INTERMEDIATE ACCOUNTING VOLUME 2
7TH EDITION BEECHY UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
◉ operating cycle
Answer: length in which it takes to produce and receive money fro
product
◉ total shareholders' equity
Answer: equals additional paid-in capital + common stock at par +
Retain earnings
◉ working capital
Answer: current assets - current liabilities
◉ explicitly stated interest
Answer: usual difference between accounts payable and notes
payable
◉ principal concern with accounting for related-party
transactions is
Answer: differences between economic substance and legal form
, ◉ Management's Discussion and Analysis section of the annual
report can best be described as:
Answer: biased but informative
◉ example of an error
Answer: counting an inventory item twice when taking a physical
inventory
◉ adverse opinion
Answer: an omission in the notes to the financial statements that
is so serious that even a qualified opinion is not justified is
◉ percentage change in the cash balance from last year to this
year
Answer: which of the following would be an amount computed
using horizontal analysis?
◉ debt to equity ratio always decreases
Answer: when a company pays its bill from a plumber for
previous services on account:
◉ debt to equity ratio decreases
Answer: when a company sells land for cash and recognizes a
$25,000 gain:
7TH EDITION BEECHY UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
◉ operating cycle
Answer: length in which it takes to produce and receive money fro
product
◉ total shareholders' equity
Answer: equals additional paid-in capital + common stock at par +
Retain earnings
◉ working capital
Answer: current assets - current liabilities
◉ explicitly stated interest
Answer: usual difference between accounts payable and notes
payable
◉ principal concern with accounting for related-party
transactions is
Answer: differences between economic substance and legal form
, ◉ Management's Discussion and Analysis section of the annual
report can best be described as:
Answer: biased but informative
◉ example of an error
Answer: counting an inventory item twice when taking a physical
inventory
◉ adverse opinion
Answer: an omission in the notes to the financial statements that
is so serious that even a qualified opinion is not justified is
◉ percentage change in the cash balance from last year to this
year
Answer: which of the following would be an amount computed
using horizontal analysis?
◉ debt to equity ratio always decreases
Answer: when a company pays its bill from a plumber for
previous services on account:
◉ debt to equity ratio decreases
Answer: when a company sells land for cash and recognizes a
$25,000 gain:
