1) The Liquidity ratios indicate if a company: a) can earn a satisfactory rate o

Question

1) The Liquidity ratios indicate if a company:
a) can earn a satisfactory rate of return.
b) can pay bills that are currently due.
c) can pay their bills in the long term.
d) has efficient and effective operations and asset management.

2) The Solvency ratios indicate if a company:
a) can earn a satisfactory rate of return.
b) can pay bills that are currently due.
c) can pay their bills in the long term.
d) has efficient and effective operations and asset management.

3) The Profitability ratios indicate if a company:
a) can earn a satisfactory rate of return.
b) can pay bills that are currently due.
c) can pay their bills in the long term.
d) has efficient and effective operations and asset management.

4) The Activity ratios indicate if a company:
a) can earn a satisfactory rate of return.
b) can pay bills that are currently due.
c) can pay their bills in the long term.
d) has efficient and effective operations and asset management.

5) Direct costs include direct labor, direct materials, and overhead.
a)True b) False

6) There is a long term construction project worth $15,000 in revenue. Costs of the project are $10,000. How much revenue does the firm recognize in the second year if at end of first year the project is 30% complete, at end of second year project it is 80% complete and at end of third year the project is complete?
a)7,500 b) 12,000 c) 15,000 d) none of the above

7) The cost structure of an organization is the relative proportion of fixed and variable costs.
a)True b) False

8) The control environment component of an organization is:
a)the internal and external sources of risk to achievement of objectives
b)the policies and procedures that are carried out by management
c)the pertinent information is identified, captured and communicated
d)the tone of organization

9) The standard costing method starts with the product and works backward determining the steps or activities necessary to produce the product.
a)True b) False


10) To calculate the periodic payment for a loan, you must use which of the following time value of money formulas:
a) Present Value of a single sum
b) Present Value of an annuity
c) Future Value of a single sum
d) Future Value of an annuity

11) For internal management purposes, net income is the most important number on the income statement; if the company is making a profit, they are doing fine.
a)True b) False

12) A constrained resource helps an organization determine how sensitive the net operating income is to a change in sales.
a)True b) False

13) The operating leverage multiplier will tell an organization how much variable expenses will increase with an increase in sales.
a)True b) False

14) A revenue recognition method used when cash is paid at the beginning of the contract but revenue is recognized as the selling firm completes each part of the contract is the definition of what revenue recognition method:
a) Percentage of completion
b) Point of Sale
c) Proportional performance
d) Cost recovery

15) To calculate the gross margin for a company, take sales minus cost of goods sold.
a)True b) False

16) The risk assessment component of an organization is:
a)the internal and external sources of risk to achievement of objectives
b)the policies and procedures that are carried out by management
c)the pertinent information is identified, captured and communicated
d)the tone of organization

17) The control activities component of an organization is:
a)the internal and external sources of risk to achievement of objectives
b)the policies and procedures that are carried out by management
c)the pertinent information is identified, captured and communicated
d)the tone of organization

18) The information and communication component of an organization is:
a)the internal and external sources of risk to achievement of objectives
b)the policies and procedures that are carried out by management
c)the pertinent information is identified, captured and communicated
d)the tone of organization


19) A revenue is recorded when the cash has been collected in full, completing the cash to cash cycle.
a)True b) False

20) Internal Control is now required by law for all companies.
a)True b) False

21) The general rules as set forth in both U.S. GAAP standards and SEC accounting bulletins require that revenue can only be recognized when
a) the seller invoices the customer
b) the seller has both earned the revenue and the revenue is realizable.
c) the buyer takes possession of the goods
d) the seller collects cash.

22) Simple rate of return or accounting rate of return is calculated as:
a) initial investment divided by annual net cash inflow
b) annual incremental net operating income divided by initial investment
c) annual cash flows minus depreciation divided by initial investment
d) discounted project cash flows less initial investment.

23) The matching principle indicates that expenses should be matched with the time frame in which the cash is paid out, completing the cash to cash cycle.
a) True b) False

24)The fixed costs of an organization are those costs that:
a) contain both variable and fixed elements b) do not change with production
c) vary, but increases in big chunks d) vary in direct proportion to changes in activity level

25) The variable costs of an organization are those costs that
a)contain both variable and fixed elements b)do not change with production
c) vary, but increases in big chunks d) vary in direct proportion to changes in activity level

26) A debt instrument issued on credit worthiness of an issuer is a:
a) Convertible serial bond
b) Residual ownership of a stock issuing company
c) Debenture
d) Preferred stock

27) To calculate the contribution margin for an organization, take sales minus variable costs.
a)True b) False

28) Which of the following are NOT characteristic of members of the board of directors of a corporation.
a) Elected by shareholders
b) May work for another company
c) Compensated
d) Considered part of management


29) CFG Company has currently 1, 000,000 shares of outstanding common stock at $20 per share and par value of $1. The company would like to double its outstanding common stocks to 2,000,000 shares. So, they have instituted a 2 for 1 split. After the split, how many shares will the company have at what par value?
a) 1,000,000 shares at $0.50 par
b) 2,000,000 shares at $1.00 par
c) 2,000,000 shares at $0.50 par
a) 1,000,000 shares at $1.00 par

30) The accounting cycle is
a) Recognition of a business transaction before the cash flow occurs.
b) Recognition of a business transaction after the cash flow occurs.
c) The value at which a transaction is put on the financial statements.
d) The accounting transactions from original source to financial statements

Explanation / Answer

1) The Liquidity ratios indicate if a company:
Answer: b) can pay bills that are currently due.
2) The Solvency ratios indicate if a company:
Answer: c) can pay their bills in the long term. 3) The Profitability ratios indicate if a company: Answer: d) has efficient and effective operations and asset management.
4) The Activity ratios indicate if a company:
Answer: d) has efficient and effective operations and asset management.
5) Direct costs include direct labor, direct materials, and overhead Answer: b) False 7) The cost structure of an organization is the relative proportion of fixed and variable costs.
Answer: a)True 8) The control environment component of an organization is: Answer: b) the policies and procedures that are carried out by management
9) The standard costing method starts with the product and works backward determining the steps or activities necessary to produce the product.
Answer: a)True 10) To calculate the periodic payment for a loan, you must use which of the following time value of money formulas: Answer: b) Present Value of an annuity 11) For internal management purposes, net income is the most important number on the income statement; if the company is making a profit, they are doing fine.
Answer: a)True 12) A constrained resource helps an organization determine how sensitive the net operating income is to a change in sales.
Answer: a)True 13) The operating leverage multiplier will tell an organization how much variable expenses will increase with an increase in sales.
Answer: b) False
14) A revenue recognition method used when cash is paid at the beginning of the contract but revenue is recognized as the selling firm completes each part of the contract is the definition of what revenue recognition method:
Answer: a) Percentage of completion 15) To calculate the gross margin for a company, take sales minus cost of goods sold.
Answer: a)True 16) The risk assessment component of an organization is:
Answer: a)the internal and external sources of risk to achievement of objectives 17) The control activities component of an organization is:
Answer:
b)the policies and procedures that are carried out by management 18) The information and communication component of an organization is:
Answer: c)the pertinent information is identified, captured and communicated 19) A revenue is recorded when the cash has been collected in full, completing the cash to cash cycle.
Answer: b) False 20) Internal Control is now required by law for all companies.
Answer: a)True 21) The general rules as set forth in both U.S. GAAP standards and SEC accounting bulletins require that revenue can only be recognized when
Answer:
b) the seller has both earned the revenue and the revenue is realizable. 22) Simple rate of return or accounting rate of return is calculated as:
Answer:
b) annual incremental net operating income divided by initial investment 23) The matching principle indicates that expenses should be matched with the time frame in which the cash is paid out, completing the cash to cash cycle. Answer:
b) False 24)The fixed costs of an organization are those costs that: Answer:
b) do not change with production 25) The variable costs of an organization are those costs that
Answer:
d) vary in direct proportion to changes in activity level 26) A debt instrument issued on credit worthiness of an issuer is a:
Answer: c) Debenture 27) To calculate the contribution margin for an organization, take sales minus variable costs.
Answer: a)True
28) Which of the following are NOT characteristic of members of the board of directors of a corporation. Answer:
a) Elected by shareholders
30) The accounting cycle is Answer:
d) The accounting transactions from original source to financial statements







c) can pay their bills in the long term. 3) The Profitability ratios indicate if a company: Answer: d) has efficient and effective operations and asset management.
4) The Activity ratios indicate if a company:
Answer: d) has efficient and effective operations and asset management.
5) Direct costs include direct labor, direct materials, and overhead Answer: b) False 7) The cost structure of an organization is the relative proportion of fixed and variable costs.
Answer: a)True 8) The control environment component of an organization is: Answer: b) the policies and procedures that are carried out by management
9) The standard costing method starts with the product and works backward determining the steps or activities necessary to produce the product.
Answer: a)True 10) To calculate the periodic payment for a loan, you must use which of the following time value of money formulas: Answer: b) Present Value of an annuity 11) For internal management purposes, net income is the most important number on the income statement; if the company is making a profit, they are doing fine.
Answer: a)True 12) A constrained resource helps an organization determine how sensitive the net operating income is to a change in sales.
Answer: a)True 13) The operating leverage multiplier will tell an organization how much variable expenses will increase with an increase in sales.
Answer: b) False
14) A revenue recognition method used when cash is paid at the beginning of the contract but revenue is recognized as the selling firm completes each part of the contract is the definition of what revenue recognition method:
Answer: a) Percentage of completion 15) To calculate the gross margin for a company, take sales minus cost of goods sold.
Answer: a)True 16) The risk assessment component of an organization is:
Answer: a)the internal and external sources of risk to achievement of objectives 17) The control activities component of an organization is:
Answer:
b)the policies and procedures that are carried out by management 18) The information and communication component of an organization is:
Answer: c)the pertinent information is identified, captured and communicated 19) A revenue is recorded when the cash has been collected in full, completing the cash to cash cycle.
Answer: b) False 20) Internal Control is now required by law for all companies.
Answer: a)True 21) The general rules as set forth in both U.S. GAAP standards and SEC accounting bulletins require that revenue can only be recognized when
Answer:
b) the seller has both earned the revenue and the revenue is realizable. 22) Simple rate of return or accounting rate of return is calculated as:
Answer:
b) annual incremental net operating income divided by initial investment 23) The matching principle indicates that expenses should be matched with the time frame in which the cash is paid out, completing the cash to cash cycle. Answer:
b) False 24)The fixed costs of an organization are those costs that: Answer:
b) do not change with production 25) The variable costs of an organization are those costs that
Answer:
d) vary in direct proportion to changes in activity level 26) A debt instrument issued on credit worthiness of an issuer is a:
Answer: c) Debenture 27) To calculate the contribution margin for an organization, take sales minus variable costs.
Answer: a)True
28) Which of the following are NOT characteristic of members of the board of directors of a corporation. Answer:
a) Elected by shareholders
30) The accounting cycle is Answer:
d) The accounting transactions from original source to financial statements

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