ACCT 5315 Exam 1/Midterm Prep Exam with
Questions with expert verified Answers
latest update 2025
Shareholders demand financial information primarily to assess profitability
and risk whereas bankers demand information primarily to assess cash
flows to repay loan interest and principal.
True
False --- correct answer ---Answer: True
Rationale: While both shareholders and bankers are interested in all the
information companies provide, shareholders care about more about a
company's profitability and bankers care more about solvency and
creditworthiness.
Publicly traded companies must provide to the Securities Exchange
Commission annual audited financial statements (10K reports) and
quarterly audited financial statements (10Q reports).
,True
False --- correct answer ---False
Quarterly reports do not need to be audited
An increase in treasury stock would be reflected in the statement of
stockholders' equity.
True
False --- correct answer ---True
Return on Assets (ROA) measures the profit the company makes on each
dollar of total assets it uses.
True
False --- correct answer ---True
Assets must always equal liabilities plus equity.
True
,False --- correct answer ---true
Publicly traded companies are required to provide quarterly financial
reports directly to the public.
True
False --- correct answer ---false
Return on Assets (ROA) = Net Income / Sales × Asset Turnover
True
False --- correct answer ---True
For self-constructed assets, a firm may capitalize any expenses required to
place the asset in service. This includes any interest expense on loans
during the construction period.
True
, False --- correct answer ---True
When a firm uses an accelerated method of depreciation for tax reporting in
order to minimize its tax burden, it will not really save any tax dollars in
the end because depreciation method merely changes the timing of the
depreciation expenses but not the total.
True
False --- correct answer ---False
Companies using LIFO are required to disclose the amount at which
inventory would have been reported had it used FIFO. Similarly, companies
using FIFO are required to disclose what their inventory would have been if
the company had used LIFO.
True
False --- correct answer ---False
In general, in a period of falling prices, LIFO produces higher gross profits
than FIFO.
Questions with expert verified Answers
latest update 2025
Shareholders demand financial information primarily to assess profitability
and risk whereas bankers demand information primarily to assess cash
flows to repay loan interest and principal.
True
False --- correct answer ---Answer: True
Rationale: While both shareholders and bankers are interested in all the
information companies provide, shareholders care about more about a
company's profitability and bankers care more about solvency and
creditworthiness.
Publicly traded companies must provide to the Securities Exchange
Commission annual audited financial statements (10K reports) and
quarterly audited financial statements (10Q reports).
,True
False --- correct answer ---False
Quarterly reports do not need to be audited
An increase in treasury stock would be reflected in the statement of
stockholders' equity.
True
False --- correct answer ---True
Return on Assets (ROA) measures the profit the company makes on each
dollar of total assets it uses.
True
False --- correct answer ---True
Assets must always equal liabilities plus equity.
True
,False --- correct answer ---true
Publicly traded companies are required to provide quarterly financial
reports directly to the public.
True
False --- correct answer ---false
Return on Assets (ROA) = Net Income / Sales × Asset Turnover
True
False --- correct answer ---True
For self-constructed assets, a firm may capitalize any expenses required to
place the asset in service. This includes any interest expense on loans
during the construction period.
True
, False --- correct answer ---True
When a firm uses an accelerated method of depreciation for tax reporting in
order to minimize its tax burden, it will not really save any tax dollars in
the end because depreciation method merely changes the timing of the
depreciation expenses but not the total.
True
False --- correct answer ---False
Companies using LIFO are required to disclose the amount at which
inventory would have been reported had it used FIFO. Similarly, companies
using FIFO are required to disclose what their inventory would have been if
the company had used LIFO.
True
False --- correct answer ---False
In general, in a period of falling prices, LIFO produces higher gross profits
than FIFO.
