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Upwork Finance and Accounting

PC Graphics Test 2016

Published by:

1 Which of the following is/are basic phases of creating 3-D computer graphics?

Answers:

  1. 3-D modeling
  2. 3-D rendering
  3. Transmogrification
  4. Computer animation

2 Which of the following are common shading models?

Answers:

  1. Cortez
  2. flat
  3. Gouraud
  4. Phong

3 Which of the following statements about pixels are true? (Answer all that apply)

Answers:

  1. A pixel has a dimension
  2. A pixel is a point
  3. Pixels are visible
  4. A pixel can have coordinates

4 Which of the following colors belong to the most common three-color additive color model used in video displays or otherwise used to describe the physical concepts involved?

Answers:

  1. Red
  2. Magenta
  3. Yellow
  4. Green

5 Which of the following is/are typical steps in a graphical pipeline that converts three-dimensional objects for two-dimensional display or printing?

Answers:

  1. Hidden line/hidden surface removal (HLHSR)
  2. Rasterization
  3. Viewport mapping and clipping
  4. Writing to the framebuffer

6 Which of the following colors belong to the standard four-color subtractive color model used in color printing or otherwise used to describe the printing process?

Answers:

  1. Red
  2. Magenta
  3. Yellow
  4. Green

7 Which of the following file formats are popular vector-graphics formats?

Answers:

  1. EPS
  2. XLS
  3. SVG
  4. PDF

8 _________ adds appropriately colored pixels to an image to make it seem as though more colors were present in the original

Answers:

  1. Imposition
  2. Logo
  3. Dithering
  4. Over print

9 What does the term “stroke weight” denote?

Answers:

  1. A term that illustration software uses to specify the thickness of a line when drawing a path
  2. A process where the software adds new pixels to an image based on the color values of the surrounding pixels
  3. A term for the descriptive information embedded inside an image or other type of file
  4. A measurement of the output quality of an image, usually in terms of samples, pixels, dots, or lines per inch

10 The effect that occurs when an object nearer to the viewport in 3-D space blocks (masks) another, more distant object from view is called:

Answers:

  1. Depth
  2. Cueing
  3. Occlusion
  4. Filtering

11 What is meant by the term projection?

Answers:

  1. The process of mapping three dimensional images to two dimensions for display
  2. An interpolation technique used to remove texture distortion, stair casing, or jagged edges at the edges of an object
  3. The part of the graphics engine that draws 3-D primitives, usually triangles or other simple polygons
  4. Wrapping a texture image onto an object to create a realistic representation of the object in 3D space

12 What is meant by the term rigging?

Answers:

  1. A combination of colors that appear to have a stronger impact and highly visible look
  2. The area of the graphics memory used to store the Z or depth information about rendered objects
  3. The process of linking a 3-D object, such as modeling a character, to its bone structure (skeletal animation)
  4. The process of applying a texture to the surface of 3-D models to simulate walls, sky, etc

13 A technique for achieving higher quality in lower-quality images is called __________ It takes advantage of an optical illusion to simulate 24-bit quality with 8-bit or 16-bit images:

Answers:

  1. Dithering
  2. 3-D pipeline
  3. Interpolation
  4. Surface removal

14 Which of the following raster graphics editors used to process digital graphics and photographs is/are open source, instead of being proprietary?

Answers:

  1. Photshop
  2. Paint Shop Pro (PSP)
  3. GIMP
  4. Photoshop Elements

15 Which one of the following graphics standard specifications is the main competitor to Microsoft’s Direct3D (the 3D graphics API within DirectX)?

Answers:

  1. OpenGL
  2. PHIGS
  3. X 11
  4. IRIS GL

16 Which one of the following is a data structure used to organize objects within a space, which can be used in hidden-surface removal and in ray tracing?

Answers:

  1. Patch mesh
  2. Circular buffer
  3. Binary space partitioning (BSP) tree
  4. Hash table

17 What does the term “constraint” imply?

Answers:

  1. A graphics processing technique that simulates transparency or translucency for objects in a 3D scene to create visual effects like smoke, glass, or water
  2. The section of the graphics memory that stores the stencil data
  3. A rule or condition that must be followed regarding how the individual objects within an graphic can or cannot move, such as a wrist having to be attached to both a hand and an end of the lower arm
  4. Memory that is dedicated to the graphics processor and used to store rendered pixels before they are displayed on the monitor

18 What is meant by the term fog?

Answers:

  1. The mixing of an image with a fixed color that thickens as the image’s pixels get further away from the viewpoint
  2. A special type of channel used in graphics software for saving selections
  3. a technique of blending bitmap-based images and text to reduce the stair-stepping or jagged appearance
  4. The relationship of an image’s width to height or its proportions

19 What does the term “jaggies” imply?

Answers:

  1. Image that continues from one page of a publication across the gutter or spine to the facing page
  2. The stair-step effect seen along curves and edges in text or bit-mapped graphics
  3. In halftone screens, a measurement of resolution or detail
  4. A photographic proof made from assembled (stripped) negatives

20 The first procedure in the OpenGL pipeline is to transform a 3-D point that is defined in the object coordinate system into the world coordinate system This step has three possible transformations: rotation, scaling, and translation Which one of those below is typically the correct order for executing these three transformations?

Answers:

  1. First rotation, then translation, and then scaling
  2. First scaling, then rotation, and then translation
  3. First translation, then scaling, and then rotation
  4. First scaling, then translation, and then rotation

21 In computer animation, the entire frame is redrawn for each frame What of the following would reduce flicker between frames?

Answers:

  1. Surface removal
  2. Phong shading
  3. Double buffering
  4. Interpolation

22 Bitmapped graphics are also known as:

Answers:

  1. Vector graphics
  2. Raster graphics
  3. Line work
  4. Ray tracing

23 Select from the following choices the one that most closely completes the Shannon sampling theorem: “The ideal samples of a continuous function contain all the information in the original function if and only if the continuous function is sampled at a frequency ________________ the highest frequency in the function”

Answers:

  1. Equal to
  2. Greater than twice
  3. Greater than one-half
  4. Less than one-half

24 In computer graphics, when a line or object is moved where one end or point stays fixed in position is termed as:

Answers:

  1. Perfect banding
  2. Rubber banding
  3. Print banding
  4. Saddle banding

25 Which of the following best describes the term “vertex-vertex polygon mesh?”

Answers:

  1. A process by which color information is interpolated across the face of the polygon to determine the colors at each pixel
  2. A method of using two buffers, one for display and the other for rendering
  3. The simplest mathematical representation of a mesh, but which is not widely used due to the lack of explicit face and edge information
  4. A method of increasing the quality of a texture map by applying different-resolution texture maps for different objects in the same image, depending on their size and depth

26 Which of the following polygon meshes is most commonly used in mesh modelling because its input data are more readily acceptable to modern hardware?

Answers:

  1. Vertex-vertex mesh
  2. Winged-edge mesh
  3. Vertex-face mesh
  4. Quad-edge mesh

27 Which of the following rotation techniques gives the best results?

Answers:

  1. Euler angles
  2. Axis-angle
  3. 3 by 3 matrix
  4. Quaternions

28 What is meant by the term gradient?

Answers:

  1. A binary representation in which a bit or set of bits corresponds to some part of an object such as an image or font
  2. In computer graphics, a curve that is generated using a mathematical formula which assures continuity with other b-splines
  3. A color (or grayscale) fill that gradually blends from one color to another, perhaps from light to dark, for example
  4. In computer graphics, a technique for simulating rough textures by creating irregularities in shading

29 The serial execution of the processes applied to geometric primitives (text, lines, polygons, curves, and surfaces) in a graphics package to produce two-dimensional output is called its:

Answers:

  1. Execution LIFO stack
  2. Graphical modeling
  3. Transmogrification
  4. Rendering pipeline

30 What does the term “spline” imply?

Answers:

  1. In computer-aided design, a smooth curve that runs through a series of given points
  2. The smallest rectangular region of a picture or a frame buffer for which you can specify unique properties such as color and transparency
  3. Simulating a condition or activity by performing a set of equations on a set of data
  4. An interface that allows for the transfer of a digital video signal from a computer to a display, which increases the image quality and performance over a comparable analog system

31 Another term for the video output device for storing the graphic image as it is being formed and later used for displaying the image is:

Answers:

  1. FIFO stack
  2. Frame buffer
  3. Flash drive
  4. L3 cache

32 A modeling technique based upon a formal grammar whereby complex shapes are recursively generated from relatively simpleprocedures is termed as:

Answers:

  1. Flush right
  2. Graftal
  3. Crossover
  4. Coated stock

33 The process of using an image described in a vector-graphics format and converting it into a bitmapped image as output on a display or printer, or as storage in a bitmapped file is known as

Answers:

  1. Pixelation
  2. Rasterization
  3. Transmogrification
  4. Animation

34 Which one of the color parameters measures how far away the color is from gray?

Answers:

  1. Hue
  2. Saturation
  3. Brightness
  4. Gamut

35 An image rendering process that builds images based upon the propagation of light rays and the effects of absorption, reflection, and refraction associated with the objects being scanned is termed as:

Answers:

  1. Ray tracing
  2. Grommets
  3. Spread
  4. Mask

36 Images based upon geometric elements, such as points, curves, and surfaces, that follow mathematical equations are called:

Answers:

  1. Marques
  2. Vectors
  3. Knock-outs
  4. Halftones

37 Which of the following techniques reduces the appearance of jagged edges of lines and edges in raster graphics?

Answers:

  1. Warnock space subdivision
  2. Depth sort
  3. Gouraud shading
  4. Anti-aliasing

38 What does the term “depth sort” imply?

Answers:

  1. To convert an image or signal into digital code by scanning, tracing on a graphics tablet, or using an analog to digital conversion device
  2. An algorithm for creating a hidden-line drawing of polygon data sets by drawing the polygons from the most distant to the closest, in order
  3. The simulation of a continuous-tone image (shaded drawing, photograph) with dots
  4. In computer graphics, a particular shade or tint of a given color

39 What does the term “bezier” imply?

Answers:

  1. A measurement of printer resolution that defines how many dots of ink are placed on the page when the image is printed
  2. The term that describes one way that illustration software may create curves and shapes by using control points and control handles
  3. Special points placed around an active object that are used to manipulate the object when clicked and dragged with the mouse or other pointing device
  4. A graph that depicts the tonal range of an image

40 In computer graphics, a technique in which irregularities in shading are created for simulating rough textures is called:

Answers:

  1. Cosine mapping
  2. Bump mapping
  3. Bleed mapping
  4. Image mapping

41 When considering illumination from light sources, which of the following types of light sources has the same intensity in all directions:

Answers:

  1. Point source
  2. Spot light
  3. Parallel light
  4. Specular

42 Which of the following is the most commonly used lighting model?

Answers:

  1. Xerxes
  2. Z-buffering
  3. Texture mapping
  4. Phong

43 What does the term “flythrough” imply?

Answers:

  1. A series of mathematical operations that act on output primitives and geometric attributes to convert them from modeling coordinates to device coordinates
  2. A memory buffer used to hold one line of video
  3. Displayed representation of a scene or an object that appears to have three axes of reference: height, width, and depth (x, y, and z)
  4. A type of animation in which the camera moves around a scene, rather than objects moving in front of a stationary camera

44 The number of bits per pixel typically used for the color depth to be described as being a truecolor format is:

Answers:

  1. 4
  2. 16
  3. 24
  4. 36

45 In a 3-D graphics environment, the process of subdividing a surface into a mesh of smaller shapes that are easy to analyze is known as:

Answers:

  1. Anti-aliasing
  2. Tessellation
  3. Blending
  4. Texture mapping

46 Which of the following types of reflection transmits light in all direction with the same energy?

Answers:

  1. Specular
  2. Diffuse
  3. Gloss
  4. Retro reflection

47 The process whereby a specific key color (often blue or green) within an image is made transparent when that image is mixed with another image is known as:

Answers:

  1. Graphic keying
  2. Chroma keying
  3. Shade keying
  4. Scissors keying

48 Which of the following vector graphics editors used to process digital graphics is/are open source, instead of being proprietary?

Answers:

  1. Illustrator
  2. Visio
  3. Flash
  4. Inkscape

49 The rendering of three-dimensional computer graphics often employs one or more approaches to model a complex four-dimensional mathematical function that defines the physical behavior of light at an opaque surface This fundamental radiometric concept is known as the:

Answers:

  1. Kummer’s function
  2. Reisz function
  3. Bidirectional reflectance distribution function (BRDF)
  4. Mittag-Leffler function

50 Which of the following graphic formats allow for animation?

Answers:

  1. GIF
  2. JPEG
  3. TIFF
  4. PNG

51 A process in 2-D computer graphics whereby a closed vector path is used to mask (block) parts of an image is known as:

Answers:

  1. Double path
  2. Palletized path
  3. Keying path
  4. Clipping path

52 What is meant by the term auto trace?

Answers:

  1. A part of off-screen memory that holds the distance from the viewpoint for each pixel, the Z-value
  2. A programmed function in illustration software that converts raster graphics into vector graphics whereby paths are created along the edges of a scanned image
  3. A process of removing hidden surfaces by sorting polygons in back-to-front order prior to rendering
  4. Areas in an image with a blocky or blotchy appearance

53 Which one of the following formats would provide the least amount of pixelation when its dimensions are scaled (magnified) in size?

Answers:

  1. JPEG
  2. TIFF
  3. PNG
    EPS

54 What is meant by the term crop?

Answers:

  1. In proportional spacing, the tightening of space between letters to create a visually appealing flow to the text
  2. The analysis of a picture using techniques that can identify shades, colors, and relationships that cannot be perceived by the human eye
  3. Changing or improving graphics images, either interactively using a paint program or by using software routines that alter contrast, smooth lines, or filter out unwanted data
  4. Trimming or masking of photos, graphics, drawings, or illustrations

55 What is meant by the term stroke?

Answers:

  1. A reddish brown monochrome tint that gives the picture a warm, antique feeling
  2. A term that illustration software uses to describe the width of a line in a path
  3. A photograph whose edges fade out gradually
  4. Copying a block of pixels from one place to another

56 Which of the following graphical formats is/are always low-resolution (8-bit) bitmap graphics?

Answers:

  1. JPEG
  2. GIF
  3. TIFF
  4. SVG

57 The vector-graphics package that was developed by Microsoft is:

Answers:

  1. Draw
  2. Inkscape
  3. Illustrator
  4. Visio

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Upwork Finance and Accounting

Venture Capital Test 2016

Published by:

1. What level of involvement will a venture capital firm typically have?

Answers:

  1. None; their investment is passive
  2. Very active; a venture capital team member will be on site daily
  3. Somewhat active; weekly visits to the target company
  4. No day to day involvement; involvement through participation in the board of directors only

2. How are the investments in a venture capital firm structured typically?

Answers:

  1. As limited partners
  2. As shareholders
  3. As a limited liability company
  4. No formal structure agreements are needed

3. What is a sweeper clause?

Answers:

  1. It is a clause that requires that the books of the company be kept clean and free of fraud.
  2. It is a clause that requires the attendance of three management personnel at all meetings.
  3. It is a clause that allows the venture capitalist to make requests for financial information from the company from time to time.
  4. It is a clause that allows the venture capitalist not to attend meetings.

4. When investigating the target market of the potential investment, what will the venture capitalists focus on specifically?

Answers:

  1. The pricing of the product
  2. The Intellectual Property and any competitors with similar IP
  3. The customer base, the competition, and the opportunity in the market space
  4. Location of competition

5. What do veto rights allow the venture capitalist to do?

Answers:

  1. Call board meetings at any point
  2. Require liquidation within 30 days
  3. Overturn decisions made by the company directors
  4. Fire the management

6. What are the “conversion rights”, typically stated on a term sheet?

Answers:

  1. They are terms that allow a venture capitalist to sell off their stock at any point.
  2. They are terms that stipulate that the venture capitalists can convert their preferred shares into common shares which will be more easily liquidated.
  3. They are terms that allow the target company to surrender more equity to the venture capitalist if the venture is growing quickly.
  4. They are terms that prevent anyone from selling stock for the first three years.

7. What is meant by the right to “observer rights”?

Answers:

  1. The venture capitalist doesn’t have to come to the board meetings
  2. The venture capitalist can bring in an observer, who can not vote, to the board meeting
  3. The company is only allowed to watch board meetings, and not to participate
  4. The company management is required to be present at all board meetings

8. What purpose do milestones serve in the term sheet?

Answers:

  1. They protect the target company in case they don’t perform well.
  2. They prevent outsiders from investing until specific goals are met.
  3. They force the management to make decisions they would not want to make otherwise.
  4. They stipulate the goals the target company has to meet in order to receive subsequent amounts of funding.

9. What is the main reason why a venture capitalist does its own evaluation of a target company’s projected financials?

Answers:

  1. Due to their lack of trust in the target company
  2. To check that assumptions are reasonable and the model covers all aspects of the company
  3. To see if there’s potential for even more revenue
  4. To spot check for formula errors

10. How often do venture capital firms change the investments within their portfolios, on an average?

Answers:

  1. Often, several times a year
  2. Annually
  3. Every three to five years
  4. Almost never

11. What role do the investors play in a venture capital firm?

Answers:

  1. That of investment screeners
  2. That of managing directors
  3. That of advisors
  4. That of due diligence experts

12. What is the importance of the intellectual property (IP) which venture capitalists focus heavily on?

Answers:

  1. Companies with no IP will never succeed
  2. Companies who have IP may be competing against firms with similar IP
  3. Venture capitalists want to make sure the company is not at risk of being sued over the IP
  4. IP can be a key deciding factor, as the target company’s success or failure may hinge on the IP they own

13. When was the largest burst of activity in the venture capital industry witnessed?

Answers:

  1. In the 1960s
  2. In late 2000s
  3. In mid 2000s
  4. In early 2000s

14. What does an exit effectively do?

Answers:

  1. It allows the investor to put more money into a company to get a better return.
  2. It makes everyone involved rich.
  3. It determines the value of the company at the given point.
  4. It allows the venture capitalist to sell their equity in some fashion, either on the stock market, or to the owners, or to the new owners.

15. What is meant by Post-money valuation?

Answers:

  1. It is the expected value of the company after it has received the venture capital investment.
  2. It is the expected value of the company before it has received the venture capital investment.
  3. It is the expected value of the company after five years.
  4. it is the expected value of the company once the venture capitalist exits the company.

16. When will the venture capitalist show the most active involvement with the company post funding?

Answers:

  1. At the beginning, offering direction and guidance
  2. After a year, when the company begins to grow
  3. Towards the exit point
  4. Throughout the process

17. What does “deal syndication” on the term sheet address?

Answers:

  1. It prevents outsiders from investing at all.
  2. It discusses what happens in the event the company fails to execute.
  3. It allows venture capitalists to merge two or more of their investments into one company.
  4. It discusses the process required for additional investors to invest in the target company.

18. What is the purpose of having portfolios?

Answers:

  1. To segregate investments into specific categories with similar criteria
  2. To deal with tax implications
  3. To rule out potential investments
  4. To meet the requirements of the SEC

19. What has been the largest area which venture capitalists have been actively investing in for the last decade?

Answers:

  1. Local government municipalities, such as utilities
  2. Small businesses such as a brick and mortar store, or a coffee shop
  3. Professional services industries, such as lawyers and accountants
  4. Internet based companies, such as an e-commerce site

20. What are the typical returns a venture capital firm expects when exiting from a successful investment?

Answers:

  1. At least 10 times their original investment
  2. The market interest rate, compounded annually
  3. Double their investment
  4. Enough to break even and hold on to some equity

21. What is meant when a venture capitalist talks about the “burn rate”?

Answers:

  1. The interest rate they expect to earn on their investment
  2. How quickly a target company may burn out, or fail
  3. The monthly amount of cash spent on an average by a target company, which can then be used to calculate how far investment dollars will take the company
  4. How quickly the management team members are phased out

22. What role do committees play?

Answers:

  1. They act as specialized arms of the board to address specific topics such as Human Resources or Accounting and Finance Matters.
  2. They are at a higher level than the board, and are called in to make decisions when the board can not agree.
  3. They are the key management personnel in the company.
  4. They are formed to organize things such as employee birthday parties.

23. What would be the attraction of offering a debt round to a target company?

Answers:

  1. It can earn more money than equity when the company performs well.
  2. It is easier to sell off debt.
  3. It limits how well the management has to perform.
  4. It is less risky, gives the right to demand repayment, and earns interest.

24. Which of the following would be a possible portfolio for a venture capital firm?

Answers:

  1. High tech, Entertainment, E-commerce, Food and Beverage
  2. High Risk, Low Risk, Zero Risk
  3. Local, National, Global
  4. Equity, Bonds, Debt, Convertible Debt

25. What protection do investors in a venture capital fund have?

Answers:

  1. They are guaranteed at least a 3% return on the investment.
  2. They are guaranteed to double their money within one year.
  3. There is no protection. They are not guaranteed a return on their investment, and it is made very clear that investing in new ventures is risky.
  4. There is no protection. They are told that they may lose their money, but most likely, they will make a lot of money.

26. What is meant by “exit strategy”?

Answers:

  1. It is how the venture capitalist plans to merge with another venture capitalist.
  2. It is how the target company is planning to liquidate all investors and give them a return for their investment.
  3. It is how the target company plans to fire key personnel.
  4. It is how the target company plans to exit their target markets if they are not successful.

27. What options does a venture capitalist have when holding convertible debt?

Answers:

  1. They can choose immediately if they want debt or equity.
  2. They can convert back and forth between debt and equity depending on which is more beneficial.
  3. They can sell off some of the debt before converting the rest to equity.
  4. They can keep their investment as debt, or convert to equity given some predetermined circumstances have occurred.

28. How much in funding, in general, will an investor want to invest?

Answers:

  1. Enough to allow the company to survive for three years
  2. Enough to cover management salaries
  3. Enough to allow the company to reach traction and prove their business model, regardless of time line
  4. One year’s operating expenses

29. What is a “first round” investment?

Answers:

  1. An investment in a company which is at the idea stage
  2. An investment in a company which is early in its growth, typically one generating some revenue
  3. An investment in a company where the venture capitalist is the very first investor
  4. An investment in a company in its first year

30. What is the term sheet used for once it is agreed upon and signed?

Answers:

  1. It is the legally documented agreement between the venture capitalist and the target company.
  2. It is used as an outline for the legal team to draw up the official legal agreement between the venture capital firm and the target company.
  3. It is a guideline for future operations.
  4. It is similar to a business plan for the upcoming year.

31. Which of the following would be considered an exit strategy?

Answers:

  1. Making a private company public via an initial public offering
  2. Bringing in additional investors
  3. Firing the management to bring in a more experienced management
  4. Converting debt to shares

32. What is the primary source of a venture capital firm’s funding?

Answers:

  1. The venture capital firm invests its own equity in other companies.
  2. The partners of the venture capital firm invest individually.
  3. The money is raised through the stock market for the purpose of investing it in companies.
  4. Other companies invest in the venture capital firm which then invests in new ventures.

33. What is the overall venture capital portfolio expectation?

Answers:

  1. That ten out of ten companies will be huge successes
  2. That all the ten will perform satisfactorily
  3. That five of the ten will succeed, five will fail
  4. That out of every ten companies invested in, at least one will be a tremendous success, at least five will fail completely, and the other four will break even or be marginally successful

34. When is the due diligence process done?

Answers:

  1. After the initial engagement, but before the completion of the deal
  2. Before getting engaged with the potential target investment
  3. As a final step before the deal is completed
  4. The target investment company would do this before approaching the venture capitalist

35. What is the main difference between equity and debt?

Answers:

  1. Equity represents ownership, debt represents a loan to the company.
  2. Debt represents steady earnings, equity represents up and down earnings.
  3. Debt can be secured by assets but equity can not be.
  4. Debt is easier to sell than equity.

36. What does a venture capitalist look like to its investors, based on the way it operates?

Answers:

  1. A stock broker
  2. A mutual fund
  3. An investment bank
  4. An options trader

37. What role does “valuation” play in selecting the most appropriate investment areas?

Answers:

  1. Valuation gives the venture capitalist a definite value of the target in five years.
  2. Valuation doesn’t matter as much as the management team.
  3. Valuation is the target company’s expected value at some point in the future, typically five years, and helps the venture capitalist see the potential.
  4. Valuation helps the venture capitalist decide which portfolio to place the target company in.

38. What is the typical process overview?

Answers:

  1. Submission of Business Plan, Term Sheet, Due Diligence, Legal Closing
  2. Term Sheet, Submission of Business Plan, Legal Closing
  3. Evaluation, Due Diligence, Legal Closing, Business Plan Review
  4. Screening, Kick off Meeting, Evaluation, Initial Due Diligence, Negotiation of Terms, Due Diligence, Legal Closing

39. What is meant by the “anti-dilution rights”, often found on a term sheet?

Answers:

  1. Terms that guarantee a specific return on investment
  2. Terms that restrict the target company to no more than three founders owning stock
  3. Terms that protect the venture capitalist from dilution of their investment by the target company by offering subsequent investments at lower valuations to other investors
  4. Terms that prevent original owners from having more stock than the venture capitalist

40. What is the first step in the process between the target company and the venture capitalist?

Answers:

  1. The venture capital firm will look online for companies who are looking for capital.
  2. The venture capital firm holds monthly open casting calls for potential companies.
  3. The target company contacts the venture capitalist to introduce the opportunity.
  4. The target company mails the venture capital firm a full business plan and due diligence package.

41. How long does the initial due diligence process last?

Answers:

  1. 4 to 6 weeks
  2. 1 to 2 weeks
  3. 10 to 12 weeks
  4. Any duration from 1 week to a year

42. When does the target company actually receive the investment?

Answers:

  1. Mid way through the process
  2. Usually within two weeks from the start of the process
  3. After the legal closing, on a stipulated closing date
  4. They never receive the full amount and have to request disbursements weekly

43. What is the minimum that a venture capitalist would expect at the monthly board meeting?

Answers:

  1. Detailed financial statements, explaining the expenses line by line
  2. That the company invested in is meeting the goals stipulated in the negotiation process, and if not, has an action plan to rectify
  3. An exciting presentation by the CEO
  4. Meeting with individual employees

44. Does a venture capital exit have any negative impact on the original founders of the company?

Answers:

  1. Yes; it will definitely drive down the value of the company.
  2. Typically no; the exit just means the end of a successful relationship.
  3. Yes; the employees will question why the venture capitalist is now exiting.
  4. No; it will usually bolster the stock price.

45. What is meant by “screening” in the investment process?

Answers:

  1. Online submission of the business plan by the target company
  2. Initial examination of the potential investment by the venture capitalist to see whether it fits in their portfolio
  3. The meet and greet meeting held after the venture capitalist has expressed interest in the target company
  4. Examination of the target company by the legal team

46. What is the attraction of convertible debt to a venture capitalist?

Answers:

  1. It allows them to gain more control over the firm.
  2. It gives them the potential to hold debt or equity, depending on how the firm grows and what will be most profitable.
  3. It allows them to liquidate more easily.
  4. It limits any risk.

47. What is the average size of a venture capitalist’s investment in a target company?

Answers:

  1. From 1 million to 50 million dollars
  2. From 100 thousand to 1 million dollars
  3. At least 50 million dollars
  4. There is no limit

48. What is a Term Sheet?

Answers:

  1. It is a document which stipulates the term of the investment.
  2. It is a document which the company receiving funding prepares, stating what their expected revenues for the upcoming years are.
  3. It is another term for “executive summary”.
  4. It is a document which stipulates the venture capital firm’s terms for the investment, such as the amount they will invest, the percentage of equity they require in exchange for the investment, and their expectations of the company they are investing in.

49. Which of the following would be a red flag for a venture capitalist?

Answers:

  1. No one else has entered the market space.
  2. All the members of the management team come from different backgrounds.
  3. Several competitors have entered and left the market due to low traction.
  4. The company hasn’t yet talked to other venture capitalists.

1,034 total views, 6 views today

Upwork Finance and Accounting

Statistics Test 2016

Published by:

1. Prior experience and situational analysis are important in making decisions when a person does not have enough information to calculate the probability of occurrence of an event.

Answers:

  1. True
  2. False

2. The following are data collection methods except:

Answers:

  1. Surveys
  2. Observation
  3. Sampling
  4. Designed experiments

3. Population parameters include the following except:

Answers:

  1. population mean
  2. population variance
  3. population standard deviation
  4. population hypothesis

4. ______ is one way to understand the relationship between two variables that occur at the same time.

Answers:

  1. Regression analysis
  2. Correlation
  3. Variance
  4. Sampling

5. ______ is the most frequent value that is present in your data.

Answers:

  1. Standard deviation
  2. Mean
  3. Mode
  4. None of the above

6. A study finds that children who spend more hours in TV viewing score lower class grades in school. This correlation is an example of:

Answers:

  1. Positive correlation
  2. Negative correlation
  3. No correlation

7. Arranging your target population in an ordered scheme from which participants or items are chosen at regular intervals is an example of:

Answers:

  1. Simple random sampling
  2. Systematic sampling
  3. Stratified sampling

8. When a researcher doesn’t know much about a certain problem and wants to gain more information about it, which research design will he use?

Answers:

  1. Exploratory
  2. Descriptive
  3. Casual

9. The _____ is a useful tool for assessing whether the means of two groups of variable are statistically different from each other.

Answers:

  1. sample mean
  2. T-test
  3. null hypothesis
  4. alternative hypothesis

10. There are two ways to present categorical data. One is by way of graphs, the other is by way of _________.

Answers:

  1. charts
  2. pie diagram
  3. histograms
  4. tables

11. Describe the relationship between the two variables in the above given scatter plot.

Answers:

  1. Positive
  2. Negative
  3. No correlation
  4. Weak negative

12. When a person conducts analysis using data he or she has not collected, the source of such data is called:

Answers:

  1. Primary source
  2. Secondary source
  3. Firsthand source
  4. Basic data source

13. The Causal Research design is used when the ______ factor about some phenomenon or issue is being researched.

Answers:

  1. Why
  2. How
  3. What
  4. When

14. Which of the following form(s) part of descriptive analysis?

Answers:

  1. Collecting raw data
  2. Summarizing raw data
  3. Analyzing raw data
  4. All of the above

15. While following the Scientific Research steps, a researcher has to construct a hypothesis soon after defining the problem.

Answers:

  1. True
  2. False

16. A sample of a population is:

Answers:

  1. a subset of the population you are studying.
  2. a set of entities concerning which statistical inferences are to be drawn.
  3. a set of potential measurements or values.
  4. a subset of potential future subjects.

17. The formula given above is that of:

Answers:

  1. Population variance
  2. Population mean
  3. Population standard deviation
  4. Z-score

18. The relationship between two variables is of two types. One is Linear, the other is:

Answers:

  1. Positive
  2. Curvilinear
  3. Negative

19. Which type of sampling method solicits the opinions of pre-selected experts?

Answers:

  1. Convenience sampling
  2. Judgment sampling
  3. Stratified sampling

20. According to probability concepts, the chance that an event will never happen is:

Answers:

  1. between 0 to 1
  2. 0
  3. 1
  4. a and c

21. Which of these can be used as source(s) of data collection?

Answers:

  1. Magazines and Newspapers
  2. Census Bureau
  3. Television
  4. a & b

22. Probability can be determined by:

Answers:

  1. Subjective Evidence
  2. Prior Knowledge
  3. Future Knowledge
  4. a and b
  5. a and c

23. If a company’s production is consistently going down due to some reasons, which technique or method would you employ to analyze those reasons/causes?

Answers:

  1. Simple linear regression
  2. Multiple linear regression
  3. Critical analysis
  4. Correlation analysis

24. Statistics is a branch of __________.

Answers:

  1. psychology
  2. geography
  3. mathematics
  4. social science

25. Which important information does the correlation analysis of variables give about the relationship between the variables?

Answers:

  1. Type of relationship
  2. Interdependency of relations
  3. Strength of relationship
  4. a & b
  5. a & c
  6. b & c

26. What is the probability of occurrence of a Type I error referred to as?

Answers:

  1. Level of significance
  2. Level of error
  3. Level of probability
  4. Level of acceptance

27. The population you are interested in studying is called:

Answers:

  1. Sample population
  2. Item population
  3. Target population

28. Standard deviation is the most common measure of __________.

Answers:

  1. dispersion
  2. central tendency
  3. clustering

29. The components of Simple Linear Regression model include the following except:

Answers:

  1. The slope
  2. The random error term
  3. The intercept
  4. The dependent variable

30. Stem and leaf display is an example of:

Answers:

  1. Frequency distribution
  2. Ordered array
  3. Pareto diagram
  4. None of the above

31. When you are figuring out How to collect, process and analyze data, you are:

Answers:

  1. Designing your research
  2. Analyzing your data
  3. Reporting new findings
  4. Constructing a hypothesis

32. The following statements regarding a Hypothesis are true except:

Answers:

  1. A hypothesis is an educated guess.
  2. It is an assumption based on relationship between two or more variables.
  3. It helps to design your research.
  4. It can be true or false.

33. Statistics can be divided into 2 broad sections. One is Descriptive Statistics, the other is:

Answers:

  1. Inferential Statistics
  2. Cumulative Statistics
  3. Differential Statistics
  4. Analytical Statistics

34. In statistical analysis, central tendency points to the clustering of the data around a _____________.

Answers:

  1. median
  2. central value
  3. mode
  4. point

35. Which data category uses numbers to indicate a classification?

Answers:

  1. Cardinal
  2. Ordinal
  3. Nominal
  4. Parametric

36. Numerical data can be presented by way of which of the following:

Answers:

  1. Ordered array
  2. Pareto diagram
  3. Frequency distribution
  4. a&b
  5. a&c
  6. b&c

37. Trying to learn more about a larger population from a small sample, is an example of:

Answers:

  1. descriptive analysis
  2. inferential analysis
  3. exploratory analysis
  4. none of the above

38. Of the three Measures of central tendency, which one is the most sensitive to outliers?

Answers:

  1. Mean (Arithmetic)
  2. Median
  3. Mode

39. _________ is one of the basic methods of inferential statistics that helps a researcher determine the difference between a real and a random pattern in a data set.

Answers:

  1. Hypothesis testing
  2. Population parameters
  3. Regression analysis
  4. Sample testing

40. Cluster sampling and Stratified sampling form part of Probability Sampling Methods.

Answers:

  1. True
  2. False

41. Probability proves useful:

Answers:

  1. in understanding the probability of occurrence of an event or a phenomenon.
  2. in deducing larger implications from a given data.
  3. Both a and b
  4. Neither a nor b

42. Cross tabulation of data is possible through the following:

Answers:

  1. Contingency tables
  2. Scatter plot
  3. Side-by-side bar chart
  4. All of the above

43. The correlation co-efficient quantifies the strength of the relationship between two variables and the value of this co-efficient falls between:

Answers:

  1. -1.0 and +1.0
  2. +1.0 and +0.81
  3. -1.0 and -0.81
  4. -0.21 and +0.40

44. Examples of Measures of central tendency include:

Answers:

  1. Mean
  2. Range
  3. Variance
  4. None of the above

45. While accepting or rejecting a null hypothesis , ________ are the regions that help to arrive at a decision.

Answers:

  1. special regions
  2. borderline regions
  3. critical regions

46. A good research plan should include the following except:

Answers:

  1. Research Questions
  2. Research Designs
  3. Prior Knowledge
  4. Participants

47. What will be the potential sampling frame(s) for a survey whose target population is infant children?

Answers:

  1. medical facilities (such as hospitals and clinics) recording births within the past 12 months.
  2. households whose occupants include infants under 12 months old.
  3. Official school directories
  4. Both a and b

48. The advantage(s) of Scientific Research Method is/are:

Answers:

  1. It investigates the problem exhaustively
  2. It is a systematic, controlled and empirical investigation of hypothesis.
  3. a and b
  4. None of the above

49. Which graphical tool is used to arrive at decisions by presenting and comparing a number of competing alternatives?

Answers:

  1. Contingency table
  2. Bar graph
  3. Decision tree

50. The process in which data about the variables is collected and then predictions are made about future outcome is called:

Answers:

  1. Regression analysis
  2. Future analysis
  3. Correlation analysis
  4. None of the above

51. Which of the following is not an example of hypothesis?

Answers:

  1. What percentage of people pass their driving test in the first attempt?
  2. The average age of cell phone users city-wide is 40 years.
  3. The average salary of teachers in the entire school district is $50,000.
  4. A public health official believes that 60% of all elderly people have received flu examination in the previous year.

52. Commonly employed qualitative research methods include:

Answers:

  1. Focus groups
  2. Case studies
  3. Surveys
  4. a and c
  5. a and b

53. In the above image it is stated that:

Answers:

  1. the average of the given data is not 40.
  2. the alternative hypothesis is that the mean of the given data is 40.
  3. the null hypothesis is that the mean value of the given data is 40.

54. How is a Type II error symbolized as?

Answers:

  1. ß
  2. α
  3. Δ

55. When the data values are tightly clustered around the mean, the bell shaped curve is:

Answers:

  1. skewed
  2. flat
  3. steep
  4. None of the above

56. In the Sampling Process, soon after identifying the sampling method comes the process of:

Answers:

  1. determining your sample size
  2. sampling and data collection
  3. reviewing your sampling process

57. How many types of major sampling methods are there?

Answers:

  1. 3
  2. 2
  3. 4
  4. 5

58. The above-given image is an example of:

Answers:

  1. Bar graph
  2. Pie chart
  3. Line chart
  4. Pareto diagram

59. In correlation analysis, we designate one variable as an independent variable and the other as a dependent variable.

Answers:

  1. True
  2. False

60. In a set of 40 General Knowledge questions 5 are based on International Relations. In a computer generated test only 30 of these 40 questions will be picked up. What is the probability of at least one of these 5 questions (on International Relations) being picked up randomly out of the selected 30?

Answers:

  1. 0.16
  2. 0.26
  3. 1
  4. 0.01

61. Ordinal numbers or data are primarily concerned with:

Answers:

  1. comparisons
  2. rankings
  3. classifications
  4. predictions

62. The idea behind reviewing existing knowledge is:

Answers:

  1. to select the right research study tools.
  2. to be guided by previous research studies.
  3. to be careful of not repeating the errors of previous studies.
  4. All of the above

63. It is important to categorize your data and data can be categorized into the following categories:

Answers:

  1. ordinal
  2. interval
  3. classical
  4. ratio
  5. a,b and d

64. Find out the median of the following data set:

8126m; 8611m; 7817m; 8172m; 8076m; 8848m; 8598m

Answers:

  1. 7817m
  2. 8598m
  3. 8172m
  4. 8126m

65. The following are the test scores in history for ten students:

61,10,88,37,61,72,55,61,46,22.

Calculate the mode of these test scores.

Answers:

  1. 88
  2. 61
  3. 10
  4. 55

66. In marketing research, which measure of central tendency is often used in a set of ordinal data?

Answers:

  1. Mean
  2. Variance
  3. Mode
  4. Median

67. Which of the following is not a research ethic?

Answers:

  1. Transparency
  2. Anonymity
  3. Risk of harm
  4. Informed consent

68. A ________ is a graphic representation of data based on paired observations.

Answers:

  1. scatter plot
  2. pie chart
  3. bar chart
  4. pareto diagram

69. Compute the Range for the given hourly wages (in $) of janitors:

8, 10,12, 14, 16, 18

Answers:

  1. $12
  2. $10
  3. $14
  4. $6

70. Once a sample is drawn from the population, how close the sample is to the larger population is to be determined. This is known as:

Answers:

  1. Sampling error
  2. Variance error
  3. Statistical error

71. Statistics helps in making inferences and drawing conclusions. These conclusions in turn help in:

Answers:

  1. decision-making
  2. hypothesis testing
  3. data collection
  4. a and b

72. In which chart is the data organized in a descending order and includes a trend line as well?

Answers:

  1. Pareto chart
  2. Area chart
  3. Side-by-side bar chart
  4. Scatter plot

73. ______takes into account the distance of every point in the scatter plot from the trend line.

Answers:

  1. Random error term
  2. Slope
  3. Intercept
  4. Dependent variable

74. The middle point of a data set arranged in an array from the smallest to the largest value is called:

Answers:

  1. mean
  2. median
  3. mode

75. In which of the following fields is ANOVA used to make comparisons amongst groups?

Answers:

  1. In product research and development.
  2. In education and training.
  3. In human factor analysis.
  4. All of the above

76. The reasons for choosing a sample out of a population are:

Answers:

  1. Cost limits
  2. Time limits
  3. Easy availability
  4. High reliability
  5. c and d
  6. a and b

77. The following are the steps in the process of Cluster sampling. Put them in the right order:

1)Randomly select the needed number of clusters for the sample.
2)Assign the population to different clusters.
3)Include all the population members of the selected cluster in the sample. Alternatively, select only a certain number of population members from each cluster (through simple or systematic random sampling) for the sample.

Answers:

  1. 2,1,3
  2. 2,3,1
  3. 1,2,3
  4. 1,3,2

78. The events that are not affected by other outcomes are called:

Answers:

  1. Probable events
  2. Improbable events
  3. Independent events
  4. None of the above

1,156 total views, 3 views today

Upwork Finance and Accounting

General Financial Accounting Test 2016

Published by:

1. Which of the following is NOT an example of a period expense?

Answers:

  1. Administrative costs
  2. Inventory costs
  3. Accounting costs
  4. Selling costs

2. Which of the journal entries below is incorrectly recorded?

Answers:

  1. Dr: Cash, Cr: Investment in ABC Co. – Sale of an investment for cash
  2. Dr: Prepaid Insurance, Dr: Cash – Paid in advance for a 1-year insurance policy
  3. Dr: Accounts Receivable, Cr: Merchandise Inventory – Returned defective merchandise for credit
  4. Dr: Machinery, Cr: Notes Payable – Gave a 1-year note to acquire machinery

3. Which of the following accounts would NOT appear on a corporation’s Balance Sheet?

Answers:

  1. Owner Investment
  2. Retained Earnings
  3. Investment in ABC Stock
  4. Premium on Common Stock

4. Which of the following transactions would NOT result in revenue being reported?

Answers:

  1. Sale of merchandise for cash
  2. Sale of merchandise on account
  3. Collection of an account receivable
  4. All of the above

5. ________________ is the financial obligation of a company in regards to a loan that accrues with the passage of time.

Answers:

  1. Interest Payable
  2. Income Tax Payable
  3. Income Tax Expense
  4. Accounts Payable

6. XYZ Company failed to record the purchase of inventory on account at the end of 2008. In which of the following ways is the Balance Sheet misstated?

Answers:

  1. Assets and liabilities are both understated.
  2. Assets are understated and liabilities are overstated.
  3. Assets and shareholders’ equity are both understated.
  4. Assets, liabilities, and shareholders’ equity are all correctly stated.

7. Which of the following is recorded only when another business enterprise is acquired?

Answers:

  1. Cash
  2. Equity
  3. Accounts Payable
  4. Goodwill

8. ______________ refers to shares originally issued and outstanding that have been reacquired from the owners.

Answers:

  1. Treasury Stock
  2. Common Stock
  3. Preferred Stock
  4. Retained Earnings

9. Amounts paid for various fees incurred in organizing a corporation are called ____________.

Answers:

  1. Organization Costs
  2. Current Assets
  3. Deferred Taxes
  4. Current Liabilities

10. A manufacturing firm’s cost of producing its product is called ______________.

Answers:

  1. direct labor
  2. product costs
  3. indirect labor
  4. overhead

11. XYZ Company publishes a monthly sports magazine. The company has fiscal year of Jan-Dec. On July 1 of Year 1, the company sold 1000 two-year subscriptions for $200 each. On December 31 of Year 1, the amount reported as a liability on the Balance Sheet and the amount reported as revenue on the Income Statement are, respectively:

Answers:

  1. $0 and $200,000
  2. $50,000 and $150,000
  3. $100,000 and $100,000
  4. $150,000 and $50,000<>

12. Which of the following accounts accumulate amounts for only a single accounting period?

Answers:

  1. Permanent Accounts
  2. Temporary Accounts
  3. Assets
  4. Liabilities

13. Which of the following would cause the accounting equation to be out of balance?

Answers:

  1. Recording a purchase on account at the wrong amount
  2. Recording a 2007 purchase in 2008
  3. Posting the credit for a cash purchase at the wrong amount
  4. All of the above

14. From the following list of accounts and account balances, determine the amount that would be properly classified as Property, Plant, & Equipment.

$100,000 – Land Used in Business
$60,000 – Machinery Leased from Others
($80,000) – Accumulated Depreciation
$140,000 – Inventories
$40,000 – Land Held for Future Plant Site
$200,000 – Building
$50,000 – Investment in Stock of Construction Company

Answers:

  1. $220,000
  2. $360,000
  3. $260,000
  4. $280,000

15. At the beginning of the year, XYZ Company reported Accounts Receivable of $39,000. During the year, the company had credit sales totaling $288,000. At year end, the Accounts Receivable balance was $8,000 higher than the beginning balance. How much cash was collected on the accounts during the year?

Answers:

  1. $296,000
  2. $288,000
  3. $280,000
  4. $272,000

16. XYZ Company has just completed its first year of operations in Year 1. The company distributed dividends of $50,000. If the ending balance of Retained Earnings on December 31 of Year 1 is $70,000, and the company had revenues of $400,000 from Year 1 sales, then what is the total of the company’s Year 1 expenses?

Answers:

  1. $350,000
  2. $330,000
  3. $280,000
  4. None of the above

17. A ____________ is the right to use property owned by someone else.

Answers:

  1. purchase
  2. lease
  3. prepaid asset
  4. deferred revenue

18. A trial balance prepared at the end of the accounting period after adjusting entries are made is called a/an _________________.

Answers:

  1. Pre-Adjustment Trial Balance
  2. Prior Year Trial Balance
  3. Adjusted Trial Balance
  4. Balance Sheet

19. XYZ Company has assets and liabilities of $15,000 and $12,000, respectively. If the company issues an additional $1,500 of stock for cash, what will be the balance in shareholders’ equity following the transaction?

Answers:

  1. $15,000
  2. $25,500
  3. $4,500
  4. $16,500

20. XYZ Company purchased a 1-year insurance policy for $3,000 on April 1 of Year 1. The amount of prepaid insurance reported on the Balance Sheet and the amount of insurance expense reported on the Income Statement on December 31 of Year 1 are, respectively:

Answers:

  1. $750 and $2,250
  2. $2,250 and $750
  3. $1,000 and $2,000
  4. $2,000 and $1,000

21. Unused materials for manufacturing products are called ______________.

Answers:

  1. COGS
  2. Accounts Receivable
  3. depreciation
  4. inventory

22. XYZ Company is interested in disposing of one of its subsidiaries and is trying to decide on the maximum price it might be able to charge. Which valuation method below would the company be most likely to use?

Answers:

  1. Acquisition Cost
  2. Net Realizable Value
  3. Present Value
  4. Replacement Cost

23. Which of the following assets is a monetary asset?

Answers:

  1. Patent
  2. Land
  3. Inventory
  4. Accounts Receivable

24. A debit balance is normal for all of the following accounts except _______________.

Answers:

  1. Preferred Stock
  2. Treasury Shares
  3. Investment in Stock
  4. All of the above

25. At the beginning of the year, XYZ Company owed $14,500 to its creditors for inventory purchases. At year end, the company owed $9,150. During the year, the company made payments totaling $48,500 to its creditors for inventory purchases. What was the cost of the additional inventory that was purchased during the year?

Answers:

  1. $7,650
  2. $43,150
  3. $53,650
  4. $39,350

26. Payments made in advance for goods or services a firm will receive at a later date are called ______________.

Answers:

  1. Deferred Income
  2. Deferred Tax liability
  3. Advances to Suppliers
  4. Unearned Revenue

27. Amounts due from customers, for which the claim is in the form of a written promise to pay, are called ________________.

Answers:

  1. Trade Payables
  2. Accounts Receivable
  3. Equity
  4. Notes Receivable

28. A residual claim of owners having certain preferences relative to other owners’ claims is called __________________.

Answers:

  1. Treasury Stock
  2. Retained Earnings
  3. Preferred Stock
  4. Common Stock

29. Which of the following operations is NOT considered part of the accounting process leading to financial statement preparation?

Answers:

  1. Journalizing transactions
  2. Posting to the general ledger
  3. Adjusting accounts
  4. Auditing statements

30. Amounts borrowed by a business for a relatively long period of time under a formal written contract or indenture are called _________________.

Answers:

  1. Unsecured Loans
  2. Current Liabilities
  3. Bonds Payable
  4. Cash

31. Amounts owed for goods or services acquired under an informal credit agreement are called ___________________.

Answers:

  1. Accounts Payable
  2. Notes Payable
  3. Money Market Funds
  4. Common Stock

32. The process of transferring entries in the general journal to the accounts in the general ledger is called ________________.

Answers:

  1. posting
  2. journalizing
  3. financial reporting
  4. taxation

33. The balance in all asset accounts combined is $100,000 on December 1. During December, the following transactions took place:

– Purchase of $10,000 of inventory for cash
– Purchase of $15,000 of machinery on account
– Retirement of $20,000 in bonds with cash

Given this information, what is the combined balance in the asset accounts on December 31?

Answers:

  1. $80,000
  2. $115,000
  3. $105,000
  4. $95,000

34. XYZ Company completed its second year of operations in Year 2. On January 1 of Year 2, the balance in Retained Earnings was $84,000. During the year, the company declared and paid a dividend of $65,000 to shareholders. The company reported net earnings of $105,000 in its Year 2 Income Statement. What was the balance in Retained Earnings on December 31 of Year 2?

Answers:

  1. $189,000
  2. $170,000
  3. $149,000
  4. $124,000

35. Temporary revenue and expense accounts may be closed _________________.

Answers:

  1. individually by separate entries to Retained Earnings
  2. in a single entry to Retained Earnings
  3. to a temporary “Income Summary” account
  4. Any of the above methods is acceptable.

36. Amounts received for the par value of a firm’s voting stock are called ___________.

Answers:

  1. Common Stock
  2. Accounts Receivable
  3. Preferred Stock
  4. Retained Earnings

37. ________________ is/are a measure of the inflow of net assets from selling goods and providing services.

Answers:

  1. Revenues
  2. Liabilities
  3. Assets
  4. Equity

38. The Accumulated Depreciation account reflects _____________________.

Answers:

  1. depreciation for the current accounting period only
  2. cumulative depreciation on the asset since acquisition
  3. the amount of depreciation that can be taken in future periods
  4. None of the above

39. Which of the following accounts represents distributions of earnings to shareholders of the firm?

Answers:

  1. Dividends
  2. Retained Earnings
  3. Rent Expense
  4. Payroll Expense

40. XYZ Company reported a balance in Accounts Receivable of $40,500 on January 1 of year 2. During Year 2, the company collected $127,500 from its customers who had purchased on account. On December 31 of Year 2, the company reported a balance in Accounts Receivable of $21,250. How much were XYZ Company’s credit sales for Year 2?

Answers:

  1. $108,250
  2. $129,500
  3. $146,750
  4. $148,750

41. Which of the following accounts is NOT an expense?

Answers:

  1. Depreciation
  2. Sales Salaries
  3. Dividends Declared
  4. Delivery Expense

42. At the beginning of the year, XYZ Company reported a $7,200 balance in its Prepaid Insurance account. At year end, the company reported Insurance Expense of $9,000 in its Income Statement and a balance of $3,800 in the Prepaid Insurance account. What was the cost of the additional insurance that was purchased during the year?

Answers:

  1. $9,000
  2. $12,400
  3. $5,600
  4. $12,800

43. During the year, XYZ Company’s inventory account balance increased from $26,000 to $31,500. During the year, the company made payments totaling $152,500 to creditors for inventory purchases and reported Cost of Goods Sold of $159,500 on its Income Statement. How much inventory was purchased during the year?

Answers:

  1. $165,000
  2. $158,000
  3. $152,500
  4. $159,500

44. Which of the following accounts is not closed during the closing process?

Answers:

  1. Wage Expense
  2. Interest Expense
  3. Utility Expense
  4. Accumulated Depreciation

45. XYZ Company purchased some equipment for $120,000 on July 1 of Year 1. The equipment has an estimated useful life of 10 years and an estimated salvage value of $7,500. XYZ Company computes depreciation on a straight-line basis. How much depreciation should be recorded for Year 1?

Answers:

  1. $12,000
  2. $11,250
  3. $6,000
  4. $5,625

46. A right granted to an individual or company that excludes others from manufacturing, using, or selling a certain process or device is called a _____________.

Answers:

  1. liability
  2. trademark
  3. tax liability
  4. patent

47. Which of the following accounts is NOT a temporary account that should be closed during the closing process?

Answers:

  1. Prepaid Insurance
  2. Cost of Goods Sold
  3. Sales Revenue
  4. Depreciation

48. A trial balance that shows revenue and expense accounts with zero balances and balance sheet accounts at the end of the period is called a __________________.

Answers:

  1. Balance Sheet
  2. Pre-Closing Trial Balance
  3. Post-Closing Trial Balance
  4. Income Statement

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Upwork Finance and Accounting

Financial Reporting Test 2016

Published by:

1. Which of the following is not a fundamental of accounting?

Answers:

  1. Materiality
  2. Timeliness
  3. Matching
  4. Magnitude

2. What does the indirect method of preparing the cash flow statement effectively accomplish?

Answers:

  1. It keeps the use of cash vague so the reader cannot tell the exact use
  2. It is a less detailed summary version of use of cash
  3. It takes the accrual basis of accounting and converts it to cash basis
  4. It shows the reader how well the management is performing

3. Which cash collection technique is the most cost-effective for companies with many locations?

Answers:

  1. Self-addressed stamped envelopes
  2. Centralized collection system
  3. Lockbox system
  4. Using a post office box
  5. Regional collection offices

4. How does Treasury Stock differ from Trading Stock?

Answers:

  1. Treasury stock is an indication that a company is failing
  2. Treasury stock has no voting or dividend rights
  3. Treasury stock is looked negatively upon by the investment community
  4. Treasury stock can be resold to employees at a discount

5. How often do companies typically generate standard financial reports?

Answers:

  1. Yearly
  2. Quarterly
  3. Monthly
  4. Daily

6. What is one procedure a Company Manager would take to make the information on financial reports more useful for examination?

Answers:

  1. Hire an auditor to validate the company reports
  2. Use the information on the financial reports to do a financial analysis, creating comparable ratios
  3. Compare it to other companies
  4. Change the statement of cash flows to be the direct method

7. How does the income statement of a charity differ from that of a public company?

Answers:

  1. Charities typically have higher overhead expenses such as management wages
  2. Charities produce a similar report which shows funding sources, and program expenses and other commitments
  3. Charities do not generate cash via a revenue model, and do not produce any statements
  4. Charities report each donation as taxable income

8. In what general way do investors use the information in the financial statements?

Answers:

  1. To determine if a company is worth investing in
  2. To determine if a company is too top heavy with management
  3. To look for irregularities and report them to the authorities
  4. To look for insider trading

9. Which of the following is not a part of cost of goods sold?

Answers:

  1. Raw material
  2. Labor
  3. Capital
  4. All of the above are part of cost of goods sold

10. Which of the following does Financing Activities not include?

Answers:

  1. Payments to vendors
  2. Payments of dividends to company shareholders
  3. Payments to repurchase company shares
  4. Repayment of debt

11. A company declares a dividend. What is its effect on the cash?

Answers:

  1. It increases Cash
  2. It decreases Cash
  3. There is no change
  4. It depends on the dividend date

12. How are the Cash Flow Statement and Balance Sheet related?

Answers:

  1. Changes in Accounts Receivable and Accounts Payable are reflected on the Cash Flow Statement
  2. Accounts Receivable is determined by analyzing the Cash Flow statement
  3. Ending Inventory is calculated using the Cash Flow statement
  4. They are not linked directly

13. Which is/are the primary financial statements used to measure liquidity?

Answers:

  1. Balance Sheet
  2. Income Statement
  3. Balance Sheet and Income Statement
  4. Cash Flow Statement and Balance Sheet

14. What is the primary reason a government entity would want to look at a company’s financial statements?

Answers:

  1. To look whether ethical standards meeting expectations
  2. To determine if the company is committing tax fraud or evasion
  3. To determine if a company has an offshore bank account
  4. To determine tax liability

15. A company pays out a previous declared common stock dividend. What is its effect on the cash?

Answers:

  1. It will decrease
  2. It will increase
  3. There would be no change
  4. It depends on the dividend date

16. What is the purpose of a trial balance?

Answers:

  1. To act as a worksheet, making sure all debits equal all credits, as well as aid in the discovery of issues
  2. To be shown to the public along with all other financial statements
  3. To determine if cash reserves are adequate
  4. To demonstrate to management the profitability of the company

17. The best financial report to see a company’s cash balance is ______.

Answers:

  1. Balance Sheet
  2. Income Statement
  3. Margin Analysis

18. Which of the following errors/s can a trial balance be used to detect?

Answers:

  1. An incorrect reversing entry
  2. The omission of payroll raises
  3. An entry where both sides of the transaction are entered as a debit
  4. The lack of a prepaid expense entry

19. What purpose would a company’s financial statements have for the lending institutions?

Answers:

  1. To determine if management is too top heavy
  2. To change a company’s agreed upon interest rate without telling them
  3. To look for a reason to break a loan agreement
  4. To determine if the company is meeting current covenants in their existing debt agreement

20. Financial managers use the _____________ to plan for monthly financing needs.

Answers:

  1. capital budget
  2. cash budget
  3. pro forma
  4. income statement

21. What is another name for the Balance Sheet?

Answers:

  1. Income Statement
  2. Statement of Income
  3. Cash Inflows & Outflows
  4. Statement of Financial Position

22. How are the Cash Flow Statement and Balance Sheet related?

Answers:

    1. The ending cash balance on the Balance Sheet is transferred to the current period Cash Flow Statement
    2. There is no relation
    3. If the cash flow statement is prepared, the balance sheet does not have to show cash

<li>Ending cash balance from the Cash Flow Statement is transferred to the Balance Sheet

23. What are the four traits of a useful financial statement?

Answers:

  1. Material, Timely, Accurate, Cash Basis
  2. Bi Weekly, Audited, Outsourced, Comparable
  3. Relevant, Accurate, Cash Basis, Bi Weekly
  4. Understandable, Relevant, Reliable, Comparable

24. Which of the following errors/s can a trial balance be used to detect?

Answers:

  1. A calculation error resulting in sales tax being entered twice
  2. The omission of depreciation on a new asset purchase
  3. A transposition error when entering the credit side of an entry
  4. A missing payroll entry

25. What is the purpose of an income statement?

Answers:

  1. To show the reader how the company made and spent money in the period presented
  2. To examine income tax liability
  3. To show how much cash was generated in the period presented
  4. To determine management bonuses at year end

26. What is Treasury Stock?

Answers:

  1. Stock purchased by the U.S. Treasury Department
  2. Stock repurchased by the issuing company, reducing the amount of stock outstanding in the open market
  3. Stock purchased by the treasurer of the company for their personal portfolio
  4. Stock not allowed to be purchased in the first 30 days after IPO

27. How do investors turn the information on the financial statements into more useful data which is comparable to other companies?

Answers:

  1. Read all of the notes
  2. Skip to the net income number, the only important number
  3. Track cash balance
  4. Perform financial analysis

28. What is another name for the Income Statement?

Answers:

  1. Income Statement
  2. Profit & Loss Statement
  3. Statement of Cash Flows
  4. Statement of Financial Position

29. Which is/are the primary financial statements used to measure solvency?

Answers:

  1. Balance Sheet
  2. Income Statement
  3. Balance Sheet and Income Statement
  4. Cash Flow Statement and Income Statement

30. The formula to calculate Ending Retained Earnings is ______.

Answers:

  1. Ending Retained Earnings = Cash + Current Assets – Fixed Assets
  2. Ending Retained Earnings = Beginning RE – Investments – Dividends Paid + Net Income
  3. Ending Retained Earnings = Investments + Dividends – Net Income
  4. Ending Retained Earnings = Change in Accounts Receivable – Change in Accounts Payable

31. The three sections of a Statement of Cash Flows are _____.

Answers:

  1. Leverage, liquidity, financing
  2. Operating, investing, profit
  3. Operating, investing, financing
  4. Sales, investing, financing
  5. Operating, investing, borrowing

32. What does GAAP stand for?

Answers:

  1. General Accounting Accrual Procedures
  2. Generally Accepted Accounting Principles
  3. Gap Accounts receivable Accounting Practices
  4. General Accounting Accounts Payable

33. Which financial statement best allows a firm to assess its ability to pay dividends?

Answers:

  1. Statement of Cash Flows
  2. Income Statement
  3. Balance Sheet
  4. Statement of Operations

34. What is one possible use employees would have of the company financial statements?

Answers:

  1. It helps the unionized workers to determine their collective bargaining agreements
  2. It helps the employees to buy shares of the company before a big news release hits
  3. It helps the employees to demonstrate their own personal contribution to the company
  4. It helps in creating human resource policies

35. Which of the following are the 3 main sections of Statement of Cash Flows?

Answers:

  1. Current, Long term, Near Term
  2. Net Income, Gross Margin, Revenues
  3. Assets, Liabilities, Equity
  4. Operating, Investing, Financing

36. Which of the following does the cash flow cycle measure?

Answers:

  1. The time between purchase of raw materials and collection of cash
  2. The time it takes to invest liquid funds
  3. The time it takes for a check to get cleared in the bank
  4. The maturity date of corporate bonds
  5. The time between offering a marketable security and receiving funds from sale of one

37. Which of the following transactions would have no impact on the stockholder’s equity?

Answers:

  1. Purchase of land from the proceeds of a bank loan
  2. Dividends to stockholders
  3. Net loss
  4. Investments in cash by stockholders

38. Which of the following transactions is a non cash event but would be disclosed in the notes of the Statement of Cash Flows?

Answers:

  1. Exchange of shares for cash
  2. Investment of cash in exchange for a note receivable
  3. Exchange of shares for an asset
  4. Payment of accounts payable

39. What does the Balance Sheet reflect?

Answers:

  1. Net changes over a period of time
  2. Only annual balances
  3. Net Income over a period of 1 month
  4. A specific point in time

40. How does Gross Income differ from Net Income?

Answers:

  1. Gross Income determines the company’s cash flow, Net Income does not
  2. Gross Income includes several fixed costs, Net Income does not
  3. Gross Income includes all fixed costs, Net Income does not include any
  4. Gross Income measures profitability before operating expenses, whereas Net Income is calculated after all operating expenses

41. What is historical value?

Answers:

  1. Prices adjusted for inflation
  2. The current sale value of an asset
  3. The original cost or price paid for an asset
  4. The average value of an asset

42. When a company files a statement of their financial plans for the next two years with the SEC, it is called a ______.

Answers:

  1. Market plan
  2. Shelf registration
  3. Stock plan
  4. Statement of intent
  5. Prospectus

43. What does Treasury Stock appear on the balance sheet as?

Answers:

  1. As a reduction of opening Retained Earnings/li>
  2. As a positive entry in the equity section
  3. As Dividends Paid
  4. As a negative entry in the equity section

44. What are the main categories of a balance sheet?

Answers:

  1. Sales, COGS, Operating Expenses, Net Income
  2. Assets, Liabilities, Equity
  3. Retained Earnings, Current Assets, Current Liabilities
  4. Cash, Accounts Receivable, Fixed Assets, Long Term Assets

45. What way is government accounting different from public company accounting?

Answers:

  1. Government accounting has far more rules than public company accounting
  2. Government accounting occurs only once per decade
  3. The chart of accounts and financial statements are classified and organized differently
  4. Governments trade their shares in a different market than Public companies and thus report differently

46. What is the one problem while comparing financial statements with companies based in different countries?

Answers:

  1. Countries use different accounting standards, comparisons can only be made directly with countries using GAAP
  2. The exchange rate needs to be applied
  3. Other countries do not audit their financial statements as thoroughly
  4. Product lines are completely different making a comparison unusable

47. Which is the primary financial statement used to measure profitability?

Answers:

  1. Balance Sheet
  2. Income Statement
  3. Cash Flow Statement
  4. None of the above

48. How are the income statement and balance sheet linked?

Answers:

  1. Cash from the balance sheet transfers to the income statement
  2. They are not linked directly
  3. All debt payments show on both the income statement and balance sheet
  4. Net income from the income statement transfers to the balance sheet equity section

49. Which method of preparing the statement of cash flows begins with Net Income?

Answers:

  1. Direct
  2. Indirect
  3. Current Period
  4. Accrual

50. By doing/issuing which of the following could a company raise short-term funds by selling receivables and inventory?

Answers:

  1. By factoring
  2. By pledging inventory
  3. By line of credit
  4. By Notes
  5. By term loan

51. How would the financial statements be useful for a Company Manager?

Answers:

  1. To decide whether to buy more stock or sell off the stock they own before financial reports become public
  2. To compete against other departments for best sales
  3. To make operational decisions based on comparing past and current results
  4. To decide whether to double fixed assets in the next period

52. What is one possible use employees would have for the company financial statements?

Answers:

  1. Employees can justify larger personal expense reports if the company is doing well
  2. The better the company is performing, the more leeway the employees have for making small mistakes
  3. Employees have a vested interest in the company for job security and any equity incentive they have
  4. The employees can proof read the reports once they are public, looking for possible errors to report to the SEC

53. What is the purpose of the statement of cash flows?

Answers:

  1. To demonstrate how the company used their cash in the period reported
  2. To show net income
  3. To show how much cash the company collected in the period reported
  4. To show outstanding loans and loan payments made

54. Pro forma statements are _______ statements.

Answers:

  1. actual
  2. projected
  3. previous years’
  4. next years’

55. Retained earnings will change over time because of several factors. Which of the following factors would lead to an increase in the Retained Earnings?

Answers:

  1. Net loss
  2. Net income
  3. Dividends
  4. Investments by stockholders

56. Which is/are the primary financial statements used to measure stability?

Answers:

  1. Balance Sheet
  2. Income Statement
  3. Balance Sheet and Income Statement
  4. Statement of Cash Flows and Income Statement

57. Which of the following is a difference between a public company and a private one?

Answers:

  1. Public companies use different accounting software than private ones
  2. Public companies will always have more employees than a private one
  3. Only public companies can form corporations
  4. Public companies must have audited financial statements and prepared SEC reports

58. What is the purpose of an audit?

Answers:

  1. To look for fraud
  2. To make-work project for CPA’s
  3. To verify that statements made by the company are true based on an independent party’s evaluation
  4. To look for additional tax liability

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Upwork Finance and Accounting

Financial Forecasting Test 2016

Published by:

1. A company has a post-money valuation of $500,000. The last investor put in $100,000. The pre-money valuation before the investor came in was _________________.

Answers:

  1. $400,000
  2. $600,000
  3. $1,000,000
  4. $100,00

2. Why does a Balance Sheet balance (assets = liabilities + equity)?

Answers:

  1. It is required by law.
  2. Companies force it to balance.
  3. Accounting is a double-entry system of equal debits and credits.
  4. Auditors make adjustments to make it balance.

3. The primary financial statements that are forecast are _________________.

Answers:

  1. income statement only
  2. retained earnings and cash flow
  3. balance sheet and trial balance
  4. income statement, balance sheet, and cash flow

4. Which of the following is NOT an operating expense?

Answers:

  1. Rent
  2. Accounts Payable
  3. Insurance
  4. Bank fees

5. An operating budget in a corporate setting is usually prepared ________________.

Answers:

  1. for the following fiscal year
  2. for the next 5 years
  3. one month at a time
  4. None of the above; an operating budget is not typically created in a corporate setting.

6. Why would a company perform a variance/sensitivity analysis?

Answers:

  1. It is a required financial statement.
  2. Auditors will ask for it.
  3. Shareholders require the document.
  4. To see how the forecast model changes based on changing dynamic inputs

7. Depreciation on the Balance Sheet reflects ___________________.

Answers:

  1. the current period depreciation
  2. Tax Liability
  3. Total Assets
  4. cumulative depreciation on fixed assets

8. For which of the following company structures is it easiest to issue shares?

Answers:

  1. LLC
  2. C Corporation
  3. Sole Proprietorship
  4. LLP

9. Why might someone forecast future years as one annual number?

Answers:

  1. The forecaster is lazy.
  2. It is the best method for forecasting future years.
  3. It saves management time and energy.
  4. Because it is difficult to predict what will happen, applying a growth percentage to the year is the most reasonable assumption.

10. Why is it reasonable for a startup company to forecast a Net Loss for several years?

Answers:

  1. A company can never make money in its first years.
  2. It reduces tax liability in future years.
  3. As the company launches and grows, expenses will often exceed any revenue-generating abilities; hence, the expected payoff will not come until future years.
  4. It’s not reasonable and should not be done.

11. Which of the following represents three possible revenue streams for an online venture?

Answers:

  1. Product Sales, In-Store Sales, Bulk Purchases
  2. Ad Revenue, Affiliate Revenue, Product Sales
  3. In-Store Sales, Ad Revenue, Product Sales
  4. In-Store Sales, Affiliate Revenue, Product Sales

12. For a startup company looking to gain investor interest, which of the following seems like a reasonable amount of time to forecast ahead?

Answers:

  1. 6 months
  2. 1 year
  3. 5 years
  4. 20 years

13. Revenues on the Profit & Loss should be changed ___________________.

Answers:

  1. by inputting them directly into the cells
  2. through the accounting system
  3. by showing change in cash flow
  4. by changing assumptions on the assumptions page

14. Is income tax forecasted?

Answers:

  1. Yes, usually
  2. Never
  3. Not unless required by the country law
  4. Yes, but only if the company is forecasted to earn over $1 million

15. Which of the following would NOT be included on a summary page?

Answers:

  1. Cash Balance
  2. Net Income
  3. Payroll Expense
  4. Total Equity

16. Which of the following parties should be kept in mind when creating a financial forecast?

Answers:

  1. The government
  2. The end user
  3. The financial model builder
  4. The Board of Directors

17. What does an increasing trend in Accounts Payable indicate for a company?

Answers:

  1. It indicates nothing in particular.
  2. The company is making better use of its cash and is not paying bills as quickly.
  3. Cash is being mismanaged.
  4. Net Income is increasing.

18. The Net Income on the Cash Flow Forecast comes from the __________________.

Answers:

  1. Balance Sheet
  2. Statement of Retained Earnings
  3. Forecasted Profit & Loss Statement
  4. Variance Analysis

19. Why is Change in Accounts Payable added back to Net Income?

Answers:

  1. There is no reason to do so.
  2. An increase in AP reflects the fact that the company did not spend cash on paying its bills.
  3. It is required by the SEC.
  4. It is required by IRS tax law.

20. To calculate a worst case scenario, a company would ____________ and ____________.

Answers:

  1. increase revenue streams, decrease operating expenses
  2. increase operating expenses, increase revenues
  3. decrease revenues, increase operating expenses
  4. show no change to revenue, show change only to operating expenses

21. A capitalization summary would show ______________________.

Answers:

  1. Net Income, Cash, and Retained Earnings
  2. Operating Expenses and Tax Liability
  3. Change in Accounts Receivable
  4. Valuation, Investment, and Ownership %

22. In what way are the Income Statement and the Cash Flow Statement linked in a dynamic forecast?

Answers:

  1. Change in Accounts Receivable is carried forward to the Cash Flow Statement.
  2. Depreciation Expense is carried forward to the Cash Flow Statement.
  3. Net Income is carried over to the first line of the Cash Flow Statement.
  4. Rent expense is used on the Cash Flow Statement.

23. Net Income on the Balance Sheet reflects _______________.

Answers:

  1. Net Income for the current month
  2. year-to-date Net Income
  3. Change in Assets from inception
  4. Tax liability

24. What is meant by the term “post-money valuation”?

Answers:

  1. The valuation of a company before collecting accounts receivable
  2. The valuation of a company after collecting all accounts receivable
  3. The valuation of a company after an investment round
  4. The valuation of a company before an investment round

25. One method of calculating the valuation of a company is ________________.

Answers:

  1. Accounts Payable change
  2. Discounted Cash Flows
  3. Retained Earnings Growth
  4. Tax Liability discounted

26. The purpose of a worst case analysis is to _____________________.

Answers:

  1. show the best possible result
  2. advise the reader not to invest
  3. show that management is competent
  4. show what the results would be if things do not work out as forecasted

27. Should a summary include metrics such as Gross Margin %?

Answers:

  1. Yes, they are good high-level indicators.
  2. Yes, it is required by law.
  3. No, they are excessive information.
  4. No, they are too complex for a summary.

28. Which of the following would most likely be included on a summary page for Balance Sheet data?

Answers:

  1. Total Assets, Total Liabilities, Total Equity
  2. Net Income, Total Sales, Total Operating Expense
  3. Cash Balance, Cash Inflows, Cash Outflows
  4. Retained Earnings and Cash

29. Operating expenses should ____________________.

Answers:

  1. be summarized, showing one lump sum per period
  2. be organized by department
  3. be detailed, showing each line item that the actual P&L will have
  4. not be included

30. In what way are the Cash Flow Statement and the Balance Sheet linked in a dynamic forecast?

Answers:

  1. They are not interrelated.
  2. Cash from the Cash Flow Statement is carried over to the Balance Sheet cash line.
  3. Equity from the Balance Sheet is transferred to the Cash Flow Statement.
  4. Accounts Receivable is transferred from the Cash Flow Statement to the Balance Sheet.

31. How is income tax forecasted?

Answers:

  1. By applying the prevailing corporate tax rate to any income for the period
  2. By showing it escalating over time
  3. By assuming zero unless profits exceed $1 million
  4. By tax professionals who handle forecasting separately

32. In which of the following ways would typical Rent Expense be modeled?

Answers:

  1. Consistent over the next five years
  2. Based on average rent in major metropolitan areas
  3. Always assuming a 10% growth per year
  4. Related to both the number of employees and natural increases in rent

33. The term “burn rate” refers to ______________.

Answers:

  1. the total operating expenses
  2. the amount of cash a company spends on average in a given period
  3. the total fixed asset expenditures
  4. revenue growth

34. Capitalization is defined as ______________________.

Answers:

  1. the debt structure of a company
  2. the capital structure of a company
  3. current assets
  4. the annual net income

35. In what way are the Income Statement and the Balance Sheet linked in a dynamic forecast?

Answers:

  1. Change in Accounts Receivable is determined on the Income Statement.
  2. Ending cash balance is brought from the Income Statement to the Balance Sheet.
  3. There is no relationship between the two.
  4. Net income is carried over to the Equity section.

36. Another way to express the Balance Sheet formula is ________________.

Answers:

  1. Cash = Liabilities
  2. Equity = Assets – Liabilities
  3. Net Income = Assets – Liabilities
  4. Retained Earnings = Assets + Liabilities

37. Which of the following would one expect to be the highest expense?

Answers:

  1. Liability insurance
  2. Salaries
  3. Benefits
  4. Office supplies

38. In which of the following sections would Change in Accounts Receivable be recorded?

Answers:

  1. Cash from Investing
  2. Net Income
  3. Cash from Operations
  4. Cash from Financing

39. Which of the following decisions could be made by looking at the Balance Sheet?

Answers:

  1. To move offices
  2. To invest excess cash into higher-yield investments
  3. To reduce employee benefits
  4. To outsource payroll functions

40. Which of the following is the accepted format for a forecasted Balance Sheet?

Answers:

  1. Expenses first, then Revenue
  2. Revenue, COGS, Operating Expenses
  3. Taxes, COGS, Revenue, Operating Expenses
  4. Assets, Liabilities, Equity

41. What is meant by the term “pre-money valuation”?

Answers:

  1. The valuation of a company before collecting accounts receivable
  2. The valuation of a company after collecting all accounts receivable
  3. The valuation of a company after an investment round
  4. The valuation of a company before an investment round

42. Which of the following would be the most useful forecasting interval?

Answers:

  1. Monthly
  2. Quarterly
  3. Yearly
  4. Weekly

43. Why is it important to create assumptions for all possible changing variables?

Answers:

  1. It’s not important; there is no real value in doing so.
  2. It makes the model overly complex and difficult to use.
  3. It allows the user to avoid paying taxes.
  4. It makes future updates to the model easier because the user does not need to search for numbers embedded in formulas in the financial statements.

44. The most logical formatting convention for assumptions would be ___________________.

Answers:

  1. to use a 10-color coding scheme
  2. to spread assumptions throughout the entire model
  3. to outline and use red text in all input cells, and to add a note at the top of the assumptions stating that only red-text cells are to be changed, with uniform formatting and assumptions placement
  4. to use no particular formatting, but to make the assumptions simple with black text and no highlighting

45. Which of the following decisions would best be made by looking at cash flow?

Answers:

  1. Decisions about inventory management
  2. Decisions about tax planning
  3. The decision to spend less on capital assets and pay down payables in the next period
  4. The decision to increase production

46. To be as specific as possible, a revenue forecast should ______________.

Answers:

  1. be summarized by year
  2. be summarized by quarter
  3. be detailed month by month
  4. show a total for five years

47. Ad Revenue, which is revenue generated by placing advertisements of other companies on your site, can be modeled by _________________.

Answers:

  1. assuming a fixed amount each year and applying it to all years
  2. assuming that Google’s ad rates apply
  3. figuring the average revenue per ad multiplied by the expected number of advertisement spots in a given period
  4. figuring the average sales revenue on other products

48. The majority ownership of a private company is typically held by __________________.

Answers:

  1. private bankers
  2. venture capital firms
  3. employees
  4. company officers

49. In general, a financial plan can be defined as _____________________.

Answers:

  1. a plan for spending, saving, and generating revenue
  2. a 10-year strategy plan
  3. the prior year’s financial reports
  4. a plan to be used only by the Board of Directors

50. Why would an investor be interested in a company’s pre-money valuation?

Answers:

  1. The investor is required by law to ask for the pre-money valuation.
  2. Knowing the valuation allows the investor to secretly calculate how much he can expect in return.
  3. Knowing the valuation helps the investor put his investment in perspective and understand how it is relative to the capital already in the company.
  4. Knowing the valuation gives the investor the ability to calculate net income.

51. In which of the following sections would a startup company record an investment by a venture capital firm?

Answers:

  1. Cash from Investing
  2. Net Income
  3. Cash from Operations
  4. Cash from Financing

52. In what way are the Balance Sheet and the Cash Flow Statement linked in a dynamic forecast?

Answers:

  1. There is no relationship between the two.
  2. Changes in Accounts Receivable are carried over to the Cash Flow Operating Activities section.
  3. Net Income is determined on the Balance Sheet and carried over to the Cash Flow Statement.
  4. Tax liability is calculated using both statements.

53. The term “revenue driver” refers to ____________________.

Answers:

  1. the per-unit sales price
  2. any factor that drives revenue, such as site impressions
  3. the total revenue by product
  4. the total revenue

54. A simple method of calculating variance is to _________________.

Answers:

  1. apply a percentage increase/decrease to each line item on the P&L
  2. build an entirely new model for each
  3. use current interest rates
  4. look at the company’s FICA score

55. Which of the following is the accepted format for a forecasted P&L?

Answers:

  1. Expenses first, then Revenue
  2. Revenue, COGS, Operating Expenses
  3. Taxes, COGS, Revenue, Operating Expenses
  4. Assets, Liabilities, Equity

56. What is the purpose of a summary page?

Answers:

  1. It is required by the IRS.
  2. It saves the financial model creator from having to delve into details.
  3. It makes the financial model creator look smart.
  4. It gives a quick overview of the forecasted outcomes for various financials.

57. Would it be better to create detailed input that individually forecasts expenses or to create a simple, one-line input for Operating Expenses?

Answers:

  1. Simple input: it will save the end user a lot of time.
  2. Simple input: it’s not worth figuring out the specifics of Operating Expenses.
  3. Detailed input: each expense grows based on different variables.
  4. Detailed input: the model looks more impressive if there are more line items.

58. A normal revenue model will _______________.

Answers:

  1. decline in revenue due to restructuring
  2. decline in revenue as the initial buzz wears off
  3. have straight line revenues
  4. increase revenues over time

59. For most new ventures in the process of creating a forecast, the expense that warrants the most detailed analysis and input is _____________.

Answers:

  1. wages
  2. rent
  3. telephone and utilities
  4. benefits

60. Overall, what is the purpose of a Cash Flow Statement?

Answers:

  1. It shows how the company received and spent cash each period.
  2. It is used to determine whether a company should pay dividends.
  3. It shows Net Income.
  4. It determines tax liability.

61. To calculate a best case scenario, a company would ____________ and ____________.

Answers:

  1. increase revenue streams, decrease operating expenses
  2. increase operating expenses, increase revenues
  3. decrease revenues, increase operating expenses
  4. show no change to revenue, show change only to operating expenses

62. What purpose does a central assumptions input tab serve in an Excel-based forecast?

Answers:

  1. It adds a level of complexity.
  2. It helps create an easy-to-use spreadsheet in which all inputs are located in one place.
  3. There is no particular purpose for it; it is simply required by law.
  4. There is no particular purpose for it; it is simply required by the SEC.

63. Naming assumption cells is helpful because ____________________.

Answers:

  1. it allows for easier creation and tracking of formulas built into the model
  2. formulas will not work unless they are named
  3. it prevents subsequent users from editing the cells
  4. management cannot decipher any hidden references

64. Companies calculate their valuation for the purpose of _____________________.

Answers:

  1. determining their Net Income
  2. seeing if they can get credit from the bank
  3. determining their tax liability
  4. using the outcome as a basis for working with investors and deciding how much equity an investment is worth

65. The basic formula for a Balance Sheet is __________________.

Answers:

  1. Cash = Liabilities
  2. Assets = Liabilities + Equity
  3. Net Income = Assets – Liabilities
  4. Retained Earnings = Assets + Liabilities

66. Which of the following is the accepted format for a forecasted Cash Flow Statement?

Answers:

  1. Net Income, Operating Activities, Financing Activities, Investing Activities
  2. Revenue, COGS, Operating Expenses
  3. Taxes, COGS, Revenue, Operating Expenses
  4. Assets, Liabilities, Equity

67. Which of the following would most likely NOT be included on summary financials?

Answers:

  1. Net Income
  2. Total Assets
  3. Accounts Payable
  4. Sales

68. Retained Earnings reflect ____________________.

Answers:

  1. the cumulative Net Income for a company from inception until its last reporting year
  2. Net Income for the current year
  3. Change in Assets
  4. Change in Liabilities

69. Which of the following would be a logical arrangement for showing revenue?

Answers:

  1. Summary totals
  2. Detailed by revenue stream
  3. Detailed by sales person
  4. Summarized by sales person

70. In a variance/sensitivity analysis, a company will typically calculate _________________.

Answers:

  1. only a worst case scenario
  2. only a best case scenario
  3. both best case and worst case scenarios of altered revenues and expenses
  4. None of the above; most companies won’t do a variance/sensitivity analysis.

71. How is Cash at the beginning of the period determined?

Answers:

  1. It depends on the company’s AR level.
  2. It is determined by looking at revenues.
  3. It is determined through a complex calculation involving interest.
  4. It is taken from the prior period’s ending cash balance.

72. A company has a pre-money valuation of $1,000,000. An investor will invest $100,000. The post-money valuation is _________________.

Answers:

  1. $900,000
  2. $1,000,000
  3. $1,100,000
  4. $2,200,000

73. Valuation can be calculated by ____________________.

Answers:

  1. discounting net income for the next several years
  2. applying a fixed percentage to tax liability
  3. examining Rent Expense
  4. Total Retained Earnings

74. Valuation will typically trend _______________.

Answers:

  1. in a straight line; valuation does not change
  2. upwards over time as the company increases sales
  3. downwards over time as the company increases sales
  4. upwards over time as the company decreases sales

75. Why would a company be conservative when projecting revenues?

Answers:

  1. Being conservative is better than being overly optimistic.
  2. The company wants to show the highest possible revenue.
  3. Being conservative reduces the firm’s tax liability.
  4. Being conservative is required by law.

76. Valuation is a ______________________.

Answers:

  1. result of Net Income, Sales, and Cash Flow
  2. result of Accounts Receivable
  3. result of Accounts Payable
  4. result of Equity and Retained Earnings

77. Another name for the Balance Sheet is ____________________.

Answers:

  1. Statement of Financial Position
  2. Cash Flow Statement
  3. Statement of Retained Earnings
  4. Statement of Accounts

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Upwork Finance and Accounting

Financial Analysis Test 2016

Published by:

1. What is financial analysis?

Answers:

  1. Comparing ratios using numbers from the income statement and balance sheet
  2. Determining a company’s financing needs
  3. Determining the pricing model for the next year
  4. Determining the company’s stock price

2. Why would a company calculate their Risk Adjusted Return on Capital?

Answers:

  1. Is required by the SEC
  2. Auditors will overlook other abnormalities if a firm demonstrates a favorable RAROC
  3. Gives companies the ability to allocate capital in the optimal structure
  4. Keeps the financial analysis department busy

3. What is the purpose of measuring profitability?

Answers:

  1. To determine the amount of cash a company brings in on an average in a month
  2. To analyze specific expenses to look for cost cutting measures
  3. To measure a company’s ability to earn a profit and continue to grow in the short-term and long-term
  4. To measure a company’s ability to pay the highest dividend relative to its competitors

4. Operating Efficiency is defined as ______.

Answers:

  1. Net Income/Operating Expenses
  2. Gross Profit/Operating Expenses
  3. Gross Profit/Sales
  4. Net Income/Sales

5. To measure a firm’s solvency as completely as possible, we need to consider ______.

Answers:

  1. the firm’s relative proportion of debt and equity in its capital structure
  2. the firm’s capital structure and the liquidity of its current assets
  3. the firm’s ability to use Net Working Capital to pay off its current liabilities
  4. the firm’s leverage and its ability to make interest payments on its long-term debt
  5. the firm’s leverage and its ability to turn its assets into sales

6. How does Gross Income differ from Net Income?

Answers:

  1. Gross Income determines the company’s cash flow, Net Income does not
  2. Gross Income includes several fixed costs, Net Income does not
  3. Gross Income includes all fixed costs, Net Income does not include any
  4. Gross Income measures profitability before operating expenses, whereas Net Income is calculated after all operating expenses

7. Which of the following are traded in the capital markets?

Answers:

  1. Convertible securities
  2. Bonds
  3. Common stock
  4. Preferred stock
  5. All of the above

8. By doing/issuing which of the following could a company raise short-term funds by selling receivables?

Answers:

  1. By factoring receivable
  2. By pledging inventory
  3. By line of credit
  4. By Notes
  5. By term loan

9. Government mandated requirements, such as installing pollution control equipment ______.

Answers:

  1. increase a company’s profits in the long run
  2. drive many companies out of business
  3. have resulted in many instances of unethical behavior on the part of managers
  4. may reduce a company’s earnings but are considered a necessary social responsibility for the firm
  5. do not affect a firm’s profit potential

10. Why do you not subtract interest expense from operating profit when calculating Return on Investment Capital?

Answers:

  1. Denominator includes debt capital
  2. Numerator includes debt capital
  3. Interest is not material in the calculation
  4. It is important to include interest as it is part of expenses

11. Which of the following is a flaw with financial analysis?

Answers:

  1. Each company uses different formulas to calculate the ratios
  2. Ratios are too difficult to calculate and require a specialist
  3. Auditors do not look at financial ratios
  4. One ratio alone does not tell much about the entire financial situation of a company

12. What does the Price to Earnings (P/E) ratio demonstrate?

Answers:

  1. The price of the company’s products relative to how much they earn on the sale of those products
  2. A company’s stock price relative to its earnings. Higher growth companies have higher P/E ratios
  3. The prices paid for goods relative to how much the company earns on those goods
  4. The ability of a company to pay dividends

13. Which of the following is not a part of cost of goods sold?

Answers:

  1. Raw material
  2. Labor
  3. Capital
  4. All of the above are part of cost of goods sold

14. What is the purpose of measuring solvency?

Answers:

  1. To determine a firm’s ability to pay its creditors in the long term
  2. To determine a firm’s ability to pay its creditors in the short term
  3. To measure a firm’s cash flow turnover
  4. To measure a firm’s current assets to current liabilities

15. If a company has a high P/E ratio relative to it’s competitors ____.

Answers:

  1. it is expected to grow more rapidly
  2. the analyst has inside information
  3. it has a bad year for earnings, making the denominator smaller, and the P/E ratio higher
  4. everyone should invest in this stock and not the competitor’s

16. Financial managers use the _____________ to plan for monthly financing needs.

Answers:

  1. capital budget
  2. cash budget
  3. pro forma
  4. income statement

17. With which of the following regulatory bodies would a publicly traded company be much more involved than a private company would be?

Answers:

  1. SEC
  2. GAAP
  3. IRS
  4. FCC

18. Which of the following transactions would have no impact on the stockholder’s equity?

Answers:

  1. Purchase of land from the proceeds of a bank loan
  2. Dividends to stockholders
  3. Net loss
  4. Investments in cash by stockholders

19. Which of the following is a flaw with financial analysis?

Answers:

  1. It is complicated
  2. Changes in accounting policy can drastically affect the results of a ratio, making comparison analysis difficult
  3. Companies are required by law to do it, even when they do not want to
  4. Errors are inherent in financial analysis, rendering it useless

20. What is historical value?

Answers:

  1. Prices adjusted for inflation
  2. The current sale value of an asset
  3. The original cost or price paid for an asset
  4. The average value of an asset

21. Which is the primary financial statement used to measure profitability?

Answers:

  1. Balance Sheet
  2. Income Statement
  3. Cash Flow Statement
  4. Statement of Retained Earnings

22. What is operating leverage defined as?

Answers:

  1. Extent to which variable costs are utilized
  2. Extent to which fixed assets are utilized
  3. Extent to which fixed assets and fixed costs are utilized
  4. Extent to which fixed costs are utilized
  5. Extent to which prices change

23. Which report does a publicly traded company file quarterly with the SEC?

Answers:

  1. 8K
  2. 10K
  3. 10Q
  4. Prospectus

24. If a company using financing has a 60% chance of a $75,000 return under normal conditions but a 40% chance of a $20,000 return when money is tight and borrowing costs are higher, what is the expected return for this firm ?

Answers:

  1. $75,000
  2. $60,000
  3. $53,000
  4. $40,000
  5. $20,000

25. What is one caveat when calculating ROA and comparing to other companies?

Answers:

  1. Asset values change over time
  2. Carrying value of assets may be valued differently (historical, market) by different companies
  3. Liabilities vary month to month making this ratio difficult to track accurately
  4. Every financial analyst calculates it differently making comparison useless

26. Which is/are the primary financial statements used to measure stability?

Answers:

  1. Balance Sheet
  2. Income Statement
  3. Balance Sheet and Income Statement
  4. Statement of Cash Flows and Income Statement

27. Which ratio would you use to assess a company’s ability to pay bills?

Answers:

  1. Interest coverage ratio
  2. Times interest earned ratio
  3. Price earnings ratio
  4. Current ratio
  5. Profit margin

28. In breakeven analysis, if fixed costs rise, then the breakeven point will __________.

Answers:

  1. fall
  2. riseM
  3. stay the same
  4. none of the above

29. Firm A has a Return on Equity (ROE) equal to 24%, while firm B has a ROE of 15% during the same year. Both firms have a total debt ratio (D/V) equal to 0.8. Firm A has an asset turnover ratio of 0.9, while firm B has an asset turnover ratio equal to 0.4. From this, it can be assessed that ______.

Answers:

  1. Firm A has a higher profit margin than firm B
  2. Firm B has a higher profit margin than firm A
  3. Firm A and B have the same profit margin
  4. Firm A has a higher equity multiplier than firm B
  5. more information is needed to say anything about the firm’s profit margin

30. In 2002, the US passed the Sarbanes-Oxley law which ____.

Answers:

  1. did not change any function of the Boards of Directors of publicly traded corporations
  2. gave the Financial Accounting Standards Board the oversight responsibility for public auditing firms
  3. does not change the responsibilities of independent auditors
  4. was developed in response to the accounting scandals at Enron, Tyco, WorldCom and others
  5. protects senior executives from prosecution for accounting fraud if they are unaware of its existence

31. An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the final inventory valuation is ________.

Answers:

  1. FIFO
  2. LIFO
  3. Retail
  4. Weighted-average

32. Which of the following equations properly represents a derivation of the fundamental accounting equation?

Answers:

  1. Assets + liabilities = owner’s equity
  2. Assets = owner’s equity
  3. Cash = assets
  4. Assets – liabilities = owner’s equity

33. Accounting scandals of the past 5 years ______.

Answers:

  1. resulted in criminal convictions of senior executives at large US corporations like Enron and WorldCom
  2. resulted in the criminal conviction of at least one major independent auditing firm
  3. resulted in record fines being paid by major brokerage companies to the SEC
  4. resulted in the strengthening of the SEC’s enforcement powers
  5. All of the above are true

34. CAPM formula calculates which of the following?

Answers:

  1. Present value of equity
  2. Expected return on equity
  3. Discounted rate on equity
  4. Weighted interest rate on equity

35. Which of the following is an example of an area of business where use of “questionable” ethics is considered a necessity?

Answers:

  1. Attracting and sustaining new customers
  2. Aggressive accounting practices that stretch the intent of accounting standards
  3. Dealing with other firms who use “questionable” ethics
  4. Suppressing information that may negatively affect a firm’s reputation
  5. None of the statements above is correct

36. The accounting scandals of recent years ______.

Answers:

  1. had no effect on the level of prices in the US stock markets
  2. were a complete surprise to analysts who followed the stocks of the companies involved as they were issuing positive recommendations of the securities to their clients
  3. brought out the fact that brokerage firms were promoting stocks to earn hefty fees for underwriting new security issues
  4. were of such a small magnitude that the government did not feel it was warranted to prosecute the companies and their officers that were involved
  5. have been dismissed as falling within the latitude of judgment for applying GAAP rules

37. Which ratio would you use to measure how effectively the firm uses the money shareholders have invested?

Answers:

  1. Return on assets
  2. Profit margin
  3. Earnings per share
  4. Price earnings ratio
  5. Return on equity

38. Which of the following types of firms may operate with high operating leverage?

Answers:

  1. A doctor’s office
  2. An auto manufacturing facility
  3. A mental health clinic
  4. None of the above would have high operating leverage

39. What is meant by “the goal of the corporation is to maximize shareholder wealth”?

Answers:

  1. Pay out dividends
  2. Maximize profits
  3. Achieve the highest possible value for the firm
  4. Control costs
  5. Increase sales

40. Which of the following is considered a profitability measure?

Answers:

  1. Day’s sales in inventory
  2. Fixed asset turnover
  3. Price-earnings ratio
  4. Cash coverage ratio
  5. Return on Assets

41. Which is/are the primary financial statements used to measure liquidity?

Answers:

  1. Balance Sheet
  2. Income Statement
  3. Balance Sheet and Income Statement
  4. Cash Flow Statement and Balance Sheet

42. What does CAPM stand for?

Answers:

  1. Current Asset Pricing Model
  2. Capital Asset Pricing Model
  3. Current Average Product Model
  4. Capital Average Product Model

43. Which is a characteristic of an efficient market?

Answers:

  1. Stock prices are high
  2. Prices adjust rapidly to new information
  3. Stock prices are low
  4. Trading is difficult
  5. There are only small daily changes in price

44. What does Return on Assets indicate?

Answers:

  1. How well a company employs its capital investments
  2. How much cash the company has generated over the last year
  3. How much debt the company has to pay relative to its asset base
  4. How profitable a company is before leverage

45. Which of the following would not be included in a balance sheet?

Answers:

  1. Accounts receivable
  2. Accounts payable
  3. Sales
  4. Cash

46. Gerald’s had opening total stockholders’ equity of $160,000. During the year, total assets increased by $240,000 and total liabilities increased by $120,000. Their net income was $180,000. No additional investments were made. However, some amount was paid as dividend during the year. What was the amount of the dividend paid?

Answers:

  1. $20,000
  2. $60,000
  3. $140,000
  4. $220,000

47. Which short-term financing rate always requires the use of international data?

Answers:

  1. Cost of failing to take a cash discount
  2. Prime rate
  3. LIBOR
  4. Effective rate
  5. Effective rate with compensating balances

48. A company wants to increase its current ratio. Which of the following would help the most?

Answers:

  1. Borrowing a long term loan
  2. Borrowing a short term loan
  3. Creating more stringent collection policies to decrease accounts receivable
  4. Using cash to pay down accounts payable

49. Rate of profit (r) is defined as ______.

Answers:

  1. r=(surplus-value)/(fixed assets)
  2. r=(surplus+value)/(capital invested)
  3. r=(surplus+value)/(fixed assets)
  4. r=(surplus-value)/(capital invested)

50. Which of the following is not a financial intermediary?

Answers:

  1. Commercial banks
  2. Credit unions
  3. Insurance companies
  4. Credit card companies
  5. Pension funds

51. Which is an example of a variable cost?

Answers:

  1. Management salaries
  2. Utilities
  3. Property taxes
  4. Raw material
  5. Depreciation

52. Insider trading _____.

Answers:

  1. is permitted by the SEC as long as the information becomes public within 30 days
  2. is a victimless crime as no one suffers an economic loss
  3. serves no beneficial or economic purpose
  4. is not legal under any circumstances
  5. is not illegal as long as the person using the information obtained it from someone else

53. If a firm has $100 in inventories, a current ratio equal to 1.2, and a quick ratio equal to 1.1, what is the firm’s Net Working Capital?

Answers:

  1. $0
  2. $100
  3. $200
  4. $1,000
  5. $1,200

54. Which of these items would be accounted for as an expense?

Answers:

  1. Repayment of a bank loan
  2. Dividends to stockholders
  3. Purchase of land
  4. Payment of the current period’s rent

55. Which of the following inventory methods will always produce the same results under both a periodic and a perpetual system?

Answers:

  1. FIFO
  2. LIFO
  3. Average
  4. All of these

56. Which of the following does the cash flow cycle measure?

Answers:

  1. The time between purchase of raw materials and collection of cash
  2. The time it takes to invest liquid funds
  3. The time it takes for a check to get cleared in the bank
  4. The maturity date of corporate bonds
  5. The time between offering a marketable security and receiving funds from sale of one

57. If two companies have equal risk, which one will have the higher stock price?

Answers:

  1. The one with the expectations of higher returns
  2. The one that pays dividends
  3. The one that splits its stock
  4. The one whose stock is traded most frequently
  5. online/All of the above

58. Which of the following is not an area which is assessed by financial analysis?

Answers:

  1. Profitability
  2. Solvency
  3. Stability
  4. online/Adequate Cash balances<

59. What is the formula for Return on Investor Capital?

Answers:

  1. ROIC = (NetOperatingProfitLessAdjustedTaxes) / (Fixed Assets)
  2. ROIC = (NetOperatingProfit) / (InvestedCapital)
  3. ROIC = (NetOperatingProfitLessAdjustedTaxes) / (InvestedCapital)
  4. ROIC = (NetOperatingProfitLess) / (Fixed Assets)

60. Which financial statement best allows a firm to assess its ability to pay dividends?

Answers:

  1. Statement of Cash Flows
  2. Income Statement
  3. Balance Sheet
  4. Statement of Retained Earnings
  5. Statement of Operations

61. Return on Assets is defined as _______.

Answers:

  1. Net Income/Current Assets
  2. Net Income/Total Assets
  3. Gross Margin/Current Assets
  4. Gross Margin/Total Assets

62. How often can a company change its inventory valuation methodology and still be compliant with GAAP?

Answers:

  1. Once per month
  2. Anytime, there are no rules
  3. Once per year, but not every year
  4. Never, you decide once and only once

63. Which security makes up the majority of external financing for corporations?

Answers:

  1. Common stock
  2. Preferred stock
  3. Bank loans
  4. Bonds
  5. Venture capital funds

64. What type of analysis will describe how changes in volume affect costs and profits?

Answers:

  1. Trend analysis
  2. Break even analysis
  3. Common size analysis
  4. Ratio analysis
  5. DuPont analysis

65. The three sections of a Statement of Cash Flows are _____.

Answers:

  1. Leverage, liquidity, financing
  2. Operating, investing, profit
  3. Operating, investing, financing
  4. Sales, investing, financing
  5. Operating, investing, borrowing

66. What is the DuPont analysis?

Answers:

  1. Breaks Return on Equity into 3 pieces: Operating Efficiency, Asset Use Efficiency, Financial Leverage
  2. An analysis created by the DuPont paint company
  3. A ratio analysis style based on factors beyond the financial numbers
  4. A modified cash flow analysis

67. How does Cash Flow Return on Investment differ from most financial ratios?

Answers:

  1. It is the only ratio involving cash flow
  2. It can be calculated from the income statement
  3. It assumes the stock market sets prices based on cash flow, not profitability
  4. It is the only ratio where a negative number is a good result

68. Which cash collection technique is the most cost-effective for companies with many locations?

Answers:

  1. Self-addressed stamped envelopes
  2. Centralized collection system
  3. Lockbox system
  4. Using a post office box
  5. Regional collection offices

69. What is the purpose of measuring stability?

Answers:

    • To determine if management is being ethical
    • To determine if the company has an adequate product mix
    • To determine the firm’s ability to stay in business in the long run
    • To determine if the company has too many high level executives

70. Retained earnings will change over time because of several factors. Which of the following factors would lead to an increase in the Retained Earnings?

Answers:

  1. Net loss
  2. Net income
  3. Dividends
  4. Investments by stockholders

71. Planning for future growth is called ________.

Answers:

  1. capital budgeting
  2. working capital management
  3. financial forecasting
  4. none of the above

72. Pro forma statements are _______ statements.

Answers:

  1. actual
  2. projected<>/span>
  3. previous years’
  4. next years’

73. Which of the following is not a fundamental of accounting?

Answers:

  1. Materiality
  2. Timeliness
  3. Matching
  4. Magnitude

74. Asset Turnover is defined as ______.

Answers:

  1. Assets/Inventory
  2. Sales/Assets
  3. Sales/Net Income
  4. Assets/Net Income

75. What is the purpose of measuring liquidity?

Answers:

  1. To determine if the firm is keeping enough cash on hand to pay accounts payable
  2. To determine if the firm is investing their liquid assets to earn the highest return available
  3. To measure a firm’s ability to remain cash flow positive and meet its short-term obligations
  4. To measure a firm’s return on investment

76. Which is/are the primary financial statements used to measure solvency?

Answers:

  1. Balance Sheet
  2. Income Statement
  3. Balance Sheet and Statement of Retained Earnings
  4. Cash Flow Statement and Income Statement

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Upwork Finance and Accounting

Accounts Payable Test 2016

Published by:

1. What level of detail should invoices contain?

Answers:

  1. Summary, only the total due
  2. Totals by item
  3. Totals by date
  4. Specific details – dates, quantities, individual pricing

2. Why do companies require deposits & advances?

Answers:

  1. They don’t trust the customers to pay
  2. It improves cash flow, especially for long duration projects
  3. They want to make sure customers have money to pay

3. Tax Accounting Services pays off $200 on account. To record this transaction for Tax Accounting Services, the cash account is credited. Which account is debited?

Answers:

  1. Accounts Receivable
  2. Service Revenue
  3. Cash
  4. Accounts Payable

4. A company receives an advance payment for special order goods that are to be manufactured and delivered within 6 months. The advance payment should be reported in the company’s balance sheet as a

Answers:

  1. deferred charge.
  2. contra asset account.
  3. current liability.
  4. non-current liability.

5. On December 31, 2007, special insurance costs incurred but unpaid were not recorded. If these insurance costs were related to work-in-process, what will be the effect of the omission on accrued liabilities and retained earnings in the December 31, 2007 balance sheet?
Accrued liabilities Retained Earnings

Answers:

  1. No effect No effect
  2. No effect Overstated
  3. Understated No effect
  4. Understated Overstated

6. Rush checks may also be called _____

Answers:

  1. emergency checks
  2. ASAP checks
  3. quick checks
  4. All of the above.

7. Who is to be covered by VAT (Value Added Tax)?

Answers:

  1. All business transactions carried on within a State by individuals
  2. All business transactions carried on within a State by partnerships
  3. All business transactions carried on within a State by Companies
  4. All of the above

8. What steps are taken before approving an invoice for payment?

Answers:

  1. Validating the invoice once it is matched for checking
  2. If workflow is implemented, initiating approval for the invoice
  3. Creating accounting after approval of invoice
  4. Both a and b
  5. a, b, and c

9. Who typically calculates the tax liability to be paid?

Answers:

  1. The State government, which informs the company what is owed
  2. The Accounts Payable staff
  3. The CFO
  4. The General or Tax Accountant within the company

10. Among the items reported on Cord, Inc.’s income statement for the year ended December 31, 2007 were the following:
Amortization of goodwill acquired in 1992 $10,000
Insurance premium on the life of an officer. $5,000
Cord is the owner and beneficiary.
Temporary differences amount to:

Answers:

  1. $0
  2. $5,000
  3. $10,000
  4. $15,000

11. When are sales & use taxes due?

Answers:

  1. The date varies from State to State
  2. On the15th of every month
  3. Annually, on the same date as federal taxes
  4. Quarterly, on the 15th of the following month

12. Lime & Co.’s payroll for the month ended January 31,2007 is summarized as follows: Total wages $10000 Federal income tax withheld $1200 All wages paid were subject to FICA. FICA tax rates were 7% each for the employees and the employer. The company remits payroll taxes on the 15th of the following month. In its financial statements for the month ended January 31, 2007, what amounts should it report as total payroll tax liability and as payroll tax expense?

Answers:

  1. $1200 $1400
  2. $1900 $1400
  3. $1900 $700
  4. $2600 $700

13. The correct journal entry to record a purchase of inventory on credit using a perpetual inventory system includes:

Answers:

  1. debit Cost of Goods Sold, credit Inventory
  2. debit Accounts Payable, credit Inventory
  3. debit Accounts Receivable, credit Sales Revenue
  4. debit Inventory, credit Accounts Payable

14. Of the following, which is a typical situation involving a deposit?

Answers:

  1. The company uses a recruiting firm to find key employees
  2. In order to buy office supplies, the company has to put a deposit down
  3. The business has leased a new location and is required to put a deposit for the last month’s rent
  4. Federal taxes for the upcoming year

15. If a prepaid expense is expiring (the final month is expensed), and the company has not received an invoice for the upcoming prepaid period, the accounting should:

Answers:

  1. Continue to book the monthly expense in the upcoming month and contact the company to find if an invoice will be issued for the coming year
  2. Do not book the monthly expense and assume your company is no longer in business with the company
  3. Send an email to the CFO
  4. Delete the line from Excel and assume no further expense

16. A bill is a form on which you record details of _________ .

Answers:

  1. the sales made
  2. the expenses incurred
  3. a purchase made by a vendor to whom the Company owe money
  4. the income accrued

17. Streamlined Sales Tax is a national effort by which of the following?

Answers:

  1. The State Government
  2. The Local Government
  3. The private sector to simplify and modernize sales and use tax collection
  4. All of the above

18. How will you track the deposits that clients pay to the vendors?

Answers:

  1. Track deposits as negative balances in Accounts Payable
  2. Record the deposit in the Enter Bills window
  3. Neither of the above

19. When are invoices treated as having been paid short?

Answers:

  1. If any discount for early payment is allowed
  2. If there are any damaged goods
  3. If there are any prior credits
  4. All of the above.

20. What is the difference between Accounts Payable and Accounts Receivable?

Answers:

  1. Accounts receivable are amounts owed by the suppliers on account whereas the Accounts Payable are amounts owed to the customers on account.
  2. Accounts receivable are amounts owed by the customers on account whereas the Accounts Payable are amounts owed to the suppliers on account.
  3. Accounts receivable are amounts owed by the customers on account whereas the Accounts Payable are amounts owed to the bankers on account.
  4. None of the above

21. What is the report generated to find the net purchases from each vendor regardless of how payments were recorded called?

Answers:

  1. Inventory valuation summary
  2. Expenses by vendor summary
  3. Unpaid bills details
  4. Purchases by vendor summary

22. Which of the following methods can be used to value inventory in QuickBooks?

Answers:

  1. Double declining balance
  2. Last in, first out (LIFO)
  3. First in, first out (FIFO)
  4. Average cost

23. When clients have customers who are also vendors, what is the best way to offset Accounts Payable against Accounts Receivable?

Answers:

  1. Use the QuickBooks trade-off feature
  2. Create a bank account through which you can clear the Payables and the Receivables
  3. Use a single journal entry
  4. Use multiple journal entries

24. Accrual Basis means __________.

Answers:

  1. the most commonly used accounting method which reports income when earned and expenses when incurred,
  2. the accounting method which reports income when received and expenses when paid.
  3. the accounting method which reports income when earned and expenses when incurred.
  4. All of the above

25. A good example of a typical prepaid expense is:

Answers:

  1. Rent
  2. Dividends
  3. Insurance
  4. Wages

26. Orleans & Co., a cash-basis taxpayer, prepares accrual-basis financial statements. In the current year balance sheet, Orleans’s deferred income tax liabilities increased in comparison with those reported for the previous year. Which of the following changes would cause this increase in deferred income tax liabilities?

I.An increase in prepaid insurance premium
II.An increase in rent receivable
III.An increase in warranty obligations

Answers:

  1. I only
  2. I and II only
  3. II and III only
  4. III only

27. What is the difference between billable and non-billable expenses?

Answers:

  1. Billable expenses are the expenses incurred by you in carrying out your own business / performing your own duties and responsibilities and Non-billable expenses are the expenses incurred by you on behalf of your customer in performing duties / rendering services and supplying goods
  2. Billable expenses are the expenses incurred by you on behalf of your customer in performing duties / rendering services and supplying goodsand Non-billable expenses are the expenses incurred by you in carrying out your own business / duties and performing your own responsibilities.
  3. Neither of the above

28. From the Accounts Payable point of view, what are the main problems that arise between Accounts Payable and Purchasing?

Answers:

  1. Missing information on Purchase Orders
  2. Missing information about discounts
  3. Delays
  4. All of the above.

29. Debit memos are required for_______.

Answers:

  1. the payment deductions taken on invoices.
  2. the payments made on Purchase Orders
  3. the payments received on Sales Orders
  4. Both b and c

30. Tax Accounting Services pays off $200 on account. To record this transaction for Tax Accounting Services, the Cash account is credited and the __________ account is debited.

Answers:

  1. Cash
  2. Accounts Payable
  3. Service Revenue
  4. Accounts Receivable

31. In its 2007 income statement, Cere & Co. has reported an income of $300,000 before income taxes. Cere estimated that, because of permanent differences, taxable income for 2007 would be $280,000. During 2007, Cere made estimated tax payments of $50,000, which were debited to income tax expense; Cere is subject to a 30% tax rate. What amount should Cere report as income tax expense?

Answers:

  1. $34,000
  2. $50,000
  3. $84,000
  4. $90,000

32. Which of the following accounts has a debit balance?

Answers:

  1. Accounts Payable account
  2. Accrued taxes account
  3. Accumulated depreciation account
  4. Bad debt expense account

33. What is Accounts Payable Turnover Ratio?

Answers:

  1. Net profit / Accounts Receivable
  2. Cost of Goods Sold / Accounts Payable
  3. 365 days / Accounts Payable Turnover
  4. Total sales / Networth

34. How often should Payables be entered in the accounting system?

Answers:

  1. Once a week
  2. As soon as the invoices are brought to the AP department
  3. Daily
  4. As and when they are due

35. Which form is used to reimburse an individual for Travel and Entertainment expenses?

Answers:

  1. Form W4
  2. Expense Voucher
  3. Form 1099Misc
  4. Form 941

36. An Invoice statement is provided __________________

Answers:

  1. for payment purposes
  2. to ensure that the IRS department has received all the invoices sent
  3. to check for outstanding credits.
  4. to know the expenditure of the company for the particular month

37. What are the debit memo & the credit memo in Payables?

Answers:

  1. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the supplier to the Company and the credit memo is raised by the Company to the supplier stating we are due to him. Both have positive amounts
  2. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the supplier to the Company and the credit memo is raised by the Company to the supplier stating we are due to him. Both have negative amounts.
  3. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the supplier to the Company and the credit memo is raised by the Company to the supplier stating we are due to him. Both may have positive and negative amounts
  4. In A/P, both the debit and the credit memos perform the same function. The debit memo is raised by the Company to the supplier and the credit memo is raised by the supplier to the Company stating we are due to him. Both have negative amounts

38. When an invoice is presented for payment, most companies match it against a purchase order and a receiving document, and if all three match, the invoice is paid on or after its due date. This is referred to as —————- .

Answers:

  1. the two-way match
  2. the three-way match
  3. invoice cleared
  4. invoice paid

39. Accounts Payable is _________.

Answers:

  1. a file or an account that contains details of money that a person or company owes to its suppliers.
  2. details of money or money’s worth that a person or company owns.
  3. an expense account
  4. a file or an account that contains details of money that a person or company owes to its customers

40. What is VAT?

Answers:

  1. VAT is a tax calculated on the income earned
  2. VAT is a consumer-oriented tax imposed on goods and services sold.
  3. VAT is an item
  4. VAT is a Credit card fee

41. Where do you record the payment terms for the money that a client owes to a vendor?

Answers:

  1. In Sales Orders
  2. In Checks
  3. In Purchase Orders
  4. In Bills

42. Using the following information, compute total liabilities.
Notes Receivable $30,000, Accounts Payable $20,000, Wages Payable $8,000 and Rent Expenses $40,000.

Answers:

  1. $20,000
  2. $28,000
  3. $68,000
  4. $98,000

43. How are prepaid expenses typically tracked?

Answers:

  1. In an excel spreadsheet, with a monthly journal entry made to reflect the current month expenses
  2. The procedure is fully automated in the accounting system; no one needs to do anything from month to month
  3. The CFO will tell the accountant what needs to be booked
  4. The auditors of the company do it

44. What is the Journal Entry for “The Company purchased $6,000 worth of merchandise on credit”?

Answers:

  1. Dr Accounts Payable and Cr Merchandise
  2. Dr Merchandise and Cr Accounts Payable
  3. Dr Bank and Cr Accounts Payable
  4. None of the above

45. An open credit is __________.

Answers:

  1. money owed to the company
  2. money owed by the company
  3. money owed to the investors
  4. None of the above

46. Accounts payable refer to the current _________.

Answers:

  1. income of a business or an organization
  2. assets of a business or an organization
  3. expenses of a business or an organization
  4. liabilities of a business or an organization

47. When an employer makes an end-of-period adjusting entry with a debit to the Supplies Expense, the credit entry is made to:

Answers:

  1. Accounts Payable.
  2. Supplies.
  3. Cash.
  4. Retained Earnings.

48. Can you collect and remit tax for a state even if not required to do so?

Answers:

  1. No
  2. Yes, the State Government will send you the amount without your getting registered with the state prior to collecting the tax.
  3. Yes, you can voluntarily register to collect and remit tax. But, you must register with the state prior to collecting the tax.

49. What is the last date for filing claims for VAT refunds in all countries?

Answers:

  1. December 31st of every year
  2. January 31st of every year
  3. There is no deadline for filing claims for VAT refunds
  4. June 30th of every year

50. How are the A/P journal entries typically created?

Answers:

  1. Hand written by the A/P staff and entered into the system by the accountant
  2. The A/P staff is responsible for making journal entries
  3. Entries are created and entered by a CPA
  4. A/P software will generate journal entries based on preset coding

51. Buck & Co. receives deposits from its customers to protect itself against non-payments for future services. These deposits should be classified by the company as

Answers:

  1. a liability
  2. revenue
  3. a deferred credit deducted from Accounts Receivable.
  4. a contra account.

52. Which of the following is not an important step before approving a payment?

Answers:

  1. Refer to the terms and conditions for making the payment (any credit period)
  2. Check the bank balance before approving the invoice for payment.
  3. Refer to the Sales Order issued.
  4. Refer to the Goods / Services Received Note for having received goods / services as mentioned in the purchase order

53. Barnel Corp. owns and manages 19 apartment complexes. On signing a lease, each tenant has to pay the first and the last month’s rent and a $500 refundable security deposit. The security deposits are rarely refunded in total because cleaning costs of $150 per apartment are almost always deducted. About 30% of the time, the tenants are also charged for damages to the apartment, which typically costs $100 to repair. If a one year lease deed is signed on a $900 per month apartment, what amount would the company report as refundable security deposit?

Answers:

  1. $1,400
  2. 4500
  3. $350
  4. $320

54. The correct journal entry to record a return of inventory purchased on credit basis using a perpetual inventory system includes:

Answers:

  1. debit Inventory, credit Accounts Payable
  2. debit Cost of Goods Sold, credit Inventory
  3. debit Accounts Receivable, credit Sales Revenue
  4. debit Accounts Payable, credit Inventory

55. Hudson Hotels collects 15 % as city sales tax on room rentals, in addition to $2 per room, per night, as occupancy tax. Sales tax for each month is due at the end of the following month, and occupancy tax are due 15 days after the end of each calendar quarter. On January 3, 2008, Hudson paid its November 2007 sales tax and occupancy tax for the fourth quarter of 2007. Additional information pertaining to Hudson’s operations is as follows:

2007 Room Rentals Room Nights
October $100,000 $1,100
November $110,000 $1,200
December $150,000 $1,800

What amounts should Hudson report as sales tax payable and occupancy tax payable in its December 31, 2007 balance sheet?

Sales Tax Occupancy Taxes

Answers:

  1. $39,000 $6,000
  2. $39,000 $8,200
  3. $54,000 $6,000
  4. $54,000 $8,200

56. Why do companies use the government listed mileage rate for the reimbursement of traveling expenses rather than paying actualexpenses?

Answers:

  1. It is cheaper than paying people for gas
  2. It is simpler for the employer and fairly reimburses the employees for the expenditure on gas and the wear and tear of the vehicle
  3. It is required by the tax law
  4. It limits the company’s liability if the person is involved in an accident while driving for work purposes

57. Ross & Co. pays all salaried employees on Monday for the 5-day work week ended the previous Friday. The last payroll recorded for the year ended December 31, 2004 was for the week ended December 25, 2004. The payroll for the week ended January 1, 2005 included regular weekly salaries of $80000 and vacation pay of $ 25000 for the vacation time earned in 2004 but not taken by December 31, 2004. Ross had an accrued liability of $20000 for vacation pay as on December 31, 2003. In its December 31, 2004 balance sheet, what amount should Ross report as accrued salary and vacation pay?

Answers:

  1. $64000
  2. $69000
  3. $84000
  4. $89000

58. What is the best way to reimburse Travel and Entertainment to the employees who do not wish to use the electronic form of reimbursement?

Answers:

  1. The reimbursement should be included in the normal paycheck.
  2. The reimbursement should be ignored
  3. The reimbursement should be made by cash
  4. All of the above

59. On July 1, 2006, Ran County issued reality tax assessments for its fiscal year ended June 30, 2007. The assessments were to be paid in two equal installments. On September 1, 2006, Day & Co. purchased a warehouse in Ran County. The purchase price was reduced by a credit for accrued realty taxes. The company did not record the entire year’s real estate tax obligations, but instead records tax expenses at the end of each month by adjusting prepaid real estate taxes payable, as appropriate. On November 1, 2006, it paid the first installment of $12000 for realty taxes. What amount of this payment should it record as a debit to real estate taxes payable?

Answers:

  1. $4,000
  2. $8,000
  3. $10,000
  4. $12,000

60. What does the acronym EFT stand for?

Answers:

  1. Electronic File Transfer
  2. Electronic Funds Transfer
  3. Both a and b
  4. Electronic Fund Tour

61. When a deposit is used as payment, what is the journal entry from the customer’s (the person who made the deposit) perspective?

Answers:

  1. Debit Cash, credit Service Expense
  2. Debit Accounts Payable, credit Cash
  3. Debit Service Expense, credit Cash
  4. Debit Service Expense, credit Other Advances

62. Under which head does VAT reflect in the Balance Sheet?

Answers:

  1. Equity
  2. Creditors
  3. Fixed Asset
  4. Current Asset

63. SFAS 109 establishes standards of financial accounting and reporting for income taxes that are currently payable and for

Answers:

  1. the tax consequences of revenues and expenses included in taxable income in a different year from the year in which they are recognized for financial reporting purposes.
  2. the method of accounting for the US Federal investment tax credit.
  3. the discounting of income taxes.
  4. the accounting for income taxes in general in interim periods.

64. Recording expenditure made, but not yet paid, to a vendor is an example of:

Answers:

  1. a prepaid income transaction
  2. an unearned expense transaction
  3. an accrued liability transaction
  4. an accrued payable transaction

65. Receipts from cash sales of $7,500 were recorded incorrectly as $5,700. What entry is required in the depositor’s accounts?

Answers:

  1. Debit Cash: Credit Accounts Receivable
  2. Debit Sales: Credit Cash
  3. Debit Accounts Receivable: Credit Cash
  4. Debit Cash: Credit Cash Sales

66. What is the mode of making payment to the employees for reimbursing travel and entertainment expenses?

Answers:

  1. Check
  2. Automated Clearing House (ACH)
  3. Direct deposit
  4. All of the above

67. Accounts Payable affect net income.

Answers:

  1. True
  2. False

68. What is nexus?

Answers:

  1. Nexus is the sales tax collected from Hotels
  2. Nexus is the determining factor of whether an out-of-state business selling products in a state is liable for collecting the tax on sales in the state.
  3. Nexus is the sales tax collected on the traveling expenditure incurred in the same state
  4. Nexus is the determining factor of whether a state business selling goods in the state is liable for collecting the tax on sales in the state.

69. Which of the following will not result in the recognition of a deferred tax asset?

Answers:

  1. An operating loss carry forward.
  2. Immediate expensing of organizational costs.
  3. Subscriptions revenue received in advance.
  4. Receipt of municipal bond interest.

70. Excess payment made to the supplier will appear as a _____.

Answers:

  1. debit balance in the supplier’s account.
  2. credit balance in the supplier’s account.
  3. debit balance in the customer’s account
  4. credit balance in the customer’s account.

71. At what stage in the Accounts Payable process is cash affected?

Answers:

  1. When an invoice is entered into the accounting system
  2. When a credit memo is generated
  3. When checks are printed
  4. Accounts Payable never handles cash

72. $1,000 worth of supplies are purchased on account. What is the Journal Entry to be posted?

Answers:

  1. Dr A/P account and Cr Supplies account
  2. Dr Purchase account and Cr A/P account
  3. Dr Supplies account and Cr A/P account
  4. Dr A/P account and Cr Purchase account

73. Under generally accepted accounting principles, which approach is used to determine income tax expense?

Answers:

  1. Asset and liability approach.
  2. “With and Without” approach.
  3. Net-of-tax approach.
  4. Deferred approach.

74. Under the state law, Acme may pay 3% of eligible gross wages or it may reimburse the state directly for actual unemployment claims. The Company believes that actual unemployment claims will be 2% of the eligible gross wages and has chosen to reimburse the state. Eligible gross wages are defined as the first $10000 of the gross wages paid to each employee. The Company had five employees, each of whom earned $20000 during 2007. In its December 31, 2007 balance sheet, what amount should it report as accrued liability for unemployment claims?

Answers:

  1. $1000
  2. $1500
  3. $2000<>
  4. $3000

75. On December 31, 2007, Deal Inc. failed to accrue the December 2007 sales salaries that were payable on January 6,2008. What will be the effect of the failure to accrue sales salaries on the working capital and cash flows from operating activities in Deal’s 2007 financial statements?

Working Capital Cash Flows from Operating Activities

Answers:

  1. Overstated No effect
  2. Overstated Overstated
  3. No effect Overstated
  4. No effect No effect

76. What are the steps involved in setting up QuickBooks to track 1099 information?

Answers:

  1. Turn on the Tax: 1099 preference
  2. Link 1099 categories to QuickBooks accounts
  3. Designate which vendors should receive 1099s
  4. All of the above

77. What is the use of an Accounts Payable ledger?

Answers:

  1. An Accounts Payable ledger helps you to control your expenditures and payables
  2. An Accounts Payable ledger helps you to know the income earned
  3. An Accounts Payable ledger shows the amount to be paid to the employees
  4. None of the above

78. What should be submitted to the VAT authorities to obtain a refund of VAT?

Answers:

  1. The original invoice, together with an application form and other supporting documents relating to the expenditure incurred must be submitted.
  2. The original purchase order together with an application form and other supporting documents relating to the expenditure incurred must be submitted.
  3. The original Receipt together with an application form and other supporting documents relating to the expenditure incurred must be submitted
  4. Both the original purchase order and the invoice should be submitted

79. Making insurance payments in advance is an example of:

Answers:

  1. an accrued receivable transaction.
  2. an accrued liability transaction.
  3. an unearned revenue transaction.
  4. a prepaid expense transaction

80. Is a sales tax return required to be filed even if the sales are equal to zero?

Answers:

  1. Yes
  2. No
  3. Depends on the expenditure made
  4. Varies from state to state.

81. What is Accounts Payable aging report?

Answers:

  1. Sorting of a company’s Accounts Payable by the bill date.
  2. Sorting of a company’s Accounts Payable by the due date.
  3. Sorting of a company’s Accounts Payable by the posted date.
  4. None of the above.

82. What is the standard method used for the employees to submit an account of the travel expenses incurred by them?

Answers:

  1. They needn’t as they are given a company credit card for the purpose
  2. They have to submit a written and signed letter stating the total expenses to be reimbursed
  3. They submit an envelope containing the receipts of the expenses incurred
  4. They have to submit a report of the expenses approved by the employees’ supervisor

83. Payments for expenses incurred on corporate cards should be made directly to_____.

Answers:

  1. the EFT
  2. the IRS
  3. the state Taxes
  4. the credit card company

84. The ratio derived by dividing Cost of Goods Sold by Account Payable is known as _______.

Answers:

  1. the Current Ratio
  2. the Quick Ratio
  3. the Networth Ratio
  4. the Accounts Payable Turnover Ratio

85. Why are per diem’s used in lieu of having employees detail all actual spending for meals?

Answers:

  1. Companys like to treat their employees while they travel for the company
  2. Reasonable amounts are fixed and it limits the amount the company will have to spend
  3. Employees always lose receipts and that makes the process of reimbursement tough
  4. It saves on paperwork

86. The Provisions of SFAS 109, Accounting for Income Taxes, are applicable to:

Answers:

  1. all foreign, state, and local taxes.
  2. domestic Federal income taxes.
  3. an enterprise’s foreign operations accounted for by the cost method.
  4. financial statements of foreign enterprises required to pay US. Federal income taxes.

87. What type of people does the Accounts Payable interface with most often?

Answers:

  1. Customers
  2. Vendors
  3. Other employees
  4. IRS

88. Who can use a company’s Travel & Entertainment Cards, though the liability lies with the employees?

Answers:

  1. Vendors
  2. Customers
  3. Employees
  4. All of the above

89. On February 1, Royal Company Ltd. purchased $2,000 worth of merchandise, terms 2/10, n/30. The company uses the gross method of recording purchases. Payment for the Accounts Payable was made on February 26. Which of the following journal entries is appropriate for the February 26 transaction?

Answers:

  1. Debit Purchases a/c… $2,000 and credit Account Payable a/c… $2,000
  2. Debit Accounts Payable a/c… $1960 and credit Cash a/c… $1,960
  3. Debit Accounts Payable a/c… $2,000 and credit Cash a/c… $2,000
  4. Debit Accounts Payable & Purchase Discount a/c for $1,960 & $40 and credit Cash a/c for $2,000

1,378 total views, 4 views today

Upwork Finance and Accounting

Accounting Skills Test (Cash Flow) 2016

Published by:

1. Which of the following would be included in the investing section of a cash flow statement?

Answers:

  1. Proceeds from sale of equipment
  2. Proceeds from sale of long-term investments
  3. Proceeds from sale of marketable securities
  4. All of the above would be included in the investing section.

2. In 2007, XYZ Company had a net loss of $160,000 and reported the following:

Dividends paid: $40,000
Depreciation expense: $30,000
Increase in accounts payable: $15,000
Issuance of stock: $100,000
Retirement of debt: $50,000

Given this data, the amount of cash flow from operations was ______________.

Answers:

  1. ($115,000)
  2. $205,000
  3. ($75,000)
  4. $65,000

3. Equity in the undistributed earnings of a recognized affiliate would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

4. Dividends paid for the year would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

5. Equity income from an affiliate would be shown _____________________.

Answers:

  1. as an add-back to net income in the operations section
  2. as a deduction from net income in the operations section
  3. in the investing section
  4. None of the above

6. Issuing ten-year bonds will cause cash to ______________ .

Answers:

  1. increase
  2. decrease
  3. show no change

The effect on cash cannot be determined based on given information.

7. A cash flow statement is typically prepared _____________________.

Answers:

  1. before the balance sheet is prepared
  2. after the balance sheet is prepared but before the income statement is prepared
  3. after the income statement is prepared but before the balance sheet is prepared
  4. after both the balance sheet and the income statement are prepared

8. Which of the following would be shown in the investing section of a cash flow statement?

Answers:

  1. Retirement of long-term debt
  2. Retirement of preferred stock
  3. Acquisition of treasury stock
  4. None of the above

9. The sale of equipment for cash with a recognized loss would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

10. An increase in the accounts payable balance would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement

11. Pre-paying a one-year insurance policy will cause cash to ______________ .

Answers:

  1. increase
  2. decrease
  3. show no change
  4. The effect on cash cannot be determined based on given information.

12. Warranties payable that increased during the year would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

13. The acquisition of a building and/or land by entering into a lease that meets the capital lease criteria would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

14. Depreciation recorded on equipment would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

15. Which of the following would be shown in the investing section of a cash flow statement?

Answers:

  1. Acquisition of equipment through a capital lease
  2. Acquisition of treasury stock
  3. Retirement of long-term debt
  4. None of the above

16. Cash borrowed from a bank by issuing a short-term note payable would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

17. Collecting receivables will cause cash to ______________ .

Answers:

  1. increase
  2. decrease
  3. show no change
  4. The effect on cash cannot be determined based on given information.

18. In 2007, XYZ Company had a net income of $150,000 and reported the following:

Depreciation expense: $21,000
Issuance of debt: $120,000
Loss on sale of equipment: $23,000
Purchase of building: $110,000
Increase in inventory: $12,000

Given this data, the amount of cash flow from operations was ______________.

Answers:

  1. $182,000
  2. $171,000
  3. $159,000
  4. $138,000

19. Preferred stock issued for cash would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

20. The most popular method of presenting cash from operations in a cash flow statement is the _________________.

Answers:

  1. direct method
  2. operations method
  3. indirect method
  4. funds method

21. The amortization of a recorded patent would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

22. Preferred stock converted into common stock would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

23. An amortization of a bond discount would be shown __________________.

Answers:

  1. as an add-back to net income when determining cash flow from operations
  2. as a deduction from net income when determining cash flow from operations
  3. in the financing section
  4. None of the above

24. When determining cash flow from operations, which of the following would NOT be deducted from net income?

Answers:

  1. Increase in accounts receivable
  2. Loss on sale of equipment
  3. Amortization of bond premium
  4. Decrease in accounts payable

25. Which of the following statements about depreciation expense is true?

Answers:

  1. Depreciation expense increases the expense for a period but does not use cash.
  2. When determining funds from operations, depreciation expense that had originally been subtracted in computing net income is added back to net income, but it is not a use of cash.
  3. Depreciation expense is not a source of funds.
  4. All of the above statements are true.

26. Which of the following transactions would be shown on a cash flow statement, but does not affect cash?

Answers:

  1. Sale of bonds for cash
  2. Exchange of land for stock
  3. Collection of customer accounts
  4. Payment of dividends to owners

27. When determining cash flow from operations, which of the following would NOT be deducted from net income?

Answers:

  1. Gain on sale of a building
  2. Gain on sale of equipment
  3. Gain on sale of marketable securities
  4. All of the above

28. An investment in the stock of another company would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

29. Which of the following typically happens during the maturation phase of a product’s life cycle?

Answers:

  1. Cash outflow exceeds cash inflow from operations.
  2. Cash outflow exceeds cash inflow from investing activities.
  3. Cash inflow exceeds cash outflow from financing activities.
  4. All of the above

30. Paying previously declared dividends will cause cash to ______________ .

Answers:

  1. increase
  2. decrease
  3. show no change
  4. The effect on cash cannot be determined based on given information.

31. Treasury stock purchased for cash would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

32. The use of a bond sinking fund to retire a long-term debt at maturity would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

33. When determining cash flow from operations, which of the following would be added back to net income?

Answers:

  1. Depreciation expense
  2. Amortization of patent
  3. Loss on sale of marketable securities
  4. All of the above

34. XYZ reported balances in the Accumulated Depreciation account of $130,000 on 01/01/07 and $120,000 on 12/31/07. During 2007, an asset costing $100,000 (with an accumulated depreciation of $80,000) was sold for $20,000.

Given this data, the depreciation expense for 2007 was _____________.

Answers:

  1. $10,000
  2. $90,000
  3. $110,000
  4. $70,000

35. A payment made from accounts payable will cause cash to ______________ .

Answers:

  1. increase
  2. decrease
  3. show no change
  4. The effect on cash cannot be determined based on given information.

36. Cash paid for land would be shown as ________________.

Answers:

  1. cash flow from operations
  2. cash flow from investing
  3. cash flow from financing
  4. a non-cash transaction

37. Declaring dividends will cause cash to ______________ .

Answers:

  1. increase
  2. decrease
  3. show no change
  4. The effect on cash cannot be determined based on given information.

38. Amortized discount on bonds payable would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

39. In 2007, XYZ Company had a net income of $100,000 and reported the following account changes on its balance sheet:

Accounts Receivable: $6,000 increase
Accounts Payable: $2,000 increase
Building: $8,000 decrease
Accumulated Depreciation: $3,000 increase
Bonds Payable: $16,000 increase

Given this data, the amount of cash flow from operations was ______________.

Answers:

  1. $100,000
  2. $99,000
  3. $119,000
  4. $103,000

40. At the beginning and end of 2007, XYZ Company reported the following balances for Bonds Payable:

Jan 1: $100,000
Dec 31: $140,000
In addition, $60,000 In bonds was retired In 2007.

Given the above data, the amount of Bonds Payable issued during the year was ______________.

Answers:

  1. $100,000
  2. $20,000
  3. $160,000
  4. $180,000

41. Deferred income tax payable that increased during the year would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

42. Recording a depreciation expense will cause cash to ______________ .

Answers:

  1. increase
  2. decrease
  3. show no change
  4. The effect on cash cannot be determined based on given information.

43. A cash payment for land acquisition would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

44. Which of the following typically happens during the growth phase of a product’s life cycle?

Answers:

  1. Cash outflow exceeds cash inflow from operations.
  2. Cash outflow exceeds cash inflow from investing activities.
  3. Cash inflow exceeds cash outflow from financing activities.
  4. All of the above

45. When determining cash flow from operations, which of the following would be a deduction from net income?

Answers:

  1. Depreciation expense
  2. Increased accounts receivable
  3. Decreased accounts receivable
  4. Increased accounts payable

46. Which of the following would be shown in the financing section of a cash flow statement?

Answers:

  1. Long-term bonds payable issued
  2. Long-term notes payable issued
  3. Short-term notes payable issued
  4. All of the above

47. Salaries paid during the year would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

48. Long-term investments sold for cash with a recognized gain would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

49. In most countries, the preparation of a __________________ is a common practice.

Answers:

  1. cash flow statement<>/span<
  2. financing activities statement
  3. investing activities statement
  4. statement of sources and uses of funds

50. On their income statement, XYZ Company reported $600,000 in sales, $320,000 in depreciation expense, $60,000 in income taxes, and $100,000 in other expenses. In addition, $80,000 of common stock was issued for cash during the year. Assuming that the company’s non-cash working capital balances did not change during the year, the total amount of cash from operations was ____________.

Answers:

  1. $20,000
  2. $100,000
  3. $420,000
  4. $440,000

51. Accounts receivable that increased during the year would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

52. Unearned revenue that had been reduced during the year would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

53. In determining cash flow from operations, which of the following would be an add-back to net income?

Answers:

  1. Gain on sale of building
  2. Loss on sale of building
  3. Decrease in inventories
  4. All of the above

54. Accruing an income tax liability will cause cash to ______________ .

Answers:

  1. increase
  2. decrease
  3. show no change
  4. The effect on cash cannot be determined based on given information.

55. Prepaid rent that increased during the year would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

56. Cash received from sale of investment would be shown on a cash flow statement as ___________.

Answers:

  1. cash flow from operations
  2. cash flow from investing
  3. cash flow from financing
  4. a non-cash transaction

57. During 2007, XYZ Company experienced the following changes:

Current liabilities: $75,000 increase
Non-current liabilities: $45,000 decrease
Owners’ equity: $51,000 decrease
Non-current assets: $42,000 increase
Current assets (other than Cash): $18,000 increase

Given the above data, the change in cash for 2007 was ____________.

Answers:

  1. ($57,000)
  2. $30,000
  3. $39,000
  4. ($81,000)

58. The acquisition of a patent would be shown __________________.

Answers:

  1. as an add-back to net income in the operations section
  2. as a deduction from net income in the operations section
  3. in the investing section
  4. None of the above

59. Land acquired by issuing preferred stock would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

60. When determining cash flow from operations, which of the following would NOT be added back to net income?

Answers:

  1. Loss on sale of equipment
  2. Equity in affiliate’s losses
  3. Amortization of bond premium
  4. All of the above

61. Which of the following is NOT a characteristic of growing firms?

Answers:

  1. Significant increase in inventories
  2. Reporting in the cash flow statement a deduction adjustment to net income for change in deferred taxes
  3. Significant increase in accounts receivable
  4. All of the above

62. Which of the following typically happens during the introduction phase of a product’s life cycle?

Answers:

  1. Cash outflow exceeds cash inflow from operations.
  2. Cash outflow exceeds cash inflow from investing activities.
  3. Cash inflow exceeds cash outflow from financing activities.
  4. All of the above

63. On a cash flow statement, depreciation expense ________________.

Answers:

  1. provides cash from operations
  2. should be added to net income when determining cash provided by operations
  3. should be deducted from net income when determining cash provided by operations
  4. is an example of cash expense

64. The major components of a cash flow statement are ________________________.

Answers:

  1. cash flow from operations, cash flow from investing, and cash flow from financing
  2. cash flow from operations, other sources of cash, and other uses of cash
  3. sources of cash from investments, application of cash for financing activities, and other cash transactions
  4. cash received from customers, cash paid to customers, and other sources of cash

65. Which of the following statements does NOT illustrate a proper interpretation of information in a cash flow statement?

Answers:

  1. Capital-intensive firms would likely show a substantially smaller add-back to net income for depreciation than service firms would show.
  2. The product life cycle concept provides useful insights into the relation between cash flows from operating, investing, and financing activities.
  3. The adjustments for changes in operating working capital accounts depend in part on a firm’s rate of growth.
  4. All of the above

66. Paying cash to retire preferred stock will cause cash to ______________ .

Answers:

  1. increase
  2. decrease
  3. show no change
  4. The effect on cash cannot be determined based on given information.

67. When preparing cash flow statements, the practice of presenting cash from operations by listing all cash-generating revenues followed by all cash expenses is called the ______________.

Answers:

  1. direct method
  2. operations method
  3. indirect method
  4. funds method

68. In determining cash flow from operations, which of the following would be added to net income?

Answers:

  1. Increased accounts receivable
  2. Increased merchandise inventory
  3. Increased accounts payable
  4. Decreased notes payable to suppliers

69. In 2007, XYZ Company had a net loss of $160,000 and reported the following:

Dividends paid: $40,000
Depreciation expense: $30,000
Increase in accounts payable: $15,000
Issuance of stock: $100,000
Retirement of debt: $50,000

Given this data, the net change in cash for 2007 was ______________.

Answers:

  1. ($105,000)
  2. $10,000
  3. $215,000
  4. ($165,000)

70. Which of the following would NOT be shown in the investing section of a cash flow statement?

Answers:

  1. Acquisition of equipment
  2. Acquisition of a building
  3. Proceeds from sale of equipment
  4. All of the above are shown in the investing section of a cash flow statement

71. Treasury stock sold for an amount greater than its repurchase price would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

72. Which of the following transactions would be shown as a cash flow from financing?

Answers:

  1. Cash paid for investments acquisition
  2. Cash received from sale of property, plant, and equipment
  3. Cash received from customers
  4. Cash paid for dividends

73. Acquisition of treasury stock would be shown _____________________.

Answers:

  1. as an adjustment to net income for the difference in price paid versus the original issue price
  2. in the financing section
  3. in the investing section
  4. None of the above

74. Which of the following statements expresses the objective of a cash flow statement?

Answers:

  1. To report the amount of cash flow from a firm’s operating activities
  2. To report the principal inflows and outflows of cash from investing activities
  3. To report the principal inflows and outflows of cash from financing activities
  4. All of the above

75. New equipment purchased by issuing a long-term note payable would appear in which of the following sections of the cash flow statement?

Answers:

  1. Operating section
  2. Investing section
  3. Financing section
  4. It would not appear on the statement.

1,465 total views, 2 views today

Upwork Finance and Accounting

Accounting Principles Test 2016

Published by:

1. Which of the following is a method of timing business transactions or choosing accounting principles so that the firm reports smaller variations in income from year to year than it would otherwise?

Answers:

  1. Conservatism
  2. Income Smoothing
  3. Profit Maximization
  4. Least and Latest Rule

2. What is the accounting objective which best relates to the percentage of completion method?

Answers:

  1. Conservatism
  2. Accurate Presentation
  3. Tax Minimization
  4. Income Smoothing

3. What entry would a donor make when giving a cash donation to a charity, where the donor retains the right to revoke the contribution?

Answers:

  1. Dr: Cash, Cr: Refundable Advance to Charity
  2. Dr: Refundable Advance to Charity, Cr: Cash
  3. Dr: Expense, Cr: Cash
  4. Dr: Revenue, Cr: Expense

4. Companies of what size have been impacted the most by the SOX from a cost perspective?

Answers:

  1. Mid-sized companies feel the impact the most
  2. There is no correlation between company size and the cost of implementing the provisions of the Act
  3. The larger companies as the larger the company, the more it has to pay to implement the provisions of the Act
  4. The smaller companies as the cost of implementing the provisions of the Act does not decrease proportionally with the size of the company

5. What is the acronym for the agency authorized by the U.S. Congress to regulate, among other things, the financial reporting practices of most public corporations?

Answers:

  1. SEC
  2. IASC
  3. FASB
  4. GAAP

6. What is the accounting objective which best relates to the MACRS method?

Answers:

  1. Income Smoothing
  2. Profit Maximization
  3. Tax Minimization
  4. None of the above

7. What is the phrase with no agreement on meaning which implies to most analysts that earnings quality increase with the likelihood of recurrence?

Answers:

  1. Quality of financial position
  2. Quality of earnings
  3. Conservatism objective
  4. None of the above

8. What entry would a donor make when giving a cash donation to a charity?

Answers:

  1. Dr: Revenue, Cr: Cash
  2. Dr: Expense – Cash, Cr: Cash
  3. Dr: Liability, Cr: Cash
  4. Dr: Expense – Contributions, Cr: Cash

9. What is the accounting objective which best relates to the double declining balance method?

Answers:

  1. Conservatism
  2. Income Smoothing
  3. Profit Maximization
  4. Tax Minimization

10. What is the effect of the SOX on public companies?

Answers:

  1. It has made regulations more strict
  2. It has added accountability to the upper management
  3. It has forced companies to look at their internal controls
  4. All of the above

11. Which of the following accounts may appear on a company’s balance sheet when the incomes for financial and tax reporting are different?

Answers:

  1. Income tax expenses
  2. Deferred income tax liability
  3. Sales tax expenses
  4. All of the above

12. What is the accounting objective which best relates to the Lower of Cost or Market Price method?

Answers:

  1. Accurate Presentation
  2. Tax Minimization
  3. Profit Maximization
  4. Conservatism

13. Which of the following is a method of accounting for the exploration costs of a mineral resource that would best attain the objective of income tax accounting?

Answers:

  1. Expense in total when incurred
  2. Capitalize only the costs related to mineral deposits
  3. Capitalize all costs associated with productive as well as non-productive mineral deposits
  4. None of the above

14. What is the accounting objective which best relates to the straight line method?

Answers:

  1. Profit Maximization
  2. Conservatism
  3. Tax Minimization
  4. None of the above

15. How is an unconditional promise to give a donation to a charity accounted for by the charity?

Answers:

  1. Not recorded at all until 100% contribution is received
  2. Never recorded even after receipt
  3. As revenue only when the donation is made
  4. As revenue when the promise is made

16. What is the acronym for the independent board responsible, since 1973, for establishing generally accepted accounting principles?

Answers:

  1. GAAP
  2. IASC
  3. SEC
  4. FASB

17. What is form 8-K?

Answers:

  1. Monthly filing with the SEC reporting director salaries
  2. As needed filing to disclose any significant issues or changes
  3. Quarterly financial reports filed with the SEC
  4. Annual financial reports filed with the SEC

18. What is the acronym for an independent board responsible, since 1973, for establishing generally accepted accounting principles?

Answers:

  1. SEC
  2. IASC
  3. FASB
  4. None of the above

19. Who can review the filings made by public companies with the SEC?

Answers:

  1. Only company executives
  2. Anyone using the EDGAR system
  3. Only law enforcement officials
  4. Only the staff of the SEC and the company executives

20. What change was made in regarding the penalization of the whistleblowers (people who alert the authorities about the illegal activities in a corporation) by the companies?

Answers:

  1. They are now themselves subject to fraud charges for uncovering the crimes
  2. They are put under witness protection
  3. They are offered a transfer to a new department
  4. They are now protected against retaliation by the company in order to encourage employees to bring the wrong doings of the companies to light

21. Which of the following courses of action should a firm take in order to minimize the present value of income tax payments?

Answers:

  1. Use the LIFO inventory method instead of FIFO durating periods of rising prices
  2. Depreciate fixed assets on the straight-line method rather than the MACRS method
  3. Capitalize exploration costs instead of expensing them
  4. All of the above

22. What kind of organization issuing securities would NOT have to register them with the SEC?

Answers:

  1. A private IT firm
  2. The government
  3. A publicly traded book publisher
  4. A firm with no revenue

23. What factors affect the balance sheet, given the articulation of the income statement with the balance sheet and the factors that imply high or low quality of earnings?

Answers:

  1. Quality of Financial Position
  2. Profit Maximization
  3. Quality of Earnings
  4. Conceptual Framework

24. What is the phrase which, though there is no agreement on its meaning, implies to most analysts that the quality of earnings improves with the likelihood of recurrence?

Answers:

  1. Quality of Financial Position
  2. Quality of Earnings
  3. Least and Latest Rule
  4. Accurate Presentation

25. What is the accounting objective which best relates to the disclosing of the cost of employee stock options (not expensing)?

Answers:

  1. Conservatism
  2. Profit Maximization
  3. Income Smoothing
  4. Tax Minimization

26. What is the purpose of a Registration Statement?

Answers:

  1. To offer securities to the public
  2. To disclose the operations during the first year
  3. To provide information to the public about a company before it is traded publicly
  4. Financial records for the company from inception to date

27. Which of the following is true of the Sarbanes Oxley Act?

Answers:

  1. It has bolstered investor confidence
  2. It has increased all stock prices
  3. It has increased the number of foreign corporations registering in the US
  4. It has created more work for corporate accounting departments

28. For which of the following accounts would the use of ‘the lower of cost or market price’ principle be acceptable?

Answers:

  1. Inventory
  2. Land
  3. Prepaid rent
  4. All of the above

29. Which of the following is a valid criticism of the SOX?

Answers:

  1. It has made regulations more strict
  2. It has made foreign companies reluctant to register on US stock exchanges due to the burden of SOX reporting
  3. It allows for looser corporate standards
  4. It makes a few people accountable for the misdeeds of a corporation

30. Which of the following must generally be used for financial reporting if it is used for income tax reporting?

Answers:

  1. FIFO
  2. LIFO
  3. NIFO
  4. Installment sales method

31. What is the reporting objective that calls for the anticipation of all losses incurred but defers the recognition of gains or profits until they are realized in arm’s length transactions?

Answers:

  1. Conservatism
  2. Materialism
  3. Matching
  4. Smoothing

32. Which of the following is used by the FASB in the selection of acceptable accounting principles?

Answers:

  1. Conservatism
  2. Matching
  3. Materialism
  4. Conceptual Framework

33. What value should a contribution be accounted for at?

Answers:

  1. Historical value
  2. Fair value
  3. Market value
  4. Value determined by auditors

34. What is the qualitative accounting objective suggesting that information reported in a financial statement should correspond as precisely as possible to the economic effects underlying transactions and events?

Answers:

  1. Conceptual Framework
  2. Quality of Financial Position
  3. Accurate Presentation
  4. Least and Latest Rule

35. What is the accounting objective which best relates to the expensing of R&D costs?

Answers:

  1. Income Smoothing
  2. Accurate Reporting
  3. Conservatism
  4. Profit Maximization

36. What is Form 10-K?

Answers:

  1. Monthly filing with the SEC reporting salaries to the directors
  2. As needed filing to disclose any significant issues or changes
  3. Quarterly financial reports filed with the SEC
  4. Annual financial reports filed with the SEC

37. Which FASB sets the requirements for accounting for Non-Profit organizations?

Answers:

  1. FASB SFAS 999
  2. FASB SFAS 100
  3. FASB SFAS 99
  4. FASB SFAS 117

38. What two filings are required when a company wishes to list its stock?

Answers:

  1. Forms 10K and 10Q
  2. Forms S-X and S-K
  3. Forms 8K and 10Q
  4. Forms S-X and X-S

39. In which year was the Sarbanes Oxley Act passed?

Answers:

  1. 2008
  2. 1945
  3. 2002
  4. 1845

40. What is the accounting objective which best relates to the capitalization of prepaid advertising costs?

Answers:

  1. Profit Maximization
  2. Accurate Presentation
  3. Tax minimization
  4. None of the above

41. Which doctrine lays down that a firm should account for a given set of operations so as to make reported net income as large as possible?

Answers:

  1. Least and latest rule
  2. Profit maximization
  3. Income smoothing
  4. None of the above

42. For which of the following would the use of the straight-line method of amortization be acceptable?

Answers:

  1. Building
  2. Patent
  3. Goodwill
  4. All of the above

43. What are the 3 types of Health Care Organizations for accounting purposes?

Answers:

  1. Incorporated, Limited Liability, Sole Proprietor
  2. Asset based, Liability based, Expense based
  3. Investor-owned, Non-Profit, Governmental
  4. Private, Public, LLC

44. What is the accounting objective which best relates to the weighted average inventory method?

Answers:

  1. Tax Minimization
  2. Income Smoothing
  3. Profit Maximization
  4. None of the above

45. Which of the following methods is normally considered to be acceptable for financial reporting?

Answers:

  1. MACRS
  2. Lower of cost or market price for inventories
  3. Direct write off of uncollectible accounts
  4. Capitalization of R&D Costs

46. What change was made to the internal controls of the companies by the SOX?

Answers:

  1. All company processes and related internal controls now need to be documented and then tested by an outside auditing firm
  2. Companies no longer have to document their internal controls since the auditors do the job
  3. Internal controls can be more lax than before
  4. Companies have to provide for internal controls only to satisfy the auditors

47. What is the acronym for an organization that promotes the international harmonization of accounting standards?

Answers:

  1. SEC
  2. IASC
  3. FASB
  4. None of the above

48. How are third party adjustments to patient bills reflected in the financial statements?

Answers:

  1. As an addition to revenue
  2. As a deduction from revenue
  3. As a liability
  4. As an asset

49. What is the database created by the SEC for companies to file electronically?

Answers:

  1. PCAOB
  2. EDGAR
  3. SEC
  4. IRS

50. What was the purpose of the Sarbanes Oxley act, in general?

Answers:

  1. To allow for caps on management salaries
  2. To allow for price setting on the stock market
  3. To regulate employee pension funds
  4. To better regulate public and private companies in the wake of recent accounting scandals

51. What are forms 10K and 10Q referred to as?

Answers:

  1. Periodic Filings
  2. Financial Statements
  3. Information Returns
  4. Tax Returns

52. What is the acronym for the agency authorized by the U.S. Congress to regulate the financial reporting practices of most public corporations?

Answers:

  1. SEC
  2. IASC
  3. FASB
  4. None of the above

53. Which of the following methods would be employed to help accomplish the following objective: smoothing a firm’s income as a means of minimizing large fluctuations in the price of its stock.

Answers:

  1. Weighted average inventory
  2. Percentage of completion method for long term construction contracts
  3. Straight line amortization of patents
  4. All of the above

54. What is the doctrine that the firm should account for a given set of operations so as to make reported net income as large as possible known as?

Answers:

  1. Conservatism
  2. Quality of Earnings
  3. Profit Maximization
  4. Matching

55. Which of the financial accounting objectives listed below would seem to be closest to the objective of tax reporting?

Answers:

  1. Conservatism
  2. Fair Presentation
  3. Accuracy
  4. Profit Maximization

56. What is ‘paying the least amount of taxes as late as possible within the law to minimize the present value of tax payments for a given set of operations’ a description of?

Answers:

  1. Profit Maximization
  2. Least and Latest Rule
  3. Conservatism
  4. Income Smoothing

57. What is the accounting objective which best relates to the completed contract method?

Answers:

  1. Income Smoothing
  2. Profit Maximization
  3. Tax Minimization
  4. None of the above

58. What is the accounting objective which best relates to the LIFO method?

Answers:

  1. Income Smoothing
  2. Accurate Presentation
  3. Conservatism
  4. None of the above

59. How should a firm compensating its employees by granting them the option to purchase its shares report it?

Answers:

  1. Merely disclose the cost of those grants
  2. Charge that cost as expense for the period during which it makes the grant
  3. Choose either of the options a and b
  4. Neither a nor b

60. What is the accounting objective which best relates to the percentage of sales method for uncollectible accounts?

Answers:

  1. Accurate Presentation
  2. Tax Minimization
  3. Profit Maximization
  4. Conservatism

61. What is the acronym for the organization that promotes international harmonization of accounting standards?

Answers:

  1. IASB
  2. FASB
  3. SEC
  4. IRS

62. What is the accounting objective which best relates to the FIFO method?

Answers:

  1. Tax Minimization
  2. Income Smoothing
  3. Profit Maximization
  4. Accurate Reporting

63. What change was made by the Act regarding the authority competent to sign the company tax returns?

Answers:

  1. Only the CEO now has the authority to sign the company tax returns
  2. Any employee can now sign a tax return
  3. Only the firm’s CPA can sign the tax returns
  4. Only the person who has prepared the return can sign it

64. What new board was created as part of the Sarbanes Oxley Act?

Answers:

  1. SEC – Securities and Exchange Commission
  2. IRS – Internal Revenue Service
  3. PCAOB – Public Company Accounting Oversight Board
  4. GAAP – Generally Accepted Accounting Principles

65. In which years were the Securities & Exchange Acts created?

Answers:

  1. 1980 and 1981
  2. 1933 and1934
  3. 1920 and 1930
  4. 1802 and 1920

66. What is form 10-Q?

Answers:

  1. Monthly filing with the SEC reporting director salaries
  2. As needed filing to disclose any significant issues or changes
  3. Quarterly financial reports filed with the SEC
  4. Annual financial reports filed with the SEC

67. How is a donated asset accounted by a non-profit organization based on its fair market value?

Answers:

  1. Dr: Asstes, Cr: Revenue
  2. Dr: Revenue, Cr: Liability
  3. Dr: Expenses, Cr: Assets
  4. Dr: Revenue, Cr: Expenses

68. What statements are required of a Non-Profit organization?

Answers:

  1. statement of financial position, statement of cash flows, and statement of activity and changes in net assets
  2. Bank Statements
  3. Cash Flows and Income Statement
  4. Changes in retained earnings, statement of cash flows, income statement

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