statements for that parent and subsidiary companies.
Questão 16
Questão
Consolidated financial statements should be prepared only when a subsidiary company has a controlling interest in the parent company.
Questão 17
Questão
The valuation of non-trading securities is similar to the procedures followed for trading securities, except that changes in fair value are not recognized in current income.
Questão 18
Questão
An unrealized gain or loss on trading securities is reported as a separate component of stockholders' equity.
Questão 19
Questão
For non-trading securities, the unrealized gain or loss account is carried forward to future periods.
Questão 20
Questão
A decline in the fair value of a trading security is recorded by debiting an unrealized loss account and crediting the Fair Value Adjustment account.
Questão 21
Questão
The statement of cash flows is a required statement that must be prepared along with an income statement, balance sheet,and retained earnings statement.
Questão 22
Questão
For external reporting, a company must prepare either an income statement ora statement of cash flows, but not both.
Questão 23
Questão
A primary objective of the statement of cash flows is to show the income or loss on investing and financing transactions.
Questão 24
Questão
A statement of cash flows indicates the sources and uses of cash during a period.
Questão 25
Questão
A statement of cash flows should help investors and creditors assess the entity's ability to generate future income.
Questão 26
Questão
The information in a statement of cash flows helps investors and creditors assess the company's ability to pay dividends and meet obligations.
Questão 27
Questão
Financial statement readers can determine future investing and financing transactions by examining a company's statement of cash flows.
Questão 28
Questão
In preparing a statement of cash flows, the issuance of debt should be reported separately from the retirement of debt.
Questão 29
Questão
Non-cash investing and financing activities must be reported in the body of a statement of cash flows.
Questão 30
Questão
The statement of cash flows classifies cash receipts and payments as operating, non operating, financial and extraordinary activities.
Questão 31
Questão
The sale of land for cash would be classified as a cash inflow from an investing activity.
Questão 32
Questão
Cash flow from investing activities is considered the most important category on the statement of cash flows because it is considered the best measure of expected income.
Questão 33
Questão
The receipt of dividends from long-term investments in stock is classified as a cash inflow from investing activities.
Questão 34
Questão
The payment of interest on bonds payable is classified as a cash outflow from operating activities.
Questão 35
Questão
Any item that appears on the income statement would be considered as either a cash inflow or cash outflow from operating activities.
Questão 36
Questão
The acquisition of a building by issuing bonds would deb considered an investing and financing activity that did not affect cash.
Questão 37
Questão
All major financing and investing activities affect cash.
Questão 38
Questão
Cash provided by operations is generally equal to operating income.
Questão 39
Questão
Using the indirect method, an increase in accounts receivable during a period is deducted from net income in calculating cash provided by operations.
Questão 40
Questão
Using the indirect method, an increase in accounts payable during a period is deducted from net income in calculating cash provided by operations.
Questão 41
Questão
Intracompany comparisons of the same financial statement items can often detect changes in financial relationships and significant trends.
Questão 42
Questão
Calculating financial ratios is a financial reporting requirement under generally accepted accounting principles.
Questão 43
Questão
Measures of a company's liquidity are concerned with the frequency and amounts of dividend payments.
Questão 44
Questão
Analysis of financial statements is enhanced with the use of comparative data.
Questão 45
Questão
Comparisons of company data with industry averages can provide some insight into the company's relative position in the industry.
Questão 46
Questão
Vertical and horizontal analyses are concerned with the format used to prepare financial statements.
Questão 47
Questão
Horizontal, vertical and circular analyses are the most common tools of financial statement analysis.
Questão 48
Questão
Horizontal analysis is a technique for evaluating a financial statement item in the current year with other items in the current year.
Questão 49
Questão
Another name for trend analysis is horizontal analysis.
Questão 50
Questão
If a company has sales of $110 in 2012 and $154 in 2013, the percentage increase in sales from 2012 to 2013 is 140%.
Questão 51
Questão
In horizontal analysis, if an item has a negative amount in the base year,and a positive amount in the following year, no percentage change for that item can be computed.
Questão 52
Questão
Common size analysis expresses each item within a financial statement in terms of a percent of a base amount.
Questão 53
Questão
Vertical analysis is a more sophisticated analytical tool than horizontal analysis.
Questão 54
Questão
Vertical analysis is useful in making comparisons of companies of different sizes.
Questão 55
Questão
Meaningful analysis of financial statements will include either horizontal or vertical analysis, but not both.
Questão 56
Questão
Using vertical analysis of the income statement, a company's net income as a percentage of net sales is 10%; therefore, the cost of goods sold as a percentage of sales must be 90%.
Questão 57
Questão
In the vertical analysis of the income statement, each item is generally stated as a percentage of net income.
Questão 58
Questão
A ratio can be expressed as a percentage, a rate, or a proportion.
Questão 59
Questão
A solvency ratio measures the income or operating success of an enterprise for a given period of time.
Questão 60
Questão
The current ratio is a measure of all the ratios calculated for the current year.