3034 Chapter 4

The balance sheet is useful for analyzing all of the following except

• Liquidity

• Profitability

• Solvency

• Financial Flexibility

What is the correct order to present current assets?

• cash, inventories, prepaid items, accounts receivable.

• cash, accounts receivable, inventories, prepaid items.

• cash, inventories, accounts receivable, prepaid items.

• cash, accounts receivable, prepaid items, inventories.

Major limitations of the balance sheet include all of the following except:

• 
  it necessarily omits many items that are of financial value but cannot be recorded objectively.

• 
  only amounts known with absolute certainty are reported.

• 
  most assets and liabilities are reported at historical cost.

• judgments and estimates are used to determine many of the items reported.

Which of the following pairings of an item and a basis of valuation is incorrect?

• Prepaid expenses – Cost.

• 
  Receivables – Lower-of-cost-or-market.

• Cash – Fair value.

• Short-term investments – Generally Fair value.
  

Which of the following is not an element of owners’ equity?

• Treasury stock.

• Accumulated capital.

• 
  Capital stock.

• Retained earnings.