Acc 561 Final Exam

ACC 561 FINAL EXAM

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ACC 561 FINAL EXAM,

1. Which of the following is an advantage of corporations relative to partnerships and sole proprietorships?

Most common form of organization.

*Reduced legal liability for investors.

Lower taxes.

Harder to transfer ownership.

2. The group of users of accounting information charged with achieving the goals of the business is its

creditors.

*managers.

auditors.

investors.

3. Which of the following financial statements is concerned with the company at a point in time?

Retained Earnings statement.

Statement of cash flows.

*Balance sheet.

Income statement.

4. An income statement

reports the changes in assets, liabilities, and stockholders’ equity over a period of time.

summarizes the changes in retained earnings for a specific period of time.

reports the assets, liabilities, and stockholders’ equity at a specific date.

*presents the revenues and expenses for a specific period of time.

5. The most important information needed to determine if companies can pay their current obligations is the

net income for this year.

relationship between short-term and long-term liabilities.

*relationship between current assets and current liabilities.

projected net income for next year.

6. A liquidity ratio measures the

percentage of total financing provided by creditors.

income or operating success of a company over a period of time.

*short-term ability of a company to pay its maturing obligations and to meet unexpected needs for cash.

ability of a company to survive over a long period of time.

7. The convention of consistency refers to consistent use of accounting principles

among firms.

throughout the accounting periods.

*among accounting periods.

within industries.

8. Horizontal analysis is also known as

common size analysis.

*trend...