College Accounting Coach » Accounting Test Question Bank

Financial Accounting Quiz on Inventories or Stock

slang — Sat, 21 Aug 2010 05:46:41 +0000

Refresh or test your accounting knowledge on Inventories or stocks:

Multiple Choice Questions ( with answers(below))

1. The lower of cost or market method for valuing inventories
a. Recognizes reductions in the values of inventories held by a corporation in the period in which the decline in value occurs
b. Recognizes increases in the values of inventories held by a company in the period in which the increase in value occurs
c. Recognizes reductions in the values of inventories held by a company in the period in which the goods are sold
d. All of the above

2. The method of inventory accounting that, during periods of rising periods, results in a balance sheet valuation for inventories that is between the LIFO and FIFO values is the
a. Weighted-average method
b. First-in, first-out method
c. Last-in, first-out method
d. Specific identification method

3. The method of inventory accounting that has been adopted by a majority of companies use in part to the lower income taxes its use creates during periods of rising period is the
a. Last –in, first –out method
b. Specific identification method
c. First-in, first-out method
d. Weighted-average method

4. The method of inventory accounting which results in balance sheet values that are closest in the cost of replacing the inventories in periods of changing prices is the
a. First-in, first-out method
b. Specific identification method
c. Last-in, first-out method
d. Weighted average method

5. The method of inventory accounting which specifically identifies units sold and expenses their costs against the revenues generated from their sale is the
a. Specific identification method
b. Last-in, first-out method
c. First-in, first-out method
d. Weighted average method

Answers:
1 to 5 = answer (a)

Answers To Financial Accounting test Question IFS No.5 & 6 On Interpretation of Financial Statement

slang — Thu, 17 Apr 2008 02:18:00 +0000

Answer to Financial Accounting Test Question IFS No. 5 On Interpretation Of Financial Statement:

1 D

2 D

3 B

4 B

5 C

6 D

7 D

8 A

9 A

10 D

11 C

12 A

Answer to Financial Accounting Test Question IFS No.6 On Interpretation Of Financial Statement:

1. TRUE 2. TRUE

3. TRUE 4. FALSE

5. TRUE 6. TRUE

7. TRUE 8. TRUE

9. FALSE 10. TRUE

11 TRUE 12 FALSE

13 FALSE 14 TRUE

15 TRUE 16 TRUE

17 TRUE 18 TRUE

19 TRUE 20 FALSE

21 FALSE 22 TRUE

23 TRUE 24 TRUE

25 TRUE

Financial Accounting Test Question IFS No 6 On Interpretation Of Financial Statement

slang — Thu, 17 Apr 2008 02:06:18 +0000

Financial Accounting Question Test IFS No. 6 On Interpretation Of Financial Statement

True Or False

1. Financial statements that reflect financial data for two or more periods are often referred to as comparative statements

· True

· False

2. Development of data that measures changes occurring from one accounting period to another is a form of horizontal analysis

· True

· False

3. One form of horizontal analysis is the development of an index-number trend series

· True

· False

4. When preparing an index-number trend series, the first year presented must always be the base(100%)

· True

· False

5. Index numbers can only be computed when amounts are positive

a. True

b. False

6. Common-size financial statements are a widely used vertical analysis technique.

· True

· False

7. A common-size income statement usually shows each revenue or expense item as a percentage of net sales

· True

· False

8. Comparability between enterprises is more difficult to obtain than comparability within a single enterprise.

a. True

b. False

9. Computation of ratios for an accounting period is a form of horizontal analysis

· True

· False

10. Generally, the first concern of a financial analyst is a firm’s liquidity

· True

· False

11. The working capital ratio is regarded as a fundamental measurement of a company’s liquidity

a. True

b. False

12. Normally, an analyst would believe that a manufacturing company with a current ratio of 3 to 1 was in serious liquidity trouble.

· True

· False

13. The acid-test ratio is regarded primarily as a measure of a company’s long-term liquidity situation

· True

· False

14. Usually a quick ratio of 1.5 to 1 would be considered satisfactory.

a. True

b. False

15. The accounts receivable turnover is both a measure of liquidity and a measure of activity

· True

· False

16. Average receivables may also be expressed in terms of the number of days’ sales in receivables

· True

· False

17. The receivable position and the approximate collection time may be evaluated by computing the accounts receivable turnover

c. True

d. False

18. The inventory turnover is computed by dividing cost of goods sold by average inventory

· True

· False

19. A natural business year relates to a fiscal year ending when operations are at their lowest point

· True

· False

20. Normally a relatively low inventory turnover is desirable

a. True

b. False

21. The ratio of the net sales to total sales is often called the profitability ratio

· True

· False

22. The ratio called profit margin on sales is a measure of the profit percentage per dollar of sales

· True

· False

23. Return on investment(ROI) is a measure of overall asset productivity

· True

· False

24. The price earning ratio is a measure of the relative attractiveness of common stock as an investment

· True

· False

25. The use of borrowed funds is known as trading on the equity.

· True

· False

[ REFER ANSWER}

Financial Accounting Test Question IFS No 5 On Interpretation Of Financial Statements

slang — Thu, 17 Apr 2008 01:58:44 +0000

Financial Accounting Test Question IFS No.5 On Interpretation Of Financial Statements:

PLEASE INDICATE THE CORRECT ANSWER:

1. Comparisons between financial statements are most informative and useful if

a. Any changes in circumstances of the underlying transaction are made known

b. The presentation are in good form

c. Accounting principles are not changed

d. All of the above

2. A company reported sales of $300,000 in 2005, the base year. Sales were $360,000 in 2006 and $450,000 in 2007. In the presentation of an index-number trend series, the sales index for 2007 should be reported as:

a. 67

b. 100

c. 120

d. 150

3. The current ratio is also known as the:

a. Turnover ratio

b. Working capital ratio

c. Acid test ratio

d. Liquidity ratio

4. Sales for the year totaled $400,000; cost of goods sold $240,000;beginning inventory,$30,000;ending inventory$50,000; average trade receivables for the year,$80,000. The inventory turnover rate was:

a. 5

b. 6

c. 8

d. 10

5. A measure of the overall efficiency of asset utilization is the:

a. Earnings per share

b. Receivable turnover rate

c. Asset turnover rate

d. Acid-test ratio

6. The ratio of income to sales determines the:

a. Asset turnover

b. Inventory turnover

c. Rate earned on assets

d. None of the above

7. If stockholders have provided 80% and creditors have provided 20% of total assets, this can be referred to as:

a. Trading on the equity

b. Equity to debt ratio of 4 to 1

c. Applying leverage

d. All of the above are correct

8. A company reported income after income tax of $100,000;income tax expense$40,000; interest earned on investments, $20,000;interest paid on bonds outstanding,$60,000. The number of times interest was earned would be:

a. 3.3

b. 3.0

c. 2.3

d. 1.7

9. If a company’s capital structure does not qualify as simple:

a. Both a primary and a fully diluted earnings per share amount must be reported

b. Only one earnings per share amount is normally required

c. The company cannot have stock options outstanding

d. It is not necessary to determine weighted average number of shares outstanding

10. A company had 80,000 shares of stock outstanding on January 1. On March 31, the company sol an additional 20,000 shares; a 3-for-1 stock split was distributed on July 15; and an additional 20,000 shares were sold on November 1. The weighted average number of shares to be used in determining earnings per share for the year would be:

a. 95,000

b. 320,000

c. 238,333

d. 288,333

11. A company ha 90,000 shares of common stock outstanding at the beginning of the year, sold an additional 60,000 shares on May 1 and had income for the year of $26,000. Earnings per share for the year would be:

a. $0.14

b. $0.17

c. $0.20

d $0.29

12. A company had 100,000 shares of common stock and 100,000 shares of cumulative nonconvertible preferred stock outstanding throughout the year. The dividend on the preferred stock was 70 ct per share. If the company reported income of $100,000 for the year, what amount of earnings per share should be reported?

a. $0.30

b. $0.70

c. $1.00

d None of the above.

[ REFER ANSWER ]