ACC 561 Week 6 Final Exam elaborations questions and answers

Which of the following is an advantage of corporations relative to partnerships and sole proprietorships? Harder to transfer ownership. Lower taxes. Most common form of organization. Reduced legal liability for investors. Multiple Choice Question 2 The group of users of accounting information charged with achieving the goals of the business is its creditors. investors. managers. auditors. Multiple Choice Question 3Which of the following financial statements is concerned with the company at a point in time? Balance sheet. Income statement. Retained Earnings statement. Statement of cash flows. Multiple Choice Question 4 An income statement presents the revenues and expenses for a specific 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. reports the changes in assets, liabilities, and stockholders’ equity over a period of time. Multiple Choice Question 5The most important information needed to determine if companies can pay their current obligations is the projected net income for next year. net income for this year. relationship between current assets and current liabilities. relationship between short-term and long-term liabilities. Multiple Choice Question 6 A liquidity ratio measures the income or operating success of a company over a period of time. percentage of total financing provided by creditors. ability of a company to survive over a long period of time. short-term ability of a company to pay its maturing obligations and to meet unexpected needs for cash. Multiple Choice Question 7 The convention of consistency refers to consistent use of accounting principlesthroughout the accounting periods. within industries. among accounting periods. among firms. Multiple Choice Question 8 Horizontal analysis is also known as vertical analysis. trend analysis. common size analysis. linear analysis Multiple Choice Question 9 Horizontal analysis is a technique for evaluating a series of financial statement data over a period of time that has been arranged from the highest number to the lowest determine the amount and/or percentage increase or decrease that has taken place. to determine which items are in error. that has been arranged from the lowest number to the highest number. Multiple Choice Question 10 Vertical analysis is a technique that expresses each item in a financial statement as a percent of the item in the previous year. in dollars and cents. as a percent of a base amount. starting with the highest value down to the lowest value.