Ch 5 (IFSA) Understanding Balance Sheets

Question 1

The starting place for analyzing a company’s financial position is typically ___.

Answer 1

the balance sheet

Question 2

___ reported on the income statement before cash is received results in accrued revenue or accounts receivable, which is an asset. This is ultimately reflected on the balance sheet as an increase in accounts receivable and an increase in retained earnings.

Answer 2

Revenue

Question 3

Revenue reported on ___ before cash is received results in accrued revenue or accounts receivable, which is an asset. This is ultimately reflected on the balance sheet as an increase in accounts receivable and an increase in retained earnings.

Answer 3

the income statement

Question 4

Revenue reported on the income statement before cash is received results in ___, which is an asset. This is ultimately reflected on the balance sheet as an increase in accounts receivable and an increase in retained earnings.

Answer 4

accrued revenue or accounts receivable

Question 5

Revenue reported on the income statement before cash is received results in accrued revenue or accounts receivable, which is an ___. This is ultimately reflected on the balance sheet as an increase in accounts receivable and an increase in retained earnings.

Answer 5

asset

Question 6

Revenue reported on the income statement before cash is received results in accrued revenue or accounts receivable, which is an asset. This is ultimately reflected on ___ as an increase in accounts receivable and an increase in retained earnings.

Answer 6

the balance sheet

Question 7

Revenue reported on the income statement before cash is received results in accrued revenue or accounts receivable, which is an asset. This is ultimately reflected on the balance sheet as an increase in ___ and an increase in retained earnings.

Answer 7

accounts receivable

Question 8

Revenue reported on the income statement before cash is received results in accrued revenue or accounts receivable, which is an asset. This is ultimately reflected on the balance sheet as an increase in accounts receivable and an increase in ___.

Answer 8

retained earnings

Question 9

Cash received before ___ is to be reported on the income statement results in a deferred revenue or unearned revenue, which is a liability. For example, if a company pays in advance for delivery of custom equipment, the balance sheet reflects an increase in cash and an increase in liabilities.

Answer 9

revenue

Question 10

Cash received before revenue is to be reported on ___ results in a deferred revenue or unearned revenue, which is a liability. For example, if a company pays in advance for delivery of custom equipment, the balance sheet reflects an increase in cash and an increase in liabilities.

Answer 10

the income statement

Question 11

Cash received before revenue is to be reported on the income statement results in ___, which is a liability. For example, if a company pays in advance for delivery of custom equipment, the balance sheet reflects an increase in cash and an increase in liabilities.

Answer 11

a deferred revenue or unearned revenue

Question 12

Cash received before revenue is to be reported on the income statement results in a deferred revenue or unearned revenue, which is a ___. For example, if a company pays in advance for delivery of custom equipment, the balance sheet reflects an increase in cash and an increase in liabilities.

Answer 12

liability

Question 13

Cash received before revenue is to be reported on the income statement results in a deferred revenue or unearned revenue, which is a liability. For example, if a company pays in advance for delivery of custom equipment, ___ reflects an increase in cash and an increase in liabilities.

Answer 13

the balance sheet

Question 14

Cash received before revenue is to be reported on the income statement results in a deferred revenue or unearned revenue, which is a liability. For example, if a company pays in advance for delivery of custom equipment, the balance sheet reflects an increase in ___ and an increase in liabilities.

Answer 14

cash

Question 15

Cash received before revenue is to be reported on the income statement results in a deferred revenue or unearned revenue, which is a liability. For example, if a company pays in advance for delivery of custom equipment, the balance sheet reflects an increase in cash and an increase in ___.

Answer 15

liabilities

Question 16

___ reported on the income statement before cash is paid results in an accrued expense, which is a liability. This is reflected on the balance sheet as an increase in liabilities and a decrease in retained earnings.

Answer 16

Expense

Question 17

Expense reported on ___ before cash is paid results in an accrued expense, which is a liability. This is reflected on the balance sheet as an increase in liabilities and a decrease in retained earnings.

Answer 17

the income statement

Question 18

Expense reported on the income statement before cash is paid results in ___, which is a liability. This is reflected on the balance sheet as an increase in liabilities and a decrease in retained earnings.

Answer 18

an accrued expense

Question 19

Expense reported on the income statement before cash is paid results in an accrued expense, which is a ___. This is reflected on the balance sheet as an increase in liabilities and a decrease in retained earnings.

Answer 19

liability

Question 20

Expense reported on the income statement before cash is paid results in an accrued expense, which is a liability. This is reflected on ___ as an increase in liabilities and a decrease in retained earnings.

Answer 20

the balance sheet

Question 21

Expense reported on the income statement before cash is paid results in an accrued expense, which is a liability. This is reflected on the balance sheet as an increase in ___ and a decrease in retained earnings.

Answer 21

liabilities

Question 22

Expense reported on the income statement before cash is paid results in an accrued expense, which is a liability. This is reflected on the balance sheet as an increase in liabilities and a decrease in ___.

Answer 22

retained earnings

Question 23

Cash paid before an ___ is to be reported on the income statement results in a deferred expense, also known as a prepaid expense, which is an asset. On the balance sheet, cash is reduced and prepaid assets are increased

Answer 23

expense

Question 24

Cash paid before an expense is to be reported on ___ results in a deferred expense, also known as a prepaid expense, which is an asset. On the balance sheet, cash is reduced and prepaid assets are increased

Answer 24

the income statement

Question 25

Cash paid before an expense is to be reported on the income statement results in a ___, which is an asset. On the balance sheet, cash is reduced and prepaid assets are increased

Answer 25

deferred expense, also known as a prepaid expense

Question 26

Cash paid before an expense is to be reported on the income statement results in a deferred expense, also known as a prepaid expense, which is an ___. On the balance sheet, cash is reduced and prepaid assets are increased

Answer 26

asset

Question 27

Cash paid before an expense is to be reported on the income statement results in a deferred expense, also known as a prepaid expense, which is an asset. On ___, cash is reduced and prepaid assets are increased

Answer 27

the balance sheet

Question 28

Cash paid before an expense is to be reported on the income statement results in a deferred expense, also known as a prepaid expense, which is an asset. On the balance sheet, ___ is reduced and prepaid assets are increased

Answer 28

cash

Question 29

Cash paid before an expense is to be reported on the income statement results in a deferred expense, also known as a prepaid expense, which is an asset. On the balance sheet, cash is reduced and ___ are increased

Answer 29

prepaid assets

Question 30

The key purposes of equity capital are to ___.

Answer 30

provide stability and to absorb losses, thereby providing a measure of protection to creditors in the event of liquidation

Question 31

The key purposes of ___ are to provide stability and to absorb losses, thereby providing a measure of protection to creditors in the event of liquidation.

Answer 31

equity capital

Question 32

The ___ of a company should have three important characteristics: - It should be permanent. - It should not impose mandatory fixed charges against earnings (in the case of banks). - It should allow for legal subordination to the rights of creditors.

Answer 32

capital

Question 33

The capital of a company should have three important characteristics: - ___. - It should not impose mandatory fixed charges against earnings (in the case of banks). - It should allow for legal subordination to the rights of creditors.

Answer 33

It should be permanent

Question 34

The capital of a company should have three important characteristics: - It should be permanent. - ___. - It should allow for legal subordination to the rights of creditors.

Answer 34

It should not impose mandatory fixed charges against earnings (in the case of banks)

Question 35

The capital of a company should have three important characteristics: - It should be permanent. - It should not impose mandatory fixed charges against earnings (in the case of banks). - ___.

Answer 35

It should allow for legal subordination to the rights of creditors

Question 36

When using the ___, assets, liabilities, and equity are listed in a single column on the balance sheet.

Answer 36

report format

Question 37

When using the report format, assets, liabilities, and equity are ___ on the balance sheet.

Answer 37

listed in a single column

Question 38

When using the report format, assets, liabilities, and equity are listed in a single column on ___.

Answer 38

the balance sheet

Question 39

The ___ follows the pattern of the traditional general ledger accounts, with assets at the left and liabilities and equity at the right of a central dividing line, it's the most commonly preferred and used by financial statement preparers.

Answer 39

account format

Question 40

The account format ___, it's the most commonly preferred and used by financial statement preparers.

Answer 40

follows the pattern of the traditional general ledger accounts, with assets at the left and liabilities and equity at the right of a central dividing line

Question 41

Grouping together the various classes of assets and liabilities is a format described as ___.

Answer 41

a classified balance sheet

Question 42

___ is a format described as a classified balance sheet.

Answer 42

Grouping together the various classes of assets and liabilities

Question 43

___ should distinguish between current and noncurrent assets and between current and noncurrent liabilities unless a presentation based on liquidity provides more relevant and reliable information (e.g., in the case of a bank or similar financial institution).

Answer 43

The balance sheet

Question 44

The balance sheet should distinguish between ___ unless a presentation based on liquidity provides more relevant and reliable information (e.g., in the case of a bank or similar financial institution).

Answer 44

current and noncurrent assets and between current and noncurrent liabilities

Question 45

The balance sheet should distinguish between current and noncurrent assets and between current and noncurrent liabilities unless ___.

Answer 45

a presentation based on liquidity provides more relevant and reliable information (e.g., in the case of a bank or similar financial institution)

Question 46

It should be clear that in essence, ___ is also an attempt at incorporating liquidity expectations into the structure of the balance sheet.

Answer 46

the current/noncurrent distinction

Question 47

It should be clear that in essence, the current/noncurrent distinction is also an attempt at ___ into the structure of the balance sheet.

Answer 47

incorporating liquidity expectations

Question 48

It should be clear that in essence, the current/noncurrent distinction is also an attempt at incorporating liquidity expectations into the structure of ___.

Answer 48

the balance sheet

Question 49

___ is the amount of time that elapses between spending cash for inventory and supplies and collecting the cash from its sales to customers.

Answer 49

A company’s operating cycle

Question 50

A company’s operating cycle is ___.

Answer 50

the amount of time that elapses between spending cash for inventory and supplies and collecting the cash from its sales to customers

Question 51

___ is called working capital.

Answer 51

The excess of current assets over current liabilities

Question 52

The excess of current assets over current liabilities is called ___.

Answer 52

working capital

Question 53

The level of ___ tells analysts about the ability of an entity to meet liabilities as they fall due.

Answer 53

working capital

Question 54

The level of working capital tells analysts about ___.

Answer 54

the ability of an entity to meet liabilities as they fall due

Question 55

___ is the amount at which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s-length transaction.

Answer 55

Fair value (sometimes referred to as fair market value)

Question 56

Fair value (sometimes referred to as fair market value) is ___.

Answer 56

the amount at which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s-length transaction

Question 57

When the asset or liability trades regularly, its ___ is usually readily determinable from its market price.

Answer 57

fair value

Question 58

When the asset or liability trades regularly, its fair value is usually readily determinable from ___.

Answer 58

its market price

Question 59

The ___ of an asset or liability is its cost or fair value at acquisition, including any costs of acquisition and/or preparation.

Answer 59

historical cost

Question 60

The historical cost of an asset or liability is ___.

Answer 60

its cost or fair value at acquisition, including any costs of acquisition and/or preparation

Question 61

In limited circumstances other measurement bases are sometimes used, such as ___ (the cost to replace an asset) or present value (the present discounted value of future cash flows).

Answer 61

current cost

Question 62

In limited circumstances other measurement bases are sometimes used, such as current cost (___) or present value (the present discounted value of future cash flows).

Answer 62

the cost to replace an asset

Question 63

In limited circumstances other measurement bases are sometimes used, such as current cost (the cost to replace an asset) or ___ (the present discounted value of future cash flows).

Answer 63

present value

Question 64

In limited circumstances other measurement bases are sometimes used, such as current cost (the cost to replace an asset) or present value (___).

Answer 64

the present discounted value of future cash flows

Question 65

___ should disclose the following information related to the measures used for assets and liabilities shown on the balance sheet: - Accounting policies, including the cost formulas used. - Total carrying amount of inventories and amount per category. - Amount of inventories carried at fair value less costs to sell. - Amount of any write - downs and reversals of any write- down. - Circumstances or events that led to the reversal of a write - down. - Inventories pledged as security for liabilities. - Amount of inventories recognized as an expense.

Answer 65

The financial statements

Question 66

The financial statements should disclose the following information related to the measures used for assets and liabilities shown on ___: - Accounting policies, including the cost formulas used. - Total carrying amount of inventories and amount per category. - Amount of inventories carried at fair value less costs to sell. - Amount of any write - downs and reversals of any write- down. - Circumstances or events that led to the reversal of a write - down. - Inventories pledged as security for liabilities. - Amount of inventories recognized as an expense.

Answer 66

the balance sheet

Question 67

The financial statements should disclose the following information related to the measures used for assets and liabilities shown on the balance sheet: - ___. - Total carrying amount of inventories and amount per category. - Amount of inventories carried at fair value less costs to sell. - Amount of any write - downs and reversals of any write- down. - Circumstances or events that led to the reversal of a write - down. - Inventories pledged as security for liabilities. - Amount of inventories recognized as an expense.

Answer 67

Accounting policies, including the cost formulas used

Question 68

The financial statements should disclose the following information related to the measures used for assets and liabilities shown on the balance sheet: - Accounting policies, including the cost formulas used. - ___. - Amount of inventories carried at fair value less costs to sell. - Amount of any write - downs and reversals of any write- down. - Circumstances or events that led to the reversal of a write - down. - Inventories pledged as security for liabilities. - Amount of inventories recognized as an expense.

Answer 68

Total carrying amount of inventories and amount per category

Question 69

The financial statements should disclose the following information related to the measures used for assets and liabilities shown on the balance sheet: - Accounting policies, including the cost formulas used. - Total carrying amount of inventories and amount per category. - ___. - Amount of any write - downs and reversals of any write- down. - Circumstances or events that led to the reversal of a write - down. - Inventories pledged as security for liabilities. - Amount of inventories recognized as an expense.

Answer 69

Amount of inventories carried at fair value less costs to sell

Question 70

The financial statements should disclose the following information related to the measures used for assets and liabilities shown on the balance sheet: - Accounting policies, including the cost formulas used. - Total carrying amount of inventories and amount per category. - Amount of inventories carried at fair value less costs to sell. - ___ - Circumstances or events that led to the reversal of a write - down. - Inventories pledged as security for liabilities. - Amount of inventories recognized as an expense.

Answer 70

Amount of any write - downs and reversals of any write- down

Question 71

The financial statements should disclose the following information related to the measures used for assets and liabilities shown on the balance sheet: - Accounting policies, including the cost formulas used. - Total carrying amount of inventories and amount per category. - Amount of inventories carried at fair value less costs to sell. - Amount of any write - downs and reversals of any write- down. - ___. - Inventories pledged as security for liabilities. - Amount of inventories recognized as an expense.

Answer 71

Circumstances or events that led to the reversal of a write - down

Question 72

The financial statements should disclose the following information related to the measures used for assets and liabilities shown on the balance sheet: - Accounting policies, including the cost formulas used. - Total carrying amount of inventories and amount per category. - Amount of inventories carried at fair value less costs to sell. - Amount of any write - downs and reversals of any write- down. - Circumstances or events that led to the reversal of a write - down. - ___. - Amount of inventories recognized as an expense.

Answer 72

Inventories pledged as security for liabilities

Question 73

The financial statements should disclose the following information related to the measures used for assets and liabilities shown on the balance sheet: - Accounting policies, including the cost formulas used. - Total carrying amount of inventories and amount per category. - Amount of inventories carried at fair value less costs to sell. - Amount of any write - downs and reversals of any write- down. - Circumstances or events that led to the reversal of a write - down. - Inventories pledged as security for liabilities. - ___.

Answer 73

Amount of inventories recognized as an expense

Question 74

___ are integral parts of the U.S. GAAP and IFRS financial reporting processes and include information on such topics as the following: - Specific accounting policies that were used in compiling the financial statements. - Terms of debt agreements. - Lease information. - Off-balance-sheet financing. - Breakdowns of operations by important segments. - Contingent assets and liabilities. - Detailed pension plan disclosure.

Answer 74

The notes to financial statements and management’s discussion and analysis

Question 75

The notes to financial statements and management’s discussion and analysis are integral parts of the U.S. GAAP and IFRS financial reporting processes and include information on such topics as the following: - __. - Terms of debt agreements. - Lease information. - Off-balance-sheet financing. - Breakdowns of operations by important segments. - Contingent assets and liabilities. - Detailed pension plan disclosure.

Answer 75

Specific accounting policies that were used in compiling the financial statements

Question 76

The notes to financial statements and management’s discussion and analysis are integral parts of the U.S. GAAP and IFRS financial reporting processes and include information on such topics as the following: - Specific accounting policies that were used in compiling the financial statements. - Terms of debt agreements. - ___. - Off-balance-sheet financing. - Breakdowns of operations by important segments. - Contingent assets and liabilities. - Detailed pension plan disclosure.

Answer 76

Lease information

Question 76

The notes to financial statements and management’s discussion and analysis are integral parts of the U.S. GAAP and IFRS financial reporting processes and include information on such topics as the following: - Specific accounting policies that were used in compiling the financial statements. - ___. - Lease information. - Off-balance-sheet financing. - Breakdowns of operations by important segments. - Contingent assets and liabilities. - Detailed pension plan disclosure.

Answer 76

Terms of debt agreements

Question 77

The notes to financial statements and management’s discussion and analysis are integral parts of the U.S. GAAP and IFRS financial reporting processes and include information on such topics as the following: - Specific accounting policies that were used in compiling the financial statements. - Terms of debt agreements. - Lease information. - ___. - Breakdowns of operations by important segments. - Contingent assets and liabilities. - Detailed pension plan disclosure.

Answer 77

Off-balance-sheet financing

Question 78

The notes to financial statements and management’s discussion and analysis are integral parts of the U.S. GAAP and IFRS financial reporting processes and include information on such topics as the following: - Specific accounting policies that were used in compiling the financial statements. - Terms of debt agreements. - Lease information. - Off-balance-sheet financing. - ___. - Contingent assets and liabilities. - Detailed pension plan disclosure.

Answer 78

Breakdowns of operations by important segments

Question 79

The notes to financial statements and management’s discussion and analysis are integral parts of the U.S. GAAP and IFRS financial reporting processes and include information on such topics as the following: - Specific accounting policies that were used in compiling the financial statements. - Terms of debt agreements. - Lease information. - Off-balance-sheet financing. - Breakdowns of operations by important segments. - ___. - Detailed pension plan disclosure.

Answer 79

Contingent assets and liabilities

Question 80

The notes to financial statements and management’s discussion and analysis are integral parts of the U.S. GAAP and IFRS financial reporting processes and include information on such topics as the following: - Specific accounting policies that were used in compiling the financial statements. - Terms of debt agreements. - Lease information. - Off-balance-sheet financing. - Breakdowns of operations by important segments. - Contingent assets and liabilities. - ___.

Answer 80

Detailed pension plan disclosure

Question 81

___ is the estimated inventory selling price less the estimated costs of completion and costs necessary to make the sale.

Answer 81

The net realizable value (NRV)

Question 82

The net realizable value (NRV) is ___.

Answer 82

the estimated inventory selling price less the estimated costs of completion and costs necessary to make the sale

Question 83

___, used to measure the cost of inventories, should take into account the normal levels of materials, labor, and actual capacity.

Answer 83

Standard cost

Question 84

Standard cost, used to measure the cost of inventories, should take into account ___.

Answer 84

the normal levels of materials, labor, and actual capacity

Question 85

___ used to measure the cost of inventories, is where the sales value is reduced by the gross margin to calculate cost.

Answer 85

The retail method

Question 86

The retail method used to measure the cost of inventories, is where ___.

Answer 86

the sales value is reduced by the gross margin to calculate cost

Question 87

The advance payment of ___ creates an asset out of a transaction that would normally have resulted in an expense.

Answer 87

prepaid expenses

Question 88

The advance payment of prepaid expenses creates ___ out of a transaction that would normally have resulted in an expense.

Answer 88

an asset

Question 89

The advance payment of prepaid expenses creates an asset out of a transaction that would normally have resulted in ___.

Answer 89

an expense

Question 90

___ are amounts owed by a business to creditors as a result of borrowings that are evidenced by a (short-term) loan agreement.

Answer 90

Notes payable

Question 91

Notes payable are ___.

Answer 91

amounts owed by a business to creditors as a result of borrowings that are evidenced by a (short-term) loan agreement

Question 92

If any ___ are not used in company operations, they must be classified as investment assets.

Answer 92

tangible assets

Question 93

If any tangible assets are not used in company operations, they must be classified as ___.

Answer 93

investment assets

Question 94

In a purchase acquisition, the excess of the cost of acquisition over the acquirer’s interest in the fair value of the identifiable assets and liabilities acquired is described as ___ and is recognized as an asset.

Answer 94

goodwill

Question 95

In a purchase acquisition, ___ is described as goodwill and is recognized as an asset.

Answer 95

the excess of the cost of acquisition over the acquirer’s interest in the fair value of the identifiable assets and liabilities acquired

Question 96

In a purchase acquisition, the excess of the cost of acquisition over the acquirer’s interest in the fair value of the identifiable assets and liabilities acquired is described as goodwill and is recognized as an ___.

Answer 96

asset

Question 97

Many analysts believe that ___ should not be listed on the balance sheet, as it cannot be sold separately from the entity.

Answer 97

goodwill

Question 98

Many analysts believe that goodwill should not be listed on the balance sheet, as ___.

Answer 98

it cannot be sold separately from the entity

Question 99

Under IFRS and U.S. GAAP, ___ should be capitalized and tested for impairment annually.

Answer 99

goodwill

Question 100

Under IFRS and U.S. GAAP, goodwill should be capitalized and tested for ___ annually.

Answer 100

impairment

Question 101

An analyst should remove any distortion that the recognition, amortization, and impairment of ___ might create by adjusting the company’s financial statements. Adjustments should be made by: - Computing financial ratios using balance sheet data that exclude goodwill. - Reviewing operating trends using data that exclude the amortization of goodwill or impairment to goodwill charges. - Evaluating future business acquisitions by taking into account the purchase price paid relative to the net assets and earnings prospects of the acquired company.

Answer 101

goodwill

Question 102

An analyst should remove any distortion that the recognition, amortization, and impairment of goodwill might create by adjusting the company’s financial statements. Adjustments should be made by: - ___. - Reviewing operating trends using data that exclude the amortization of goodwill or impairment to goodwill charges. - Evaluating future business acquisitions by taking into account the purchase price paid relative to the net assets and earnings prospects of the acquired company.

Answer 102

Computing financial ratios using balance sheet data that exclude goodwill

Question 103

An analyst should remove any distortion that the recognition, amortization, and impairment of goodwill might create by adjusting the company’s financial statements. Adjustments should be made by: - Computing financial ratios using balance sheet data that exclude goodwill. - ___. - Evaluating future business acquisitions by taking into account the purchase price paid relative to the net assets and earnings prospects of the acquired company.

Answer 103

Reviewing operating trends using data that exclude the amortization of goodwill or impairment to goodwill charges

Question 104

An analyst should remove any distortion that the recognition, amortization, and impairment of goodwill might create by adjusting the company’s financial statements. Adjustments should be made by: - Computing financial ratios using balance sheet data that exclude goodwill. - Reviewing operating trends using data that exclude the amortization of goodwill or impairment to goodwill charges. - ___.

Answer 104

Evaluating future business acquisitions by taking into account the purchase price paid relative to the net assets and earnings prospects of the acquired company

Question 105

International accounting standards define ___ as a contract that gives rise to a financial asset of one entity, and a financial liability or equity instrument of another entity.

Answer 105

a financial instrument

Question 106

International accounting standards define a financial instrument as ___.

Answer 106

a contract that gives rise to a financial asset of one entity, and a financial liability or equity instrument of another entity

Question 107

According to SFAS No. 130, three alternative formats are allowed for presenting ___: 1. Below the line for net income in a traditional income statement (as a combined statement of net income and comprehensive income). 2. In a separate statement of comprehensive income that begins with the amount of net income for the year. 3. In a statement of changes in stockholders’ equity.

Answer 107

OCI and total comprehensive income

Question 108

According to SFAS No. 130, three alternative formats are allowed for presenting OCI and total comprehensive income: 1. ___. 2. In a separate statement of comprehensive income that begins with the amount of net income for the year. 3. In a statement of changes in stockholders’ equity.

Answer 108

Below the line for net income in a traditional income statement (as a combined statement of net income and comprehensive income)

Question 109

According to SFAS No. 130, three alternative formats are allowed for presenting OCI and total comprehensive income: 1. Below the line for net income in a traditional income statement (as a combined statement of net income and comprehensive income). 2. ___. 3. In a statement of changes in stockholders’ equity.

Answer 109

In a separate statement of comprehensive income that begins with the amount of net income for the year

Question 110

According to SFAS No. 130, three alternative formats are allowed for presenting OCI and total comprehensive income: 1. Below the line for net income in a traditional income statement (as a combined statement of net income and comprehensive income). 2. In a separate statement of comprehensive income that begins with the amount of net income for the year. 3. ___.

Answer 110

In a statement of changes in stockholders’ equity

Question 111

Two techniques used to analyze balance sheets adjusted for differences or changes are ___ and ratio analysis.

Answer 111

common-size analysis

Question 112

Two techniques used to analyze balance sheets adjusted for differences or changes are common-size analysis and ___.

Answer 112

ratio analysis

Question 113

Two techniques used to ___ are common-size analysis and ratio analysis.

Answer 113

analyze balance sheets adjusted for differences or changes

Question 114

___ involves stating all balance sheet items as a percentage of total assets.

Answer 114

Common-size analysis

Question 115

Common-size analysis involves ___.

Answer 115

stating all balance sheet items as a percentage of total assets

Question 116

In ___, the analyst may examine the level and trend of a ratio in relation to past values of the ratio for the company, thereby providing information on changes in the financial position of a company over time.

Answer 116

ratio analysis

Question 117

In ratio analysis, the analyst may ___.

Answer 117

examine the level and trend of a ratio in relation to past values of the ratio for the company, thereby providing information on changes in the financial position of a company over time

Question 118

___ are those involving balance sheet items only.

Answer 118

Balance sheet ratios

Question 119

Balance sheet ratios are ___.

Answer 119

those involving balance sheet items only

Question 120

___ fall under the heading of liquidity ratios (measuring the company’s ability to meet its short-term obligations) or solvency ratios (measuring the company’s ability to meet long-term and other obligations).

Answer 120

Balance sheet ratios

Question 121

Balance sheet ratios fall under the heading of ___ (measuring the company’s ability to meet its short-term obligations) or solvency ratios (measuring the company’s ability to meet long-term and other obligations).

Answer 121

liquidity ratios

Question 122

Balance sheet ratios fall under the heading of liquidity ratios (___) or solvency ratios (measuring the company’s ability to meet long-term and other obligations).

Answer 122

measuring the company’s ability to meet its short-term obligations

Question 123

Balance sheet ratios fall under the heading of liquidity ratios (measuring the company’s ability to meet its short-term obligations) or ___ (measuring the company’s ability to meet long-term and other obligations).

Answer 123

solvency ratios

Question 124

Balance sheet ratios fall under the heading of liquidity ratios (measuring the company’s ability to meet its short-term obligations) or solvency ratios (___).

Answer 124

measuring the company’s ability to meet long-term and other obligations

Question 125

Liquidity Ratios / ___: Current assets ÷ Current liabilities

Answer 125

Current

Question 126

Liquidity Ratios / Current: ___

Answer 126

Current assets ÷ Current liabilities

Question 127

Liquidity Ratios / ___: (Cash + Marketable securities + Receivables) ÷ Current liabilities

Answer 127

Quick (acid test)

Question 128

Liquidity Ratios / Quick (acid test): ___ ÷ Current liabilities

Answer 128

(Cash + Marketable securities + Receivables)

Question 129

Liquidity Ratios / Quick (acid test): (Cash + Marketable securities + Receivables) ÷ ___

Answer 129

Current liabilities

Question 130

Liquidity Ratios / ___: (Cash + Marketable securities) ÷ Current liabilities

Answer 130

Cash

Question 131

Liquidity Ratios / Cash: ___

Answer 131

(Cash + Marketable securities) ÷ Current liabilities

Question 132

Solvency Ratios / ___: Total long-term debt ÷ Total equity

Answer 132

Long-term debt to equity

Question 133

Solvency Ratios / Long-term debt to equity: ___

Answer 133

Total long-term debt ÷ Total equity

Question 134

Solvency Ratios / ___: Total debt ÷ Total equity

Answer 134

Debt to equity

Question 135

Solvency Ratios / Debt to equity: ___

Answer 135

Total debt ÷ Total equity

Question 136

Solvency Ratios / ___: Total debt ÷ Total assets

Answer 136

Total debt

Question 137

Solvency Ratios / Total debt: ___

Answer 137

Total debt ÷ Total assets

Question 138

Solvency Ratios / ___: Total assets ÷ Total equity

Answer 138

Financial leverage

Question 139

Solvency Ratios / Financial leverage: ___

Answer 139

Total assets ÷ Total equity

Question 140

___ serve the following purposes: - They provide insights into the microeconomic relationships within a company that help analysts project earnings and free cash flow (which is necessary to determine entity value and creditworthiness). - They provide insights into a company’s financial flexibility, which is its ability to obtain the cash required to meet financial obligations or to make asset acquisitions, even if unexpected circumstances should develop. Financial flexibility requires a company to possess financial strength (a level and trend of financial ratios that meet or exceed industry norms), lines of credit, or assets that can be easily used as a means of obtaining cash, either by their outright sale or by using them as collateral. - They provide a means of evaluating management’s ability. Key performance ratios can serve as quantitative measures for ranking management’s ability relative to a peer group.

Answer 140

Financial ratios

Question 141

Financial ratios serve the following purposes: - ___ - They provide insights into a company’s financial flexibility, which is its ability to obtain the cash required to meet financial obligations or to make asset acquisitions, even if unexpected circumstances should develop. Financial flexibility requires a company to possess financial strength (a level and trend of financial ratios that meet or exceed industry norms), lines of credit, or assets that can be easily used as a means of obtaining cash, either by their outright sale or by using them as collateral. - They provide a means of evaluating management’s ability. Key performance ratios can serve as quantitative measures for ranking management’s ability relative to a peer group.

Answer 141

They provide insights into the microeconomic relationships within a company that help analysts project earnings and free cash flow (which is necessary to determine entity value and creditworthiness).

Question 142

Financial ratios serve the following purposes: - They provide insights into the microeconomic relationships within a company that help analysts project earnings and free cash flow (which is necessary to determine entity value and creditworthiness). - ___ - They provide a means of evaluating management’s ability. Key performance ratios can serve as quantitative measures for ranking management’s ability relative to a peer group.

Answer 142

They provide insights into a company’s financial flexibility, which is its ability to obtain the cash required to meet financial obligations or to make asset acquisitions, even if unexpected circumstances should develop. Financial flexibility requires a company to possess financial strength (a level and trend of financial ratios that meet or exceed industry norms), lines of credit, or assets that can be easily used as a means of obtaining cash, either by their outright sale or by using them as collateral.

Question 143

Financial ratios serve the following purposes: - They provide insights into the microeconomic relationships within a company that help analysts project earnings and free cash flow (which is necessary to determine entity value and creditworthiness). - They provide insights into a company’s financial flexibility, which is its ability to obtain the cash required to meet financial obligations or to make asset acquisitions, even if unexpected circumstances should develop. Financial flexibility requires a company to possess financial strength (a level and trend of financial ratios that meet or exceed industry norms), lines of credit, or assets that can be easily used as a means of obtaining cash, either by their outright sale or by using them as collateral. - ___

Answer 143

They provide a means of evaluating management’s ability. Key performance ratios can serve as quantitative measures for ranking management’s ability relative to a peer group.