Upwork FINANCIAL REPORTING TEST 2016

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Upwork FINANCIAL REPORTING TEST 2016

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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