Question

1.

Which of the following is a shortcoming of the balance sheet?

A. Most assets being recorded at their original purchase price instead of their market value

B. Most assets being recorded at their market value instead of their original purchase price

C. Inclusion of a company’s organically grown intangible assets (e.g., the brand value for Apple) on its balance sheet

D. None of the above is a shortcoming of balance sheet

2.

If you bought a piece of property 20 years ago for $100,000 and it is now worth $500,000, how would you record the property asset on a balance sheet?

A. As $400,000

B. As $100,000

C. As $500,000

D. As $300,000

3.

Why is EPS (Earnings Per Share) so important to potential investors?

a. It shows investors how small their share will be relative to the other investors

b. It shows investors companies' after tax earnings

c. It shows investors the percentage return they can get on their investment

d. It shows investors what a company gets to keep for every $1 of sales it makes

4.

When Walmart generates assets through selling products to its customers (through doing business), the source of that asset is called:

a. Revenue

b. Liability

c. Owner’s Equity

d. Paid-in-Capital

5.

When Walmart buys inventory and it promises its suppliers that it will pay them in the future, it records the amount it owes as_____________ on its balance sheet:

a. Unearned revenue

b. Short-term borrowing

c. Accounts payable

d. No entry is required for an amount owed until a cash payment is made

6.

How does an airline report the money you pay when you have purchased a plane ticket, but have not yet taken the flight?

A. As realized revenue

B. As revenue

C. As deferred revenue

D. As unearned revenue

Answer 1

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1. Which of the following is a shortcoming of the balance sheet?

A. Most assets being recorded at their original purchase price instead of their market value.

2. If you bought a piece of property 20 years ago for $100,000 and it is now worth $500,000, how would you record the property asset on a balance sheet?

B. As $100,000. Because properties should be recorded at their historic cost.

3. Why is EPS (Earnings Per Share) so important to potential investors?

c. It shows investors the percentage return they can get on their investment.

4. When Walmart generates assets through selling products to its customers (through doing business), the source of that asset is called:

a. Revenue.

5. When Walmart buys inventory and it promises its suppliers that it will pay them in the future, it records the amount it owes as_____________ on its balance sheet:

c. Accounts payable.

6. How does an airline report the money you pay when you have purchased a plane ticket, but have not yet taken the flight?

D. As unearned revenue.