Homework Help is Here – Start Your Trial Now!
Business
Accounting
Problem 8-6 Multiple 1. In analyzing an entity's financial statements, which financial statement would a potential investor primarily use to assess liquidity and financial flexibility? a. Statement of financial position b. Income statement c. Statement of retained earnings d. Statement of cash flows accounts are

Problem 8-6 Multiple 1. In analyzing an entity's financial statements, which financial statement would a potential investor primarily use to assess liquidity and financial flexibility? a. Statement of financial position b. Income statement c. Statement of retained earnings d. Statement of cash flows accounts are

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
Kindly answer the following questions in problems 8-6 and 8-7.
A primarily Problem 8-6 Multiple choice (AICPA Adapted) 1. In analyzing an entity's financial statements, which financial statement would a potential investor use to assess liquidity and financial flexibility? b. a. Statement of financial position Income statement Statement of retained earnings d. Statement of cash flows C. 2. Conceptually, asset valuation accounts are a. Assets b. Neither assets nor liabilities c. Part of shareholders' equity d. Liabilities 3. Working capital is a. The group of assets needed to operate profitably. b. Capital reinvested in business. c. Unappropriated retained earnings. d. Current assets less current liabilities. 4. As generally used, the term net assets represents a. Retained earnings b. Current assets less current liabilities c. Total shareholders' equity d. Total assets less total liabilities 5. The basis for classifying assets as current or noncurrent is the period of time normally required to convert cash invested in a. Inventory back into cash or 12 months, whichever is shorter. b. Receivables back into cash or 12 months, whichever is longer. c. Property, plant and equipment back into cash or 12 months, whichever is longer. d. Inventory back into cash or 12 months, whichever is longer. 158 Problem 1. Which s a. Tra colle b. Cas pre Cas C. d. A d wil 2. Which a. Ins acc b. Pr Fi C. d. Ca 3. Curre a. A b. C c. G d. B 4. Equi addit a. C b. E c. I d. L 5. Whi a. b. C. d.
Transcribed Image Text:A primarily Problem 8-6 Multiple choice (AICPA Adapted) 1. In analyzing an entity's financial statements, which financial statement would a potential investor use to assess liquidity and financial flexibility? b. a. Statement of financial position Income statement Statement of retained earnings d. Statement of cash flows C. 2. Conceptually, asset valuation accounts are a. Assets b. Neither assets nor liabilities c. Part of shareholders' equity d. Liabilities 3. Working capital is a. The group of assets needed to operate profitably. b. Capital reinvested in business. c. Unappropriated retained earnings. d. Current assets less current liabilities. 4. As generally used, the term net assets represents a. Retained earnings b. Current assets less current liabilities c. Total shareholders' equity d. Total assets less total liabilities 5. The basis for classifying assets as current or noncurrent is the period of time normally required to convert cash invested in a. Inventory back into cash or 12 months, whichever is shorter. b. Receivables back into cash or 12 months, whichever is longer. c. Property, plant and equipment back into cash or 12 months, whichever is longer. d. Inventory back into cash or 12 months, whichever is longer. 158 Problem 1. Which s a. Tra colle b. Cas pre Cas C. d. A d wil 2. Which a. Ins acc b. Pr Fi C. d. Ca 3. Curre a. A b. C c. G d. B 4. Equi addit a. C b. E c. I d. L 5. Whi a. b. C. d.
Problem 8-7 Multiple choice (AICPA Adapted) 1. Which should be classified as current asset? a. Trade installment accounts receivable normally collectible in 18 months b. Cash designated for the redemption of callable preference shares c. Cash surrender value of a life insurance policy d. A deposit on machinery ordered, delivery of which will be made within six months 2. Which should not be considered as current asset? a. Installment notes receivable due over 18 months in accordance with normal trade practice b. Prepaid taxes c. Financial asset held for trading d. Cash surrender value of life insurance policy 3. Current assets should never include a. A receivable not collectible within one year b. Current tax asset c. Goodwill arising in a business combination d. Bond investment 4. Equity investments held to finance construction of additional plant should be classified as a. Current assets b. Property, plant, and equipment c. Intangible assets d. Noncurrent investments 5. Which of the following is not a noncurrent investment? a. Cash surrender value of life insurance policy b. Franchise C. Land held for speculation d. A sinking fund 159
Transcribed Image Text:Problem 8-7 Multiple choice (AICPA Adapted) 1. Which should be classified as current asset? a. Trade installment accounts receivable normally collectible in 18 months b. Cash designated for the redemption of callable preference shares c. Cash surrender value of a life insurance policy d. A deposit on machinery ordered, delivery of which will be made within six months 2. Which should not be considered as current asset? a. Installment notes receivable due over 18 months in accordance with normal trade practice b. Prepaid taxes c. Financial asset held for trading d. Cash surrender value of life insurance policy 3. Current assets should never include a. A receivable not collectible within one year b. Current tax asset c. Goodwill arising in a business combination d. Bond investment 4. Equity investments held to finance construction of additional plant should be classified as a. Current assets b. Property, plant, and equipment c. Intangible assets d. Noncurrent investments 5. Which of the following is not a noncurrent investment? a. Cash surrender value of life insurance policy b. Franchise C. Land held for speculation d. A sinking fund 159
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Basic Accounting Terms
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS