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ACG 3024 - Accounting Exam 2 DSC Questions with complete solutions
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ACG 3024 - Accounting Exam 2 DSC Questions with complete solutions
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ACG 3024 - Accounting Exam 2 DSCQuestions with complete solutions
The straight-line method of amortization is the recommended method. - correct answer ✔✔False
Which of the following statements is true?
- The direct method is easier to use than the indirect method
- The indirect method of calculating cash flows from operations adjusts each item in the income
statement to a cash basis
- None of the choices are correct
- The direct method of calculating cash flows from operations starts with net income and adjusts for
noncash revenues and expenses and changes in current assets and current liabilities - correct answer
✔✔None of the choices are correct
The statement of cash flows is one of the major financial statements - correct answer ✔✔True
An objective of financial statement analysis is to provide information about the company's past
performance and current financial position - correct answer ✔✔True
When a corporation pays dividends, it affects the financing activities of the statement of cash flows
- No effect
- As a short-term effect
- As a cash inflow
- As a cash outflow - correct answer ✔✔As a cash outflow
If a company has a current ratio of 8.5 and its current liabilities are $6899, what are its current assets?
- $5864.15
- $58641.50
- $24907.50
,- $2409.75 - correct answer ✔✔$58641.50
A bond issue consists of all of the following except
- Outstanding indefinitely unless the company decides to retire it
- Maturity date
- Interest
- Principal - correct answer ✔✔Outstanding indefinitely unless the company decides to retire it
If a company has cash of $22500, inventory of $18320, accounts receivable of $55980, equipment of
$108200, accounts payable of $41320, and accrued expenses of $14025, what is the quick ratio?
- 1.9
- 1.4
- 2.3
- .74 - correct answer ✔✔1.4
When analyzing financial ratios, a potential investor does not need to consider the following: process
time, seasonality of company, market risk. - correct answer ✔✔False
In the operating section of the statement of cash flows, if accounts payable has decreased from the prior
year
- It does not matter since only the current amount of accounts payable is subtracted
- It means that the company has paid down its debt (liabilities) and the difference (prior year - current
year) is subtracted
- It means that the company has not paid down its debt (liabilities) and the difference (prior year -
current year) is add
- It does not matter since only the current amount of accounts payable is added - correct answer ✔✔It
means that the company has paid down its debt (liabilities) and the difference (prior year - current year)
is subtracted
Liquidity ratios help creditors determine a company's ability to pay its debt
- They include accounts receivable turnover, inventory turnover, and cash flow liquidity ratio
, - They include current ratio, times interest earned ratio, and price-earnings ratio
- They include accounts receivable turnover, inventory turnover, and rate of return on assets
- They include current ratio, inventory turnover, and price-earnings ratio - correct answer ✔✔They
include accounts receivable turnover, inventory turnover, and cash flow liquidity ratio
The investing section of the statement of cash flows takes into account the cash inflow and outflows of
purchases of assets - correct answer ✔✔True
How much will a company need to deposit in a bank account if they want to receive $20,000 in year 5?
(assume the bank will pay 5% interest as long as the company does not withdraw funds within the 5-year
period)
- $86590
- $15670
- $20000
- $25526 - correct answer ✔✔$15670
How much would the Florida Lottery need to deposit in an account today to pay a lottery winner $21,500
every year for the next six years? Assume the Florida Lottery can earn an interest rate of 3%?
- $116469.80
- $18002.50
- $158242.20
- $129000 - correct answer ✔✔$116469.80
If a company deposits $4500 in an investment account today at an interest rate of 3% for 3 years, how
much will they be able to withdraw in year 3? Assume no prior withdraws are made.
- $4500
- $4917.15
- $4117.95
- $12728.70 - correct answer ✔✔$4917.15
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