1The term "receivables" refers to
a.amounts due from individuals or companies.
b.merchandise to be collected from individuals or companies.
c.cash to be paid to creditors.
d.cash to be paid to debtors.
2Ratios are used as tools in financial analysis
a.instead of horizontal and vertical analyses.
b.because they can provide information that may not be apparent from inspection of the individual components of the financial statements.
c.because even single ratios by themselves are quite meaningful.
d.because they are prescribed by GAAP.
3The debt to total assets ratio measures the percentage of the total assets provided by creditors. True or False?
4Dividends may be declared and paid in cash or stock. True or False?
5A detailed stockholders equity section in the balance sheet will list the names of individuals who are eligible to receive dividends on the date of record. True or False?
6Which one of the following would not be considered an advantage of the corporate form of organization?
a.Limited liability of stockholders
b.Separate legal existence
c.Continuous life
d.Government regulation
7Which of the following factors does not affect the initial market price of a stock?
a.The companys anticipated future earnings
b.The par value of the stock
c.The current state of the economy
d.The expected dividend rate per share
8Specialty Packaging Corporation began business in 2007 by issuing 20,000 shares of par common stock for per share and 5,000 shares of
6%, par preferred stock for par. At year end, the common stock had a market value of . On its December 31, 2007 balance sheet,
Specialty Packaging would report
a.Common Stock of 0,000.
b.Common Stock of 0,000.
c.Common Stock of 0,000.
d.Paid-in Capital of 0,000.
9Current liabilities are due
a.but not receivable for more than one year.
b.but not payable for more than one year.
c.and receivable within one year.
d.and payable within one year.
10In a recent year Dillon Corporation had net income of 0,000, interest expense of ,000, and tax expense of ,000. What was Dillon Corporations times interest earned ratio for the year?
a.6.5
b.7.5
c.8
d.9
11The relationship between current assets and current liabilities is
a.useful in determining income.
b.useful in evaluating a company’s liquidity.
c.called the matching principle.
d.useful in determining the amount of a company’s long-term debt.
12A concentration of credit risk is a threat of nonpayment from a single customer or class of customers that could adversely affect the financial health of the company. True or False?
13A major advantage of national credit cards to retailers is that there is no charge to the retailer by the credit card companies for their services. True or False?
14When an account receivable that was previously written off is collected, it is first necessary to reverse the entry to reinstate the customers account before recording the collection. True or False?
15A dishonored note receivable
a.Is no longer negotiable.
b.Must be written off by the lender.
c.Creates a claim against the maker for the amount of principal only.
d.Is one that is not paid in full within 10 days of maturity.
16Which one of the following is not an accounting problem (issue) associated with ac-counts receivable?
a.Depreciating accounts receivable
b.Recognizing accounts receivable
c.Valuing accounts receivable
d.Accelerating cash receipts from accounts receivable
17An aging of a company’s accounts receivable indicates that ,000 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a ,200 credit balance,
the adjustment to record bad debts for the period will require a
a.debit to Bad Debts Expense for ,000.
b.debit to Allowance for Doubtful Accounts for ,800.
c.debit to Bad Debts Expense for ,800.
d.credit to Allowance for Doubtful Accounts for ,000.
18The extent of internal control features adopted by a company must be evaluated in terms of cost-benefit.
19Companies that fail to maintain an adequate system of internal control
a.may be subject to charges of fraud.
b.will be automatically dissolved.
c.may be subject to fines and officer imprisonment.
d.may be forced to sell their assets.
20An income statement would not include
a.other revenue and gains.
b.extraordinary items.
c.discontinued operations.
d.dividends paid.
21When a change in accounting principle occu