{GCU} ACC 240 Fundamental of
Accounting2024-2024 Final Exam Latest
Version
Which of the following statements are true regarding a semilogarithmic graph? (Choose
every correct answer.) - ANS✔✔--If the data increases at a constant rate over the
period of time shown on the horizontal scale, the plot will be a straight line.
Semilogarithmic graphs are frequently used to plot data that is expected to change
significantly over time, such as a company's sales data.
Working capital is calculated as current assets (+ - x /) current liabilities. - ANS✔✔---
What are reasons why a well-managed company sometimes attempts to reduce its
current ratio? (Choose every correct answer.) - ANS✔✔--Assets like accounts
receivable and merchandise inventory do not earn a high ROI.
Funds freed up by reducing the current ratio can be invested in new production
equipment or marketing efforts.
A high current ratio may be a sign that the company has not made the most productive
use of its assets.
Which of the following are normally included in a credit application? (Choose every
correct answer.) - ANS✔✔--Information about employment
Information about bank accounts
Information about salary
Which of the following statements are true regarding the current ratio? (Choose every
correct answer.) - ANS✔✔---Cash is included in the numerator.
-Accounts payable are included in the denominator.
A firm's liquidity refers to - ANS✔✔--its ability to meet its current obligations as they
become due
The current ratio is calculated as current assets (+ - x /) current liabilities. - ANS✔✔--/
Which of the following statements are true regarding the acid-test ratio? (Choose every
correct answer.) - ANS✔✔--The acid-test ratio is a more conservative measure of
liquidity than the current ratio.
The acid-test ratio excludes merchandise inventory from the numerator.
The acid-test ratio uses the same denominator as does the current ratio.
Which statements about a firm's return on equity (ROE) are correct? (Choose every
correct answer.)
, Multiple select question.
It is normally calculated using net income in the denominator.
It expresses profits earned by the firm as a rate of return on all the resources employed
by the firm.
It is normally calculated using average stockholders' equity in the denominator.
It expresses profits earned by the firm as a rate of return on the equity provided by
stockholders. - ANS✔✔--It is normally calculated using average stockholders' equity
in the denominator.
It expresses profits earned by the firm as a rate of return on the equity provided by
stockholders.
Which of the following statements are true regarding the current ratio and the acid-test
ratio? (Choose every correct answer.) - ANS✔✔--The acid-test ratio is a more
conservative measure of a firm's liquidity.
Both the current ratio and the acid-test ratio use current liabilities as the denominator.
Which of the following statements are true regarding the working capital calculation?
(Choose every correct answer.) - ANS✔✔--Merchandise inventory is part of current
assets.
Cash is part of current assets.
Calculate the current ratio assuming that cash = $6,000, land = $105,000, accounts
receivable = $19,000, merchandise inventory = $20,000, accounts payable = $15,000,
long-term debt = $80,000, and retained earnings = $55,000. (Round your answer to one
decimal place, if necessary.) - ANS✔✔--3.0 Current ratio = Current assets / Current
liabilities = (6000+105,000+20,000)/15,000=3.0
Calculate the acid-test ratio, assuming that cash = $6,000, land = $105,000, accounts
receivable = $19,000, merchandise inventory = $20,000, accounts payable = $15,000,
long-term debt = $80,000, and retained earnings = $55,000. (Round your answer to one
decimal place, if necessary.) - ANS✔✔--1.7
Working capital is calculated as current assets , (+ - x /) current liabilities. - ANS✔✔---
Which of the following statements are true regarding the acid-test ratio? (Choose every
correct answer.)
Multiple select question.
The acid-test ratio is sometimes called the quick ratio.
Temporary cash investments are included in the numerator of the acid-test ratio.
The acid-test ratio uses the same denominator as does working capital.
The acid-test ratio can be calculated as (Cash (including temporary cash investments) +
accounts receivable) divided by current liabilities.
Accounts payable are included in the numerator of the acid-test ratio. - ANS✔✔--The
acid-test ratio is sometimes called the quick ratio.
Temporary cash investments are included in the numerator of the acid-test ratio.
Accounting2024-2024 Final Exam Latest
Version
Which of the following statements are true regarding a semilogarithmic graph? (Choose
every correct answer.) - ANS✔✔--If the data increases at a constant rate over the
period of time shown on the horizontal scale, the plot will be a straight line.
Semilogarithmic graphs are frequently used to plot data that is expected to change
significantly over time, such as a company's sales data.
Working capital is calculated as current assets (+ - x /) current liabilities. - ANS✔✔---
What are reasons why a well-managed company sometimes attempts to reduce its
current ratio? (Choose every correct answer.) - ANS✔✔--Assets like accounts
receivable and merchandise inventory do not earn a high ROI.
Funds freed up by reducing the current ratio can be invested in new production
equipment or marketing efforts.
A high current ratio may be a sign that the company has not made the most productive
use of its assets.
Which of the following are normally included in a credit application? (Choose every
correct answer.) - ANS✔✔--Information about employment
Information about bank accounts
Information about salary
Which of the following statements are true regarding the current ratio? (Choose every
correct answer.) - ANS✔✔---Cash is included in the numerator.
-Accounts payable are included in the denominator.
A firm's liquidity refers to - ANS✔✔--its ability to meet its current obligations as they
become due
The current ratio is calculated as current assets (+ - x /) current liabilities. - ANS✔✔--/
Which of the following statements are true regarding the acid-test ratio? (Choose every
correct answer.) - ANS✔✔--The acid-test ratio is a more conservative measure of
liquidity than the current ratio.
The acid-test ratio excludes merchandise inventory from the numerator.
The acid-test ratio uses the same denominator as does the current ratio.
Which statements about a firm's return on equity (ROE) are correct? (Choose every
correct answer.)
, Multiple select question.
It is normally calculated using net income in the denominator.
It expresses profits earned by the firm as a rate of return on all the resources employed
by the firm.
It is normally calculated using average stockholders' equity in the denominator.
It expresses profits earned by the firm as a rate of return on the equity provided by
stockholders. - ANS✔✔--It is normally calculated using average stockholders' equity
in the denominator.
It expresses profits earned by the firm as a rate of return on the equity provided by
stockholders.
Which of the following statements are true regarding the current ratio and the acid-test
ratio? (Choose every correct answer.) - ANS✔✔--The acid-test ratio is a more
conservative measure of a firm's liquidity.
Both the current ratio and the acid-test ratio use current liabilities as the denominator.
Which of the following statements are true regarding the working capital calculation?
(Choose every correct answer.) - ANS✔✔--Merchandise inventory is part of current
assets.
Cash is part of current assets.
Calculate the current ratio assuming that cash = $6,000, land = $105,000, accounts
receivable = $19,000, merchandise inventory = $20,000, accounts payable = $15,000,
long-term debt = $80,000, and retained earnings = $55,000. (Round your answer to one
decimal place, if necessary.) - ANS✔✔--3.0 Current ratio = Current assets / Current
liabilities = (6000+105,000+20,000)/15,000=3.0
Calculate the acid-test ratio, assuming that cash = $6,000, land = $105,000, accounts
receivable = $19,000, merchandise inventory = $20,000, accounts payable = $15,000,
long-term debt = $80,000, and retained earnings = $55,000. (Round your answer to one
decimal place, if necessary.) - ANS✔✔--1.7
Working capital is calculated as current assets , (+ - x /) current liabilities. - ANS✔✔---
Which of the following statements are true regarding the acid-test ratio? (Choose every
correct answer.)
Multiple select question.
The acid-test ratio is sometimes called the quick ratio.
Temporary cash investments are included in the numerator of the acid-test ratio.
The acid-test ratio uses the same denominator as does working capital.
The acid-test ratio can be calculated as (Cash (including temporary cash investments) +
accounts receivable) divided by current liabilities.
Accounts payable are included in the numerator of the acid-test ratio. - ANS✔✔--The
acid-test ratio is sometimes called the quick ratio.
Temporary cash investments are included in the numerator of the acid-test ratio.
