Financial Reporting Test

Financial Reporting Test


How does the income statement of a charity differ from that of a public company?

a. Charities typically have higher overhead expenses such as management wages
b. Charities produce a similar report which shows funding sources, and program expenses and other commitments
c. Charities do not generate cash via a revenue model, and do not produce any statements
d. Charities report each donation as taxable income

Which of the following does Financing Activities not include?

a. Payments to vendors
b. Payments of dividends to company shareholders
c. Payments to repurchase company shares
d. Repayment of debt

Which of the following is not a part of cost of goods sold?

a. Raw material
b. Labor
c. Capital
d. All of the above are part of cost of goods sold

What does the indirect method of preparing the cash flow statement effectively accomplish?

a. It keeps the use of cash vague so the reader cannot tell the exact use
b. It is a less detailed summary version of use of cash
c. It takes the accrual basis of accounting and converts it to cash basis
d. It shows the reader how well the management is performing

Which of the following is not a fundamental of accounting?

a. Materiality
b. Timeliness
c. Matching
d. Magnitude

How does Treasury Stock differ from Trading Stock?

a. Treasury stock is an indication that a company is failing
b. Treasury stock has no voting or dividend rights
c. Treasury stock is looked negatively upon by the investment community
d. Treasury stock can be resold to employees at a discount

Which cash collection technique is the most cost-effective for companies with many locations?

a. Self-addressed stamped envelopes
b. Centralized collection system
c. Lockbox system
d. Using a post office box
e. Regional collection offices

What is one procedure a Company Manager would take to make the information on financial reports more useful for examination?

a. Hire an auditor to validate the company reports
b. Use the information on the financial reports to do a financial analysis, creating comparable ratios
c. Compare it to other companies
d. Change the statement of cash flows to be the direct method

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