MULTIPLE CHOICE
1.Which of the following statements is correct concerning investing activities?
a.they involve obtaining and managing financial resources
b.they use financial resources to acquire items to sell in the normal course of activities
c.they use financial resources to acquire assets a company needs to produce and sell its products
d.they involve buying and selling a company's own stock
2.The term "current assets" is usually used to refer to assets that
a.the organization currently owns
b.are owed to creditors and will be distributed during the coming fiscal period
c.are expected to be converted to cash or consumed (used up) during the coming fiscal year
d.are currently used in operating the company
3.Investments in tangible assets by a company that are intended to be used in the future to manufacture and/or sell products are recorded in the books as
a.investments in financial securities
b.property, plant and equipment
c.patents, copyrights, trademarks and goodwill
d.none of the above
4.Which of the following would NOT be included in property, plant, and equipment?
a.inventory
b.land
c.equipment
d.buildings
5.Which statement below is true about a company's operating cycle?
a.it may not exceed one year
b.it may not be less than a year
c.it may be longer than a year
d.it is always one year
6.Which of the following companies would be MOST likely to have an operating cycle longer than one year?
a.Grinder Tool Manufacturing Company
b.Interstate Bridge Construction & Paving Company
c.Squeegee Window Cleaning Service
d.Dade County School of Dance
7.Long-term assets are defined as
a.assets that extend benefits beyond the coming fiscal year or operating cycle
b.only tangible assets that extend benefits beyond the coming year or operating cycle, whichever is longer
c.assets that are depreciated for a maximum of 40 years
d.assets that extend no future benefits to a company
8.Which of the following is NOT an intangible asset?
a.goodwill
b.patent
c.copyright
d.cash
9.Which depreciation method allocates a larger portion of the cost of a plant asset to expense early in the asset's life?
a.replacement
b.straight-line
c.units-of-production
d.accelerated depreciation
10.Which of the following statements about depreciation methods is true?
a.firms must use the same depreciation methods for tax and financial reporting purposes
b.firms cannot use the same depreciation methods for tax and financial reporting purposes
c.firms usually use the same depreciation methods for tax and financial reporting purposes
d.firms seldom use the same depreciation methods for tax and financial reporting purposes