Question

1. A tangible noncurrent asset which cost is amortized over its estimated useful life

a. Supplies and materials

b. Property, plant and equipment

c. Goodwill

d. Inventory

2. The Retained Earnings shows which of the following

a. the accumulated net earnings of the corporation that has not been distributed as dividends

to shareholders

b. the accumulated earnings without regard to dividends distributed

c. the accumulated gross revenues less cost of sales

d. the accumulated gross revenues

3. When a company incurs a loss on the sale of machinery, it should be reported on the statement of cash flows as which type of activity?

a. A non-cash activity.

b. An operating activity under the direct method.

c. An adjustment to net income under the indirect method.

d. An investing activity cash outflow.

4. Revenues do not arise from

a. Sales of merchandise to customers.

b. Rendering of services.

c. Use of the firm’s resources by others.

d. Issuance of common stock at an amount in excess of par value.

5. During the year 2010, a firm’s assets increased by Php30,000 and owner’s equity decreased

by Php20,000. What is the net effect on the liabilities for the year 2010?

a. Increase by Php10,000.

b. Decrease by Php50,000.

c. Decrease by Php10,500.

d. Increase by Php50,000.

6. A technique for evaluating financial statements that expresses the relationship among selected items of financial statement date is

a. common size analysis.

b. horizontal analysis.

c. ratio analysis.

d. vertical analysis.

7. Horizontal analysis is also called

a. linear analysis.

b. vertical analysis.

c. trend analysis.

d. common size analysis.

8. The formula for horizontal analysis is the current year amount

a. divided by the base year amount.

b. minus the base year amount divided by the base year amount.

c. minus the base year amount divided by the current year amount.

d. plus the base year amount divided by the base year amount.

9. Horizontal analysis evaluates financial statement data

a. within a period of time.

b. over a period of time.

c. on a certain date.

d. as it may appear in the future.

10. Assume the following sales data for a company

2008 $1,000,000 2007 900,000 2006 750,000 2005 500,000

If 2005 is the base year, what was the percentage increase in sales from 2005 to 2007?

a. 100% b. 180% c. 80% d. 55.5%

Answer 1

1. A tangible noncurrent asset which cost is amortized over its estimated useful life

Ans : b. Property, plant and equipment :

its assets which is amortized over its estimated useful life by the different method of depreciation

2. The Retained Earnings shows which of the following

Ans: a. the accumulated net earnings of the corporation that has not been distributed as dividends

to shareholders

Retained earning is the amount whch is tranferred from the income statement and which left unditributed between the shareholders.

3. When a company incurs a loss on the sale of machinery, it should be reported on the statement of cash flows as which type of activity?

Ans : c. An adjustment to net income under the indirect method.

under indirect method of cash flow statement its adjustment as it was shown in the income statement of corporation.

4. Revenues do not arise from

Ans:d. Issuance of common stock at an amount in excess of par value.

the issuance of common stock an amount in excess of par value is shown in the balance sheet as additional paid in capital in the balance sheet the amount over and above the par value of stock.

5. During the year 2010, a firm’s assets increased by Php30,000 and owner’s equity decreased

by Php20,000. What is the net effect on the liabilities for the year 2010?

Ans: d. Increase by Php50,000.

As the net effect should be increase in the lilability so the it should be increase by Php 50000

6. A technique for evaluating financial statements that expresses the relationship among selected items of financial statement date is

Ans:b. horizontal analysis.

7. Horizontal analysis is also called

Ans: c. trend analysis.

8. The formula for horizontal analysis is the current year amount

Ans:b. minus the base year amount divided by the base year amount.

9. Horizontal analysis evaluates financial statement data

Ans: b. over a period of time. : horizontal analysis it done in between the given period

10. Assume the following sales data for a company

2008 $1,000,000 2007 900,000 2006 750,000 2005 500,000

If 2005 is the base year, what was the percentage increase in sales from 2005 to 2007?

Ans: C 80 %

incrase in sales 900000-500000=400000

% increase =400000/500000*100=80%