165. Marvin Services Corporation had the following accounts and balances:
Accounts payable
$30,000
Equipment
$35,000
Accounts receivable
5,000
Land
35,000
Buildings
?
Unearned service revenue
10,000
Cash
15,000
Total stockholders' equity
?
If the balance of the Buildings account was $85,000, what would be the total of liabilities and stockholders' equity?
a. $170,000
b. $175,000
c. $135,000
d. $125,000
Ans: B, LO: 3, Bloom: AN, Difficulty: Medium, Min: 3, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: Problem Solving, IMA: Reporting
Solution: $5,000 + $85,000 + $15,000 + $35,000 + $35,000 = $175,000
(A/R + Bldg. bal. + cash + equip. + land)
166. Notes to the financial statements include all of the following except
a. descriptions of significant accounting policies used.
b. explanations of uncertainties.
c. projected accounting information.
d. statistics needed to understand the statements.
Ans: C, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
167. The management discussion and analysis (MD&A) section of the annual report covers all of the following aspects except the
a. ability of the company to pay near-term obligations.
b. certification criteria of the company's auditors.
c. company's ability to fund operations and expansion.
d. results of the company operations.
Ans: B, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
168. An annual report includes all of the following except
a. management discussion and analysis section.
b. notes to the financial statements.
c. an auditor’s report.
d. salary information for all the executives.
Ans: D, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
169. Which of the following clarifies information presented in the financial statements, as well as expanding upon it where additional detail is needed?
a. Auditor’s report
b. Management discussion and analysis section
c. Notes to the financial statements
d. President’s state of the company report
Ans: C, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
170. The information needed to determine whether a company is using accounting methods similar to those of its competitors would be found in the
a. auditor’s report.
b. balance sheet.
c. management discussion and analysis section.
d. notes to the financial statements.
Ans: D, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
171. In the annual report, where would a financial statement reader find out if the company’s financial statements give a fair depiction of its financial position and operating results?
a. Notes to the financial statements
b. Management discussion and analysis section
c. Balance sheet
d. Auditor’s report
Ans: D, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting
172. Management’s views on the company’s short-term debt paying ability, expansion financing, and results of operations are found in the
a. auditor’s report.
b. management discussion and analysis section.
c. notes to the financial statements.
d. president’s state of the company report.
Ans: B, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA: Reporting