Final Part 1 Question 1 Under the corporate form of business organization Question 2 Accountants do not attempt to measure the change in a plant asset’s market value during ownership because Question 3 Budget reports provide the feedback needed by management to see whether actual operations are on course. Question 4 Intangible assets are rights, privileges, and competitive advantages that result from ownership of long-lived assets without physical substance. Question 5 A corporation is not an entity that is separate and distinct from its owners Question 6 The market rate of interest is often called the Question 7 A current liability is a debt that can reasonably be expected to be paid Question 8 A budget can be used as a basis for evaluating performance. Question 9 Vertical analysis is a technique for evaluating a series of financial statement data over a period of time to determine the increase (decrease) that has taken place. Question 10 Bonds with a face value of $400,000 and a quoted price of 104¼ have a selling price of Question 11 The current cash debt coverage ratio is considered a better representative of liquidity than the current ratio because it involves the entire year rather than a balance at one point in time. Question 12 On January 1, 2014, Ermler Company, a calendar-year company, issued $1,000,000 of notes payable, of which $250,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2014, is Question 13 One objective of the income statement is to separate the results of continuing operations from those of discontinued operations. Question 14 All of the following are true regarding financial statement analysis ratios associated with liabilities except Question 15 A primary objective of the statement of cash flows is to show the income or loss on investing and financing transactions. Question 16 A master budget is most useful in evaluating a manager’s performance in controlling costs. Question 17 The master budget reflects management’s long-term plans encompassing five years or more. Question 18 The debt to assets ratio measures the percentage of the total assets provided by creditors Question 19 A company whose current liabilities exceed its current assets may have a liquidity problem. Question 20 During 2014, Phelps Corporation reported net sales of $3,000,000, net income of $1,320,000, and depreciation expense of $80,000. Phelps also reported beginning total assets of $1,000,000, ending total assets of $1,500,000, plant assets of $800,000, and accumulated depreciation of $500,000. Phelps’s asset turnover ratio is
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