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41.     Which of the following should be excluded from long-term liabilities?
a.     Obligations payable at some date beyond the operating cycle
b.     Most pension obligations
c.     Long-term liabilities that mature within the operating cycle and will be paid from a sinking fund
d.     None of these

     42.     Treasury stock should be reported as a(n)
a.     current asset.
b.     investment.
c.     other asset.
d.     reduction of stockholders' equity.

     43.     Which of the following should be reported for capital stock?
a.     The shares authorized
b.     The shares issued
c.     The shares outstanding
d.     All of these

     44.     Which of the following would be classified in a different major section of a balance sheet from the others?
a.     Capital stock
b.     Common stock subscribed
c.     Stock dividend distributable
d.     Stock investment in affiliate

     45.     The stockholders' equity section is usually divided into what three parts?
a.     Preferred stock, common stock, treasury stock
b.     Preferred stock, common stock, retained earnings
c.     Capital stock, additional paid-in capital, retained earnings
d.     Capital stock, appropriated retained earnings, unappropriated retained earnings

     46.     Which of the following is not an acceptable major asset classification?
a.     Current assets
b.     Long-term investments
c.     Property, plant, and equipment
d.     Deferred charges


     P47.     Which of the following is a contra account?
a.     Premium on bonds payable
b.     Unearned revenue
c.     Patents
d.     Accumulated depreciation

     S48.     Which of the following balance sheet classifications would normally require the greatest amount of supplementary disclosure?
a.     Current assets
b.     Current liabilities
c.     Plant assets
d.     Long-term liabilities

     49.     Which of the following is not a method of disclosing pertinent information?
a.     Supporting schedules
b.     Parenthetical explanations
c.     Cross reference and contra items
d.     All of these are methods of disclosing pertinent information.

     50.     Significant accounting policies may not be
a.     selected on the basis of judgment.
b.     selected from existing acceptable alternatives.
c.     unusual or innovative in application.
d.     omitted from financial-statement disclosure.

     51.     A general description of the depreciation methods applicable to major classes of depreci-able assets
a.     is not a current practice in financial reporting.
b.     is not essential to a fair presentation of financial position.
c.     is needed in financial reporting when company policy differs from income tax policy.
d.     should be included in corporate financial statements or notes thereto.

     52.     It is mandatory that the essential provisions of which of the following be clearly stated in the notes to the financial statements?
a.     Stock option plans
b.     Pension obligations
c.     Lease contracts
d.     All of these

     53.     A generally accepted account title is
a.     Prepaid Revenue.
b.     Appropriation for Contingencies.
c     Earned Surplus.
d.     Reserve for Doubtful Accounts.

     54.     The financial statement which summarizes operating, investing, and financing activities of an entity for a period of time is the
a.     retained earnings statement.
b.     income statement.
c.     statement of cash flows.
d.     statement of financial position.

     S55.     The statement of cash flows provides answers to all of the following questions except
a.     Where did the cash come from during the period?
b.     What was the cash used for during the period?
c.     What is the impact of inflation on the cash balance at the end of the year?
d.     What was the change in the cash balance during the period?

     56.     Making and collecting loans and disposing of property, plant, and equipment are
a.     operating activities.
b.     investing activities.
c.     financing activities.
d.     liquidity activities.

     57.     In preparing a statement of cash flows, sale of treasury stock at an amount greater than cost would be classified as a(n)
a.     operating activity.
b.     financing activity.
c.     extraordinary activity.
d.     investing activity.

     58.     In preparing a statement of cash flows, cash flows from operating activities
a.     are always equal to accrual accounting income.
b.     are calculated as the difference between revenues and expenses.
c.     can be calculated by appropriately adding to or deducting from net income those items in the income statement that do not affect cash.
d.     can be calculated by appropriately adding to or deducting from net income those items in the income statement that do affect cash.

     59.     In preparing a statement of cash flows, which of the following transactions would be considered an investing activity?
a.     Sale of equipment at book value
b.     Sale of merchandise on credit
c.     Declaration of a cash dividend
d.     Issuance of bonds payable at a discount

     60.     Preparing the statement of cash flows involves all of the following except determining the
a.     cash provided by operations.
b.     cash provided by or used in investing and financing activities.
c.     change in cash during the period.
d.     cash collections from customers during the period.

     61.     The cash debt coverage ratio is computed by dividing net cash provided by operating activities by
a.     average long-term liabilities.
b.     average total liabilities.
c.     ending long-term liabilities.
d.     ending total liabilities.

     62.     The current cash debt coverage ratio is often used to assess
a.     financial flexibility.
b.     liquidity.
c.     profitability.
d.     solvency.
     63.     A measure of a company’s financial flexibility is the
a.     cash debt coverage ratio.
b.     current cash debt coverage ratio.
c.     free cash flow.
d.     cash debt coverage ratio and free cash flow.

     64.     Free cash flow is calculated as net cash provided by operating activities less
a.     capital expenditures.
b.     dividends.
c.     capital expenditures and dividends.
d.     capital expenditures and depreciation.

     S65.     One of the benefits of the statement of cash flows is that it helps users evaluate financial flexibility. Which of the following explanations is a description of financial flexibility?
a.     The nearness to cash of assets and liabilities.
b.     The firm's ability to respond and adapt to financial adversity and unexpected needs and opportunities.
c.     The firm's ability to pay its debts as they mature.
d.     The firm's ability to invest in a number of projects with different objectives and costs.

     P66.     Net cash provided by operating activities divided by average total liabilities equals the
a.     current cash debt coverage ratio.
b.     cash debt coverage ratio.
c.     free cash flow.
d.     current ratio.

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