This document provides a 30 question multiple choice quiz on accounting concepts related to receivables, liabilities, financial statements, ratios, and cash flows. It includes questions on accounts receivable, current and long-term liabilities, the basic components and purpose of financial statements, calculation of ratios like return on assets and times interest earned, and classifications of items on the statement of cash flows. The quiz appears to be a sample exam that could be given to assess understanding of introductory financial accounting topics.

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1. The term “receivables” refers to
cash to be paid to debtors.
merchandise to be collected from individuals or
companies.
cash to be paid to creditors.
amounts due from individuals or companies.
2. Three accounting issues associated with
accounts receivable are
depreciating, valuing, and collecting.
depreciating, returns, and valuing.
accrual, bad debts, and accelerating collections.
recognizing, valuing, and accelerating collections.
3. When the allowance method is used to account
for uncollectible accounts Bad Debts Expense is

2. debited when:
management estimates the amount of
uncollectibles.
a customer’s account becomes past due.
an account becomes bad and is written off.
a sale is made.
4. Which one of the following is not a principle of
sound accounts receivable management?
Determine a payment period.
Determine to whom to extend credit.
Delay cash receipts from receivables if necessary.
Monitor collections.
5. The accounts receivable turnover is used to
analyze
profitability.
long-term solvency.
liquidity.
risk.
6. The following information is provided for
Sunland Company and Marigold Corp.:
7. What is Marigold’s return on assets (rounded)
for 2017?
3%
2%
3%

3. 9%
8. Which of the following is not properly classified
as property, plant and equipment?
A truck held for resale by an automobile
dealership.
Land improvement, such as parking lots and
fences.
Building used as a factory.
Land used in ordinary business operations.
9. A characteristic of a plant asset is that it is
held for sale in the ordinary course of the
business.
used in the operations of a business.
not currently used in the business but held for
future use.
intangible
10. A current liability is a debt that can reasonably
be expected to be paid
out of cash currently on hand.
within one year, or the operating cycle, whichever
is longer.
out of currently recognized revenues.
between 6 months and 18 months.
11. A current liability is a debt that can reasonably
be expected to be paid
out of cash currently on hand.
within one year, or the operating cycle, whichever

4. is longer.
out of currently recognized revenues.
between 6 months and 18 months.
12. The 2017 financial statements of Blossom
Company contain the following selected data (in
millions).
13. The debt to assets ratio (rounded) is
40%.
7.1 times.
44.4%.
2.25%.
14. In a recent year Monty Corp. had net income of
$152000, interest expense of $28700, and income
tax expense of $41500. What was Monty Corp.’s
times interest earned (rounded) for the year?
7.74
6.30
6.74
5.30
15. If bonds are issued at a discount, it means that
the
bondholder will receive effectively less interest
than the contractual rate of interest.
market interest rate is lower than the contractual

5. interest rate.
financial strength of the issuer is suspect.
market interest rate is higher than the contractual
interest rate.
16. If bonds are issued at a premium, the stated
interest rate is
higher than the market rate of interest.
too low to attract investors.
lower than the market rate of interest.
adjusted to a higher rate of interest.
17. The chief accounting officer in a company is
known as the
treasurer.
controller.
vice-president.
president.
18. Which one of the following would not be
considered an advantage of the corporate form of
organization?
Separate legal existence.
Continuous life.
Limited liability of stockholders.
Government regulation.
19. Which of the following would not be true of a
privately held corporation?
It is usually smaller than a publicly held company.
It is sometimes called a closely held corporation.

6. Its shares are regularly traded on the New York
Stock Exchange.
It does not offer its shares for sale to the general
public.
20. The following information pertains to Sheffield
Company. Assume that all balance sheet amounts
represent average balance figures
21. What is Sheffield’s payout ratio?
11%.
39%.
19%.
26.05%.
22. Ayayai Corp. had net income of $91875 and
paid dividends of $39000 to common stockholders
and $16500 to preferred stockholders in 2017.
Ayayai Corp. common stockholders’ equity at the
beginning and end of 2017s was $440000 and
$565000, respectively. Ayayai Corp. return on
common stockholders’ equity is
15%.
14%.
10%.
19%.
23. The primary purpose of the statement of cash
flows is to

7. facilitate banking relationships.
provide information about the investing and
financing activities during a period.
prove that revenues exceed expenses if there is a
net income.
provide information about the cash receipts and
cash payments during a period
24. Which one of the following items is not
generally used in preparing a statement of cash
flows?
Current income statement.
Additional information.
Adjusted trial balance.
Comparative balance sheets.
25. The category that is generally considered to be
the best measure of a company’s ability to
continue as a going concern is
cash flows from investing activities.
usually different from year to year.
cash flows from financing activities.
cash flows from operating activities.
26. Assume that the Fitzgerald Corporation uses
the indirect method to depict cash flows. Indicate
where, if at all, a stock dividend declared and
issued would be classified on the statement of cash
flows.
Does not represent a cash flow.

8. Investing activities section.
Financing activities section.
Operating activities section.
27. Free cash flow provides an indication of a
company’s ability to
generate cash to invest in capital expenditures.
generate cash to pay dividends.
generate cash to invest in capital expenditures and
to pay dividends.
generate net income
28. When using the indirect method to compute
cash provided by operating activities
increases in accounts receivable are added to net
income.
income taxes paid may be ignored.
amortization expense is added to net income.
decreases in inventory are subtracted from net
income
29. To determine the net cash provided (used) by
operating activities, it is necessary to analyze
the current year’s income statement.
a comparative balance sheet.
additional information.
all of these answer choices are correct.
30. Which of these is not a liquidity ratio?
Current ratio
Accounts receivable turnover

9. Asset turnover
Inventory turnover
The current ratio would be of most interest to
long-term creditors.
stockholders.
customers.
short-term creditors

10. Asset turnover
Inventory turnover
The current ratio would be of most interest to
long-term creditors.
stockholders.
customers.
short-term creditors