Exam 16: Understanding Accounting and Financial Information

Heather works in the accounting department of CanFar Manufacturing.Today she will summarize all the information that has been posted over the most recent period in the firm's ledgers.She wants to see if the accounts are balanced as required by the double-entry method of bookkeeping.Heather will do this by preparing a(n):

The basic earnings per share ratio does not take stock options,warrants,and preferred stock into account.

One reason that generally accepted accounting principles allow firms to choose different methods for computing amortization is that amortization expenses have no effect on net income.

There are two major financial statements prepared at the completion of the accounting cycle: the journal and the ledger.

Owners,creditors,suppliers,employees,and the government all are users of accounting information.

A tax accountant is responsible for preparing tax returns and developing tax strategies.

The way accountants handle amortization could have an impact on:

Cindy is concerned because during the past four months her company has experienced cash shortages.She knows if this continues,the firm will have difficulties in accomplishing its goals.Cindy is concerned with:

Accounts payable are listed as an asset on a firm's balance sheet.

FIFO and LIFO are two common:

A _________ summarizes all the data in the account ledgers to verify that they balance.

Cash flow difficulties are unlikely for a firm that is growing rapidly.

Which financial statement represents what the company owns and owes as of a specific date?

Financial ratios that reflect the degree to which a firm relies on borrowed funds are called the ________ ratios.

The use of computers in accounting has:

Miko is the head of the accounting department at Microflush.She and her subordinates recently completed a trial balance.They are now likely to be working on the balance sheet,income statement and statement of cash flows.

Companies are not permitted to use amortization as an expense when calculating their income.

Revenue represents the dollar amount of what is received for goods sold,services rendered and from other financial sources.

The Revenue Canada is responsible for establishing accounting standards used by accountants working in government accounting.

The ability to read and understand financial statements is no longer an important skill for managers.