FIN202 FULL EXAMS WITH ANSWERES 2023

25. Which of the following sections do annual reports typically contain? A) financial summary related to the past year's performance B) information about the company, its products, and its activities C) audited financial statements, including limited historical financial data D) All three of the above sections are included in the annual report. - D 26. Annual reports are prepared by a firm's management to A) communicate to shareholders the firm's failures in the previous year. B) provide overview of the firm's financial and operating performance. C) highlight the performance of its chief competitors. D) provide a forecast of the economy in the coming years. - B 27. The generally accepted accounting principles (GAAP) are A) rules that outline how a firm can operate ethically. B) rules on how the firm will be valued in the event of a merger. C) rules and procedures that define how companies are to maintain financial records and prepare financial reports. D) rules for how a company can issue stock to raise money. - C 28. Accounting standards prescribed by GAAP are important because A) they make the financial statements of all firms standardized. B) they allow one to examine a firm's performance over time. C) they make it possible for management or analysts to compare the firm's performance to that of other competitors. D) all of the above. - D 29. The assumption of arm's-length transaction states that A) both parties to a transaction can act independently of each other and make economically rational decisions. B) both parties to a transaction must have had previous transactions. C) one of the parties to the transaction is a bank that has full knowledge of the firm's creditworthiness. D) none of the above - A 30. Your uncle, who has a second home in Bethany Beach, Delaware, is planning to sell it in the next few weeks. You are interested in buying this beachside property, so your agent negotiates a price for the house with your uncle's agent. This transaction is an example of A) The cost principle. B) the assumption of arm's-length transactions. C) the realization principle. D) the going-concern assumption. E) the matching principle. - B 31. The going concern assumption implies that A) a firm will continue to be in business for the foreseeable future. B) a firm will be going out of business in the near future. C) a firm will continue to operate in the near future but only after being acquired by another firm. D) none of the above - A 32. Dell Computer Corporation has receivables of $2.5 million and inventory worth $1.8 million. The firm plans to borrow $2 million for working capital purposes from Austin First National Bank. In evaluating the loan request, the bank should place the most emphasis on A) the matching principle. B) the realization principle. C) the going-concern assumption. D) the assumption of arm's-length transactions. - C 33. The matching principle calls for the accountant of a firm to A) identify an asset with each liability of the firm. B) associate the revenue generated from a sale to the costs incurred to produce the product. C) match each item of inventory with the historical cost at which it was acquired. D) none of the above - B 34. Tyson Corporation bought raw materials on April 23, 2008 and also on July 2, 2008. Products produced in the months of May were sold in July. The firm uses FIFO to value its inventory. According to the matching principle, the firm's accountant should associate A) the inventory acquired on July 2 with the products sold. B) the inventory acquired on April 23 with the products sold. C) Neither of these dates is valid because the products were sold in July. D) None of the above. - B 35. According to the realization principle, revenue from a sale of the firm's products are recognized