Core Accounting Principles Flashcards
7 cards from real Robert Half Assessment Test practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Core Accounting Principles flashcards as text
Which section of the statement of cash flows reflects proceeds from issuing long-term bonds?
Answer: Financing activities
Issuing bonds is a financing activity because it involves obtaining capital from creditors.
Deferred revenue appears on the balance sheet as a:
Answer: Liability
Deferred revenue is a liability representing cash received before the related service or goods have been delivered.
If a company has a current ratio of 2.0 and current liabilities of $50,000, what are its current assets?
Answer: $100,000
Current Ratio = Current Assets / Current Liabilities → 2.0 = CA / $50,000 → CA = $100,000.
Which of the following is NOT a characteristic of a liability?
Answer: It represents an ownership claim on assets
Ownership claims on assets describe equity, not liabilities; liabilities are obligations to outside parties.
What effect does declaring (but not yet paying) a cash dividend have on the balance sheet?
Answer: Decreases retained earnings; increases dividends payable
Declaration debits Retained Earnings and credits Dividends Payable, creating a liability before cash is disbursed.
Under the straight-line depreciation method, an asset costing $24,000 with a $4,000 salvage value and a 5-year life results in annual depreciation of:
Answer: $4,000
Straight-line depreciation = (Cost − Salvage) / Useful life = ($24,000 − $4,000) / 5 = $4,000 per year.
The debt-to-equity ratio measures:
Answer: A company's reliance on creditor financing relative to owner financing
Debt-to-equity = Total Liabilities / Total Equity and indicates how leveraged a company is.