UNH ADMN 400 ACTUAL EXAM
PAPER QUESTIONS WITH
SOLUTIONS GRADED A PLUS
◉ Which of the following bodies formulates the generally accepted
accounting principles (GAAP)? Answer: Financial Accounting
Standards Board
◉ Which of the following bodies enforces accounting and auditing rules
and procedures? Answer: Securities and Exchange Commission
◉ How do certified public accountants ensure a company's financial
reports really represent its operations? Answer: By conducting an audit
◉ Which of the following terms refers to the amount of money that
owners would receive if they sold all of a company's assets and paid all
of its liabilities? Answer: Owners' equity
◉ Which of the following describes a liability? Answer: A debt owed by
a firm to an outside organization or individual
◉ A company has an assets-to-liabilities ratio of 3:2 and total assets
worth $6 million. What is its owners' equity? Answer: $2 million
,◉ How much profit does a company which has a total of $5 million
invested by its owners and $4 million in liabilities need to make in order
to have an assets-to-liabilities ratio of 2:1? Answer: $7 million
◉ What distinguishes the two most commonly used categories of
owners' equity? Answer: The source of the equity --investments versus
earnings
◉ Which of the following BEST demonstrates cash flow from
operations? Answer: Transactions involved in buying and selling goods
and services
◉ Which of the following describes assets such as land, building, and
equipment? Answer: Fixed assets
◉ Which of the following BEST describes depreciation? Answer: The
process of reducing the value of fixed assets over time
◉ Which of the following describes assets such as patents and
trademarks? Answer: Intangible assets
◉ Financial statements that do not include interpretation and explanation
by management are in violation of which GAAP principle? Answer:
Principle of full disclosure
, ◉ Which of the following ratios measures a firm's ability to meet its
current debt obligations? Answer: Short-term solvency ratio
◉ Which of the following ratios measures a firm's potential earnings?
Answer: Profitability ratio
◉ Which of the following ratios evaluates management's use of
resources? Answer: Activity ratio
◉ Why is the long-term solvency ratio important for stakeholders?
Answer: It may indicate collapse or takeover opportunities.
◉ When might high debt levels be a benefit to an organization? Answer:
When trying to make otherwise unaffordable investments
◉ What is the term for the amount a firm will pay shareholders, based
on the size of their investment in the company? Answer: Earnings per
share
◉ Which of the following statements BEST describes the need for
global accounting standards? Answer: The complexity of the global
market increases the risk of unethical accounting behavior by allowing
accountants to choose which national GAAP standards are best for their
clients.
PAPER QUESTIONS WITH
SOLUTIONS GRADED A PLUS
◉ Which of the following bodies formulates the generally accepted
accounting principles (GAAP)? Answer: Financial Accounting
Standards Board
◉ Which of the following bodies enforces accounting and auditing rules
and procedures? Answer: Securities and Exchange Commission
◉ How do certified public accountants ensure a company's financial
reports really represent its operations? Answer: By conducting an audit
◉ Which of the following terms refers to the amount of money that
owners would receive if they sold all of a company's assets and paid all
of its liabilities? Answer: Owners' equity
◉ Which of the following describes a liability? Answer: A debt owed by
a firm to an outside organization or individual
◉ A company has an assets-to-liabilities ratio of 3:2 and total assets
worth $6 million. What is its owners' equity? Answer: $2 million
,◉ How much profit does a company which has a total of $5 million
invested by its owners and $4 million in liabilities need to make in order
to have an assets-to-liabilities ratio of 2:1? Answer: $7 million
◉ What distinguishes the two most commonly used categories of
owners' equity? Answer: The source of the equity --investments versus
earnings
◉ Which of the following BEST demonstrates cash flow from
operations? Answer: Transactions involved in buying and selling goods
and services
◉ Which of the following describes assets such as land, building, and
equipment? Answer: Fixed assets
◉ Which of the following BEST describes depreciation? Answer: The
process of reducing the value of fixed assets over time
◉ Which of the following describes assets such as patents and
trademarks? Answer: Intangible assets
◉ Financial statements that do not include interpretation and explanation
by management are in violation of which GAAP principle? Answer:
Principle of full disclosure
, ◉ Which of the following ratios measures a firm's ability to meet its
current debt obligations? Answer: Short-term solvency ratio
◉ Which of the following ratios measures a firm's potential earnings?
Answer: Profitability ratio
◉ Which of the following ratios evaluates management's use of
resources? Answer: Activity ratio
◉ Why is the long-term solvency ratio important for stakeholders?
Answer: It may indicate collapse or takeover opportunities.
◉ When might high debt levels be a benefit to an organization? Answer:
When trying to make otherwise unaffordable investments
◉ What is the term for the amount a firm will pay shareholders, based
on the size of their investment in the company? Answer: Earnings per
share
◉ Which of the following statements BEST describes the need for
global accounting standards? Answer: The complexity of the global
market increases the risk of unethical accounting behavior by allowing
accountants to choose which national GAAP standards are best for their
clients.
