Managerial Accounting Exam 1
At the end of Year 1, the balance sheet for the Rich Food Restaurant showed cash at $20,000. At the end
of Year 2, the balance sheet showed $40,000 in cash. A horizontal analysis of the balance sheets would
show the absolute difference between the two years as: - ✔✔50%
China, glassware, etc., purchased and placed in storage for future use as needed should generally be
recorded as ________ in accordance with the Uniform System of Accounts for the Lodging Industry. -
✔✔Inventory
Current assets are generally listed on the balance sheet in: - ✔✔order of liquidity
The ability of a business to pay its future obligations depends, in part, on: - ✔✔the relative amounts of
long-term financing by owners and creditors
The conservatism principle is best reflected in accounting when: - ✔✔Certain current assets are reduced
to their market values when market is lower than cost.
The current bank loan agreement between the Travel Hotel and the local Bigbucks Bank stipulates a
current ratio of 2 to 1. Which of the following financial statements would the bank review on a periodic
basis to ensure that the hotel is in compliance with the terms of the loan? - ✔✔Balance sheet
The hotel building would be classified on a firm's balance sheet as: - ✔✔property and equipment
The section of the balance sheet that changes with the method of business organization is: - ✔✔Current
liabilities
Trade payables are generally shown on a balance sheet as: - ✔✔
Under which of the following categories are prepaid expenses reported on the balance sheet? -
✔✔current assets
At the end of Year 1, the balance sheet for the Rich Food Restaurant showed cash at $20,000. At the end
of Year 2, the balance sheet showed $40,000 in cash. A horizontal analysis of the balance sheets would
show the absolute difference between the two years as: - ✔✔50%
China, glassware, etc., purchased and placed in storage for future use as needed should generally be
recorded as ________ in accordance with the Uniform System of Accounts for the Lodging Industry. -
✔✔Inventory
Current assets are generally listed on the balance sheet in: - ✔✔order of liquidity
The ability of a business to pay its future obligations depends, in part, on: - ✔✔the relative amounts of
long-term financing by owners and creditors
The conservatism principle is best reflected in accounting when: - ✔✔Certain current assets are reduced
to their market values when market is lower than cost.
The current bank loan agreement between the Travel Hotel and the local Bigbucks Bank stipulates a
current ratio of 2 to 1. Which of the following financial statements would the bank review on a periodic
basis to ensure that the hotel is in compliance with the terms of the loan? - ✔✔Balance sheet
The hotel building would be classified on a firm's balance sheet as: - ✔✔property and equipment
The section of the balance sheet that changes with the method of business organization is: - ✔✔Current
liabilities
Trade payables are generally shown on a balance sheet as: - ✔✔
Under which of the following categories are prepaid expenses reported on the balance sheet? -
✔✔current assets
