FAR — Financial Accounting & Reporting — Quiz 60

Questions in this quiz (10)

1. Which account increases when a company issues bonds?

   • Cash
   • Inventory
   • Accounts receivable
   • Prepaid expenses

2. Which of the following best describes long-term liabilities?

   • Obligations due within 90 days
   • Obligations due within one year
   • Obligations due after one year
   • Expenses already incurred

3. Which ratio measures a company's ability to meet long-term debt obligations?

   • Current ratio
   • Debt-to-equity ratio
   • Gross margin ratio
   • Inventory turnover ratio

4. Why is liability accounting important in financial analysis?

   • It increases profit margins
   • It helps assess financial risk
   • It reduces expenses
   • It improves revenue

5. What best defines stockholders' equity?

   • Total company revenue
   • Owners residual interest in assets
   • Company liabilities
   • Cash held by the company

6. Where is stockholders' equity reported?

   • Income statement
   • Balance sheet
   • Statement of cash flows
   • Statement of operations

7. Which account is included in stockholders' equity?

   • Accounts payable
   • Retained earnings
   • Notes payable
   • Salaries payable

8. Which type of stock represents ownership in a corporation?

   • Bonds
   • Common stock
   • Notes payable
   • Accounts payable

9. Which right is usually granted to common shareholders?

   • Guaranteed dividends
   • Voting rights
   • Guaranteed repayment
   • Priority over creditors

10. Which type of stock has priority in dividend payments?

    • Treasury stock
    • Preferred stock
    • Common stock
    • Convertible stock