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The disposal of a significant component of a business is called a.A change in accounting

The disposal of a significant component of a business is called

a.A change in accounting principle

b.An extraordinary item

c.An other expense

d.Discontinued operation

2.   If year one sales equal $800,000, year two equal $840,000 and year three equals $896,000 the percentage to be assigned for year two in a sales trend analysis, assuming that year 1 is the base year, is

a.              100%

b.              89%

c.              105%

d.              112%

3.  A measure of a company’s profitability is the

a.              Current ratio

b.              Current cash debt coverage ratio

c.              Return on assets ratio

d.              Debt to total assets ratio

4.Which of the following is not an economic consequence of financial reporting?

a.Financial information can affect the distribution of wealth among investors. More informed investors, or investors employing security analysts, may be able to increase their wealth at the expense of less informed investors.

b.Financial information can affect the level of risk accepted by a firm.  Focusing on short-term, less risky projects may have long-term detrimental effects.

c.Financial information can affect the rate of capital formation in the economy and result in a reallocation of wealth between consumption and investment within the economy.

d.Financial information can affects the   allocation of psychic income among investors.

5.Which of the following is not an income statement element?

a.Asset

b.Gain

c.Revenue

d.Expense

6.The statement, net income should reflect all items that affected the net increase or decrease in stockholders’ equity during the period is consistent with which of the following concepts of income?

a.Economic

b.All inclusive

c.Current operating performance

d.Money

7.The phrase events and transactions that are distinguished by both their unusual nature and their infrequency of occurrence describes:

a.Changes in accounting principles

b.Prior period adjustments

c.Extraordinary items

d.Prior period adjustments

8.Which of the following is not an accounting change?

a.Change in accounting principle

b.Change in accounting estimate

c.Change in a reporting entity

d.Change because of an error

9.Which of the following is not an example of an error?

a.A change from an accounting practice that is not generally acceptable to a practice that is generally acceptable.

b.Mathematical mistakes.

c.A change from LIFO to FIFO inventory costing

d.The incorrect classification of costs and expense

10.The formula, Operating profit/Sales, is used to calculate

a.Gross profit percentage

b.Net profit percentage

c.Comprehensive income percentage

d.Operating profit percentage

Dec 10 2019 View more View Less

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