101. Using different accounting methods on financial statements and tax returns will create:
A. No effect upon the balance sheet, only the income statement.
B. No effect upon the balance sheet nor the income statement.
C. A deferred tax liability.
D. An illegal situation.
102. The interest coverage ratio is computed by dividing:
A. Net income by interest expense.
B. Operating income by interest expense.
C. Interest expense by net income.
D. Interest expense by operating income.
103. Does a call provision on a bond
A. Permit the corporation to redeem the bonds at a specified price.
B. Allow the corporation to revise the stated interest rate.
C. Allow the corporation to revise the maturity date.
D. Always create the lowest price at which the bond will sell for.
104. Which of the following statistics is of more significance to a long-term creditor than to a short-term creditor?
A. Interest coverage ratio.
B. Receivables turnover rate.
C. Working capital.
D. Quick ratio.
105. The interest coverage ratio:
A. Is computed by dividing total liabilities by annual interest expense.
B. Is computed by dividing liquid assets by annual required interest payment.
C. Indicates the percentage of total assets that are financed with borrowed money.
D. Measures the number of times the annual interest expense could be covered by annual income from operations.
106. Workers' compensation is:
A. A required minimum compensation level.
B. The rules for paying overtime.
C. A state mandated insurance program.
D. Includes all three above.
107. The basic measure of the amount of leverage being applied within the capital structure of an organization is the:
A. Interest coverage ratio.
B. Debt ratio.
C. Return on assets.
D. Return on equity.
108. The principal amount of a bond is:
A. The total future interest charges.
B. The unpaid balance exclusive of any interest charges.
C. The unpaid balance plus any future interest charges.
D. The maturity value less any currently unpaid balances.
109. Which of the following is not a characteristic of an estimated liability?
A. The liability is known to exist.
B. The precise dollar amount cannot be determined until a later date.
C. The liability should not be recorded in the accounting records until future events have determined the exact amount.
D. The liability stems from past transactions.
110. Commitments, such as contracts for future transactions:
A. Are classified as liabilities.
B. Are classified as assets.
C. Are footnoted in financial statements, if material.
D. Are only disclosed if negative due to the principle of conservatism.