The relationship between current assets and current liabilities is important in evaluating a company’s

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An advantage of the corporate form of business is that

 

its owner’s personal resources are at stake.
its ownership is easily transferable via the sale of shares of stock.
it is simple to establish.
it has limited life.

 

Which of the following is the best definition of an internal user of accounting information?

 

Managers who use accounting information to plan, organize, and run a business.
Labor unions who use accounting information to examine the ability of the company to pay increased wages and benefits.
Investors who use accounting information to decide whether to buy or sell stock.
Creditors like banks that use accounting information to evaluate the risk of lending money.

 

Which of the following is the most appropriate and modern definition of accounting?

 

The information system that identifies, records, and communicates the economic events of an organization to interested users.
A means of collecting information.
Electronic collection, organization, and communication of vast amounts of information.
The interconnected network of subsystems necessary to operate a business.

 

 

 

The common characteristic possessed by all assets is

 

great monetary value.
tangible nature.
future economic benefit.
long life.

 

The cost of assets consumed or services used is also known as

 

an expense.
a revenue.
a liability.
an asset.

 

Debts and obligations of a business are referred to as

 

assets.
equities.
liabilities.
expenses.

 

 

 

 

 

 

Ending retained earnings for a period is equal to beginning

 

Retained earnings + Net income – Dividends.
Retained earnings – Net income – Dividends.
Retained earnings + Net income + Dividends.
Retained earnings – Net income + Dividends.

 

In a classified balance sheet, assets are usually classified as

 

current assets; long-term investments; tangible assets; and intangible assets.
current assets; long-term investments; property, plant, and equipment; and intangible assets.
current assets; long-term assets; property, plant, and equipment; and intangible assets.
current assets; long-term investments; property, plant, and equipment; and common stocks.

 

Multiple Choice Question 58

A current asset is

 

usually found as a separate classification in the income statement.
expected to be converted to cash or used in the business within a relatively short period of time.
the last asset purchased by a business.
an asset which is currently being used to produce a product or service.

 

Multiple Choice Question 63

Liabilities are generally classified on a balance sheet as

 

current liabilities and long-term liabilities.
present liabilities and future liabilities.
tangible liabilities and intangible liabilities.
small liabilities and large liabilities.

 

Ratios that measure the income or operating success of a company for a given period of time are

 

trending ratios.
liquidity ratios.
profitability ratios.
solvency ratios.

 

The relationship between current assets and current liabilities is important in evaluating a company’s

 

liquidity.
market value.
solvency.
profitability.

ultiple Choice Question 147

Generally accepted accounting principles

 

have eliminated all errors in accounting.
are sound in theory but rarely used in real life.
are accounting rules that are recognized as a general guide for financial reporting.
are accounting rules formulated by the Internal Revenue Service.

 

Multiple Choice Question 148

The agency of the United States Government that oversees the U.S. financial markets is the

 

Internal Revenue Service.
International Auditing Standards Committee.
Security Exchange Commission.
Financial Accounting Standards Board.

 

Multiple Choice Question 189

Valuing assets at their fair value rather than at their cost is inconsistent with the

 

full disclosure principle.
economic entity assumption.
historical cost principle.

 

periodicity assumption.

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