QUESTION: 1533

The equity turnover of a firm equals:

asset turnover times financial leverage.
asset turnover times financial leverage and sales to equity ratio.
net income to equity ratio.
sales to equity ratio.

Answer(s): B

Explanation:

Equity Turnover = sales/equity = (sales/total assets)*(total assets/equity)= (asset turnover)*(financial leverage)

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QUESTION: 1534

Warranty liabilities:

result when a company sells a product
must also result in an expense during the same period as the revenue from the sale of the product
all of these answers are correct
are estimated liabilities

Answer(s): C

Explanation:

All responses meet the definition of a warranty liability.

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QUESTION: 1535

Which of the following is not a theoretical basis for the allocation of expenses?

Profit maximization
Systematic allocation
None of these answers
Cause and effect
Immediate recognition

Answer(s): A

Explanation:

Profit maximization means that the goal is not to report costs as expenses by hiding them on the balance sheet.
It is not an acceptable basis as it goes against the purpose of generally accepted accounting methods which is to fairly present the results of operations and financial position.

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QUESTION: 1536

Below is an example of an incorrectly prepared statement of cash flows. The descriptions of activities are correct.

Cash from operating activities $60,000
Net Income (4,000)
Depreciation (2,000)
Increase in accounts receivable (1,000)
Increase in deferred tax liability $53,000

Cash from investing activities ($48,000)
Purchase of marketable securities 2,500
Dividends received 1,500
Dividends paid ($44,000)

Cash from financing activities (500)
Increase in Short-term debt (2,500)
Increase in Long-term debt ($3,000)

Increase in cash $6,000

The correct Cash flows from investing activities is ________.

($45,500)
($41,000)
None of these answers
($48,000)

Answer(s): D

Explanation:

The dividends received is an operating activity and the dividend paid is a financing activity.

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Explanation:

QUESTION: 1534

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QUESTION: 1535

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QUESTION: 1536

Explanation: