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US CMA Part 2 Using Financial Information and Accounting — practice questions — page 2

Explore 82 free Using Financial Information and Accounting questions in US CMA Part 2 Financial Management. Open each question or exercise to read its content, reference answers and available explanation.

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Using Financial Information and Accounting questions and exercises with answers

Showing questions 31–60 of 82.

Temporary investments of excess cash that can readily be converted back to cash appear under which balance sheet heading?Read the answer and worked solution →Amounts owed to a firm by customers who bought goods or services on credit are recorded as what?Read the answer and worked solution →How is the declining value of a fixed asset other than land accounted for?Read the answer and worked solution →When does goodwill arise as an intangible asset?Read the answer and worked solution →A bakery reports total liabilities of $70,150 and total owners' equity of $78,750. What must its total assets equal?Read the answer and worked solution →Which current liability is the counterpart of accounts receivable?Read the answer and worked solution →Which current liability covers wages and taxes that have built up but for which no bill has arrived?Read the answer and worked solution →Retained earnings equal total profits minus what?Read the answer and worked solution →Long-term liabilities are claims that come due when?Read the answer and worked solution →A bakery has a six-month, $15,000 loan from its bank. How is that loan classified on its balance sheet?Read the answer and worked solution →A bakery must repay $5,000 of its equipment loan during the coming year, with the rest falling due later. Where does that $5,000 belong?Read the answer and worked solution →Over what span does the income statement report a firm's results?Read the answer and worked solution →Besides the dollar amount of sales, what else counts as revenues?Read the answer and worked solution →What does gross sales measure?Read the answer and worked solution →What earns a customer a sales discount?Read the answer and worked solution →Returns and allowances record what?Read the answer and worked solution →A bakery had gross sales of $275,000, sales discounts of $2,500 and returns and allowances of $2,000. What are its net sales?Read the answer and worked solution →For a manufacturer, which costs belong in cost of goods sold?Read the answer and worked solution →Beginning inventory was $18,000, cost of goods manufactured for the year was $109,500 and ending inventory was $15,000. What is cost of goods sold?Read the answer and worked solution →Why does a service firm's gross profit equal its net sales?Read the answer and worked solution →Net sales are $270,500 and cost of goods sold is $112,500. What is gross profit?Read the answer and worked solution →What are the two main types of operating expenses?Read the answer and worked solution →Gross profit is $158,000 and total operating expenses are $115,100. What is net profit before taxes?Read the answer and worked solution →Net profit before taxes is $42,900 and income taxes for the year are $10,725. What is net profit?Read the answer and worked solution →What does the statement of cash flows summarize?Read the answer and worked solution →Into which three groups are a firm's cash flows divided?Read the answer and worked solution →Which firms must include a statement of cash flows in their financial reports to shareholders?Read the answer and worked solution →About what share of accountants in the United States are self-employed?Read the answer and worked solution →Of the accountants who belong to the AICPA, what share work in public accounting firms?Read the answer and worked solution →How do cloud-based accounting firms compare with traditional firms in winning clients?Read the answer and worked solution →

Worked practice questions

Temporary investments of excess cash that can readily be converted back to cash appear under which balance sheet heading?

  1. Notes receivable
  2. Intangible assets
  3. Accrued expenses
  4. Marketable securities
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Correct answer: D. Marketable securities

1. Marketable securities are temporary investments of excess cash that can readily be converted to cash. 2. They sit among the current assets, just below cash itself in the liquidity order. 3. Notes receivable are amounts owed by customers or others to whom the firm lent money, which is a different current asset. 4. Accrued expenses are a liability, and intangible assets are long-term items with no physical existence. _Source: OpenStax Introduction to Business (CC BY 4.0), Ch 14 "Using Financial Information and Accounting", section 14.4 The Balance Sheet_

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Amounts owed to a firm by customers who bought goods or services on credit are recorded as what?

  1. Retained earnings
  2. Accounts payable
  3. Accrued expenses
  4. Accounts receivable
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Correct answer: D. Accounts receivable

1. Accounts receivable are amounts owed to the firm by customers who bought goods or services on credit. 2. They are a current asset, since the firm expects to turn them into cash within the year. 3. Accounts payable run the other way: they are what the firm owes for its own credit purchases. _Source: OpenStax Introduction to Business (CC BY 4.0), Ch 14 "Using Financial Information and Accounting", section 14.4 The Balance Sheet_

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How is the declining value of a fixed asset other than land accounted for?

  1. Through the depreciation of its cost
  2. Through a write-off of its liabilities
  3. Through a discount on its sale price
  4. Through a transfer to intangibles
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Correct answer: A. Through the depreciation of its cost

1. Fixed assets are long-term assets used by the firm for more than a year, such as land, buildings, machinery and equipment. 2. Except for land, they wear out and become outdated, so they decrease in value every year. 3. That declining value is accounted for through depreciation, which allocates the asset's original cost to the years it is expected to produce revenues. 4. Because nobody knows exactly how long an asset will last, estimates are used, based on past experience with similar items or on IRS guidelines. _Source: OpenStax Introduction to Business (CC BY 4.0), Ch 14 "Using Financial Information and Accounting", section 14.4 The Balance Sheet_

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