Solved: FIN 512 Week 4 Quiz

A disclaimer of opinion.

An unqualified report.

A qualified report.

An adverse opinion.

Commitments for capital expenditures.

The internal and external sources of liquidity.

The market value of all assets.

A breakdown of sales increases into price and volume components.

The annual report of a publicly held company which must be filed with the SEC.

The quarterly report of a publicly held company which must be filed with the SEC.

The bankruptcy report of a publicly held company which must be filed with the SEC.

The form required to report a change of auditor.

External auditors are now required to establish and maintain an adequate internal control structure for their clients.

External auditors are now required to audit the internal control assessment of a client firm.

External auditors are now required to state their responsibility for the internal control structure of their clients.

None of the above.

GAAP-based financial statements are prepared according to the cash rather than the accrual basis of accounting.

Accounting choices and estimates can have a significant impact on the outcome of financial statement numbers.

The accrual method means that the expense is recognized after the cash is paid out.

The purpose of the accrual method is to attempt to match assets with liabilities in appropriate accounting periods.

“Reputation of the firm, morale of employees and prestige in the community.”

Nature and terms of off-balance sheet financing arrangements.

Disclosures about segments of an enterprise.

Disclosures about the fair value of financial instruments.

Management discussion and analysis.

Public relations materials.

The statement of cash flows.

The notes to the financial statements.

Assets = Liabilities + Stockholders’ Equity.

Financial position at a point in time.

Assets Liabilities = Stockholders’ Equity.

Assets + Liabilities = Stockholders’ Equity.

Annual reports must include three-year audited balance sheets and two-year audited income statements.

The balance sheet is prepared on a particular date.

Interim statements are generally prepared quarterly.

“When a parent company owns more than 50% of the voting stock of a subsidiary, the financial statements are consolidated for both entities.”

Assets purchased within the last year.

Assets which will be used within the next month.

Assets expected to be converted into cash within one year or operating cycle.

Assets are the net working capital of the firm.

US Treasury bills.

Certificates of deposit.

Commercial paper.

All of the above.

Historical cost.

At cost or fair value depending on how the securities are classified.

Market value.

At fair value with the difference between cost and fair value reported as revenue.

At their net realizable value.

At the actual amount less an allowance for doubtful accounts.

At the actual amount plus an allowance for doubtful accounts.

Both (a) and (b).

Finished goods.

Work in process.

Supplies.

Raw materials.

A manufacturing firm.

A retail firm.

A service firm.

A wholesale firm.

Reserve accounts should only be set up when the amounts can be determined with 100% certainty.

Reserve accounts can be used to record declines in asset values.

Reserve accounts are set up for the purposes of estimating obligations.

Some firms have used reserve accounts to manipulate earnings.

“Cash, accounts receivable, accounts payable.”

“Accounts receivable, inventory, marketable securities.”

“Accounts receivable, inventory, equipment.”

“Marketable securities, inventory, goodwill.”

“Land, buildings and equipment should be depreciated over the period of time they benefit the firm.”

Most companies use accelerated depreciation for financial reporting purposes.

Book value is equal to the original cost of a fixed asset plus any accumulated depreciation to date.

The process of depreciation is a method of allocating the cost of long-lived assets.

“Unearned revenue, patents, copyrights.”

“Goodwill, trademarks, franchises.”

“Land, goodwill, copyrights.”

“Deferred taxes, prepaid expenses, patents.”

“Accounts payable, additional paid-in capital, pension liabilities.”

“Common stock, retained earnings, bonds payable.”

“Commitments and contingencies, obligations under leases, notes payable.”

“Deferred taxes, accrued expenses, treasury stock.”