Robert Half Assessment Test Core Accounting Principles 4

Question 1

Which section of the statement of cash flows reflects proceeds from issuing long-term bonds?

Accepted Answer

Financing activities

Answer

Issuing bonds is a financing activity because it involves obtaining capital from creditors.

Question 2

Deferred revenue appears on the balance sheet as a:

Accepted Answer

Liability

Answer

Deferred revenue is a liability representing cash received before the related service or goods have been delivered.

Question 3

If a company has a current ratio of 2.0 and current liabilities of $50,000, what are its current assets?

Accepted Answer

$100,000

Answer

Current Ratio = Current Assets / Current Liabilities → 2.0 = CA / $50,000 → CA = $100,000.

Question 4

Which of the following is NOT a characteristic of a liability?

Accepted Answer

It represents an ownership claim on assets

Answer

Ownership claims on assets describe equity, not liabilities; liabilities are obligations to outside parties.

Question 5

What effect does declaring (but not yet paying) a cash dividend have on the balance sheet?

Accepted Answer

Decreases retained earnings; increases dividends payable

Answer

Declaration debits Retained Earnings and credits Dividends Payable, creating a liability before cash is disbursed.

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