Test Bank Chapter 5 Balance Sheet and Statement of Cash Flows.
CHAPTER 5
BALANCE SHEET AND STATEMENT OF CASH FLOWS
IFRS questions are available at the end of this chapter.
TRUE-FALSE—Conceptual
Description
F 1. Liquidity and solvency.
T 2. Limitations of the balance sheet.
T 3. Definition of financial flexibility.
T 4. Long-term liability disclosures.
F 5. Definitions of the balance sheet.
F 6. Land held for speculation.
T 7. Balance sheet format.
F 8. Purpose of statement of cash flows.
F 9. Statement of cash flows reporting.
T 10. Financial flexibility.
T 11. Collection of a loan.
T 12. Determining cash provided by operating activities.
F 13. Reporting significant financing and investing activities.
T 14. Current cash debt coverage ratio.
F 15. Reporting other comprehensive income.
F 16. Disclosure of fair values.
F 17. Disclosure of company operations and estimates.
T 18. Disclosure of pertinent information.
F 19. Use of the term reserve.
F 20. Adjunct account.
MULTIPLE CHOICE—Conceptual
Description
d 21. Limitation of the balance sheet.
c 22. Uses of the balance sheet.
b 23. Use of balance sheet information.
d 24. Use of balance sheet information.
d 25. Limitation of the balance sheet.
c S26. Uses of the balance sheet.
b S27. Criticisms of the balance sheet.
c P28. Definition of liquidity.
d 29. Definition of net assets.
b 30. Current assets presentation.
b 31. Operating cycle.
d 32. Operating cycle.
d 33. Identification of current asset.
d 34. Identification of current asset.
d 35. Identification of current asset.
d 36. Classification of short-term investments.
c 37. Classification of inventory pledged as security.
MULTIPLE CHOICE—Conceptual (cont.)
Description
b 38. Identification of long-term investments.
d 39. Identification of valuation methods.
b 40. Identification of current liabilities.
d 41. Definition of working capital.
b 42. Identification of working capital items.
d 43. Identification of long-term liabilities.
d 44. Identification of long-term liabilities.
d 45. Classification of treasury stock.
d 46. Disclosures for common stock.
d 47. Classification of investment in affiliate.
c 48. Classification of owners' equity.
d 49. Classification of assets.
d P50. Identification of contra account.
d S51. Balance sheet supplementary disclosure.
d 52. Long-term liabilities' disclosure.
b 53. Balance sheet supplementary disclosure.
c 54. Disclosure of contractual situations.
d 55. Disclosure of accounting policies.
d 56. Contingency reported in financial statement notes.
d 57. Methods of disclosure.
d 58. Disclosure of significant accounting policies.
d 59. Disclosure of depreciation methods used.
d 60. Required notes to the financial statements.
b 61. Identification of generally accepted account titles.
c 62. Purpose of the statement of cash flows.
c S63. Statement of cash flows answers.
c 64. Statement of cash flows reporting.
b 65. Statement of cash flows objective.
d 66. Reporting issuance of stock for machine.
d 67. Identify a financing activity.
b 68. Classification of cash receipts.
b 69. Identify a financing activity.
c 70. Cash flow from operating activities.
a 71. Identify an investing activity.
d 72. Preparing the statement of cash flows.
b 73. Cash debt coverage ratio.
b 74. Current cash debt coverage ratio.
d 75. Financial flexibility measure.
c 76. Calculation of free cash flow.
b S77. Description of financial flexibility.
b P78. Cash debt coverage ratio.
P Note: these questions also appear in the Problem-Solving Survival Guide.
S Note: these questions also appear in the Study Guide.
MULTIPLE CHOICE—Computational
Description
c 79. Classifying investments.
a 80. Identifying intangible assets
b 81. Calculate total stockholders’ equity.
d 82. Classifying investments.
a 83. Identifying intangible assets.
b 84. Calculate total stockholders’ equity.
c 85. Calculate beginning stockholders’ equity.
c 86. Calculate ending stockholders’ equity.
d 87. Calculate net income.
b 88. Calculate ending cash balance.
b 89. Calculate ending cash balance.
a 90. Calculate cash provided by operating activities.
c 91. Cash provided by operating activities.
c 92. Cash provided by operating activities.
a 93. Cash debt coverage ratio.
b 94. Free cash flow.
a 95. Cash debt coverage ratio.
b 96. Free cash flow.
MULTIPLE CHOICE—CPA Adapted
Description
d 97. Calculate total current assets.
d 98. Calculate total current assets.
a 99. Calculate total current liabilities.
c 100. Calculate retained earnings balance.
b 101. Calculate current and long-term liabilities.
c 102. Classification of investing activity.
a 103. Classification of operating activity.
d 104. Classification of financing activity.
b 105. Classification of investing activity.
c 106. Summary of significant accounting policies.
EXERCISES
Item Description
E5-107 Definitions.
E5-108 Terminology.
E5-109 Current assets.
E5-110 Account classification.
E5-111 Valuation of balance sheet items.
E5-112 Balance sheet classifications.
E5-113 Balance sheet classifications.
E5-114 Balance sheet classifications.
E5-115 Statement of cash flows.
E5-116 Statement of cash flows ratios.
PROBLEMS
Item Description
P5-117 Balance sheet format.
P5-118 Balance sheet preparation.
P5-119 Balance sheet presentation.
P5-120 Statement of cash flows preparation.
P5-121 Statement of cash flows preparation.
CHAPTER LEARNING OBJECTIVES
1. Explain the uses and limitations of a balance sheet.
2. Identify the major classifications of the balance sheet.
3. Prepare a classified balance sheet using the report and account formats.
4. Indicate the purpose of the statement of cash flows.
5. Identify the content of the statement of cash flows.
6. Prepare a basic statement of cash flows.
7. Understand the usefulness of the statement of cash flows.
8. Determine which balance sheet information requires supplemental disclosure.
9. Describe the major disclosure techniques for the balance sheet.
SUMMARY OF LEARNING OBJECTIVES BY QUESTIONS
Item Type Item Type Item Type Item Type Item Type Item Type Item Type
Learning Objective 1
1. TF 3. TF 22. MC 24. MC S26. MC P28. MC
2. TF 21. MC 23. MC 25. MC S27. MC
Learning Objective 2
4. TF 33. MC 40. MC 47. MC 83. MC 107. E 114. E
5. TF 34. MC 41. MC 48. MC 84. MC 108. E 117. P
6. TF 35. MC 42. MC 49. MC 97. MC 109. E 118. P
29. MC 36. MC 43. MC 79. MC 98. MC 110. E
30. MC 37. MC 44. MC 80. MC 99. MC 111. E
31. MC 38. MC 45. MC 81. MC 100. MC 112. E
32. MC 39. MC 46. MC 82. MC 101. MC 113. E
Learning Objective 3
7. TF P50. MC 85. MC 86. MC 87. MC
Learning Objective 4
8. TF 9. TF 51. MC S52. MC 53. MC 54. MC
Learning Objective 5
10. TF 56. MC 59. MC 89. MC 103. MC 115. E
11. TF 57. MC 60. MC 90. MC 104. MC
55. MC 58. MC 88. MC 102. MC 105. MC
Learning Objective 6
12. TF 13. TF 61. MC 91. MC 92. MC
Learning Objective 7
14. TF 62. MC 64. MC S66. MC 93. MC 95. MC 116. E
15. TF 63. MC 65. MC S67. MC 94. MC 96. MC
Learning Objective 8
16. TF 69. MC 72. MC 107. E 112. E
17. TF 70. MC 73. MC 108. E 114. E
S68. MC 71. MC &nbs
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