| |
4. Illegitimate earnings management practices include:
| a. |
Over accruing restructuring costs in one period and reversing those charges into income in future periods |
| b. |
Building up various liability accounts (by accruing more expenses) in good quarters and decreasing them in bad quarters |
| c. |
Recording revenue before products or services have been delivered |
| d. |
Postponing the recognition of revenue into future quarters even though the firm has completed its earning cycle |
| e. |
All of the above |
5. Who is responsible for hiring and firing the external auditor?
| a. |
Chief Financial Officer |
| b. |
Audit Committee |
| c. |
Chairman of the Board, with the advice of the CEO |
| d. |
The Board, having usually delegated the task to the audit committee |
| e. |
The shareholders, by vote on the proxy statement |
6. Which of the following is NOT typically included among “current assets” on the balance sheet?
| a. |
Accounts receivable |
| b. |
Fixed assets |
| c. |
Inventory |
| d. |
Prepaid expenses |
| e. |
All of the above are typically included |
7. What is the common definition of “current liabilities”?
| a. |
Company obligations that must be paid in cash |
| b. |
Company obligations to current vendors and suppliers |
| c. |
Company obligations that become due within 90 days |
| d. |
Company obligations that become due within a year |
8. What are three sections of the cash flow statement?
| a. |
Cash from operations, investing activities and financing activities |
| b. |
Cash from operations, working capital and capital expenditures |
| c. |
Cash from operations, asset sales and stock activity |
| d. |
None of the above |
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