Chapter 3 Final Exam Study Flashcards Preview

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Flashcards in Chapter 3 Final Exam Study Deck (13):
1

Which of the following is not a characteristic of the balance sheet?
-The major classifications of the balance sheet are assets, liabilities, and owners' equity.
-The balance sheet reports the change in financial position.
-Assets generally are listed in order of their liquidity.
-The balance sheet provides information useful in assessing liquidity.

The balance sheet reports the change in financial position.

2

The basis used to classify assets as current or long-term is:

Usually one year, because the operating cycle typically is less than one year.

3

An item not generally classified as a current asset is:

Patent

4

Included in the category of current liabilities would be:

Obligations expected to require the creation of other current liabilities.

5

An item not generally classified as a current liability is:

Bonds payable

6

Current assets minus current liabilities equals:

Working capital

7

Long-lived assets used in the operations of the business refer to property, plant, and equipment, and:

Intangible assets

8

Balance sheets prepared using International Financial Reporting Standards often:

Report long-term assets and liabilities before current assets and liabilities.

9

Information not generally disclosed in the summary of significant accounting policies is:

A related party transaction.

10

The compensation of directors and top executives is disclosed in:

The proxy statement

11

Which ratio most directly indicates the extent of the company's reliance on financial leverage?

Debt to equity

12

The acid-test ratio excludes which of the following elements from the numerator?

Inventories

13

For a firm with a current ratio of 2.0, which of the following transactions would most likely cause the ratio to decrease?

The purchase of inventory on account.