1. LiveWire manufactures inventory which, on average, takes 15 months to sell. On the balance sheet, this inventory should be classified as a:
A. non-current liability.
B. current asset.
C. current liability.
D. non-current asset.
2. “December 31, 2021” is most likely to be a heading on which financial statement?
A. Statement of cash flows
B. Income statement
C. Statement of stockholders' equity
D. Balance sheet
3. Overton, Corp. reports the following account balances:
Accounts receivable $12,300
Buildings $31,900
Cash $19,500
Common stock $6,200
Salaries payable $2,900
Supplies $3,000
Assuming the accounts reflect normal activity, what amount of
current assets would be reported on the balance sheet?
A. 72,900
B. 31,800
C. 66,700
D. 34,800
4. A valuable internal perspective on the company’s operations is provided by:
A. the audit opinion.
B. management's discussion and analysis.
C. footnote disclosures in the 10-K.
D. Wall Street analysts.
5. The primary benefit of separately reporting discontinued operations is to enhance:
A. reliability.
B. timeliness.
C. neutrality.
D. predictive ability.
6. Which of the following is NOT an item classified as Other Comprehensive Income (OCI)?
A. Foreign currency translation adjustments
B. Fair value adjustment on a cash flow hedge
C. Unrealized holding gains on available-for sale equity securities
D. Unrealized holding losses on available-for-sale debt securities
7. Revenues differ from gains in that:
A. revenues are from product sales while gains are from providing services.
B. revenues are earned from a company’s normal operations, while gains are from peripheral transactions.
C. revenues are found on the income statement while gains are found on the balance sheet.
D. revenues are material while gains are immaterial.
8. Freemont Corporation reported net income of $1,100,000 for its fiscal year ended December 31, 2022. Preferred stock dividends of $150,000 were declared during the year. Fremont had 2,000,000 shares of common stock at the beginning of 2022 and issued an additional 500,000 shares on April 1, 2022. What would be Fremont’s basic earnings per share for 2022?
A. 0.21
B. 0.40
C. 0.38
D. 0.46
9. Perrymore reports the following items related to the statement of cash flows:
Net income $745,000
Gain on sale of equipment $17,000
Purchase of equipment $26,200
Depreciation expense $49,000
Increase in accounts receivable $3,500
Increase in income tax payable $8,600
Cash received from sale of bonds $86,000
What amount would Perrymore report for cash from operating activities?
A. 816,100
B. 782,100
C. 832,100
D. 850,900
10.Squeeze Industries produced the following items related to the statement of cash flows:
Equipment – beginning balance: $65,000; ending balance:
$72,000
Accumulated depreciation, equipment – beginning balance: $22,000;
ending balance: $18,000
Depreciation expense, equipment – $13,000; Gain on sale of
equipment – $8,000
Cash purchase of equipment – $30,000
One equipment sale was made for cash. How much cash was received
from this sale?
A. 31,000
B. 23,000
C. 14,000
D. 35,000
Answer :
1. Option - B, current asset
Explanation : In this case, 15 months is the normal operating cycle of inventory. So, it still continues to be a current asset.
2. Option - D, Balance sheet
3. Option - B, $31,800
Explanation :
Current asset = Accounts receivable + Cash
= $12,300 + $19,500
= $31,800
4. Option - B, management's discussion and analysis
Explanation : Internal perspective describes how the management is going to attain its goal and satisfy their customer needs.
5. Option - D, Predictive ability
Explanation : Its important to show discontinuing operations separately on income statement because it helps inventors to see profit from continuing operations separately.
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