74. External users want answers to all of the following questions except
a. Is the company earning satisfactory income?
b. Will the company be able to pay its debts as they come due?
c. Will the company be able to afford employee pay raises this year?
d. How does the company compare in profitability with competitors?
Ans: C, LO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
75. Which type of corporate information is not available to investors?
a. Dividend history
b. Forecast of cash needs for the upcoming year
c. Cash provided by investing activities
d. Beginning cash balance
Ans: B, LO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
76. The liability created by a business when it purchases coffee beans and coffee cups on credit from suppliers is termed a(n)
a. account payable.
b. account receivable.
c. revenue.
d. expense.
Ans: A, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
77. The right to receive money in the future is called a(n)
a. account payable.
b. account receivable.
c. liability.
d. revenue.
Ans: B, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
78. Which of the following is not a principal type of business activity?
a. Operating
b. Investing
c. Financing
d. Delivering
Ans: D, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Business Economics
79. Borrowing money is an example of a(n)
a. delivering activity.
b. financing activity.
c. investing activity.
d. operating activity.
Ans: B, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Business Economics
80. Issuing shares of stock in exchange for cash is an example of a(n)
a. delivering activity.
b. investing activity.
c. financing activity.
d. operating activity.
Ans: C, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Business Economics
81. Debt securities sold to investors that must be repaid at a particular date some years in the future are called
a. accounts payable.
b. notes receivable.
c. taxes payable.
d. bonds payable.
Ans: D, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Business Economics
82. Which of the following activities involves obtaining the necessary funds to support the business?
a. Operating
b. Investing
c. Financing
d. Delivering
Ans: C, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
83. Buying assets needed to operate a business is an example of a(n)
a. delivering activity.
b. financing activity.
c. investing activity.
d. operating activity.
Ans: C, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
84. Which activities involve acquiring the assets to run the business?
a. Delivering
b. Financing
c. Investing
d. Operating
Ans: C, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting