Exam 17: Understanding Accounting and Financial Information

When companies owe money to creditors, suppliers, and others, these outstanding amounts are recorded on the balance sheet as ________.

A firm's efficient use of its assets in running the business is key to maintaining sufficient cash flow. Ratios that accountants utilize to measure the efficient use of assets are called ________ ratios.

When reviewing the balance sheet for Portable Pet Care, Inc., a mobile small animal care business, Ricky noted the following information: Company assets totaling $3.5 million, and liabilities totaling $1.3 million. On paper, the net worth (owners' equity) for this business =

The Sarbanes-Oxley Act strengthens the protection for whistleblowers who report wrongful actions of company officers.

Mike is the head of the accounting department at Micro Flash. After completing the trial balance, he will proceed with the preparation of the balance sheet, the income statement, and the statement of cash flows.

One advantage of the double-entry method of bookkeeping is that it helps to identify mistakes made in recording financial transactions.

At the time the Bieg Plumbing Suppliers prepared its financial statements, it had several customers who bought goods over the past three months on its "90 days same as cash" credit plan. These customers had not yet paid their bills, but they have good credit ratings and Bieg is confident that they will make their payments on time. The amount these credit customers owe would show up as part of the

The top managers of Pages and Pages Bookstores want to indicate to the firm's shareholders how effectively they have managed the company. Perhaps the most meaningful way to do this would be by reporting strong

Explain the differences between managerial and financial accounting, and give examples of the types of problems and issues examined by each of these areas of accounting.

Barkatorium's balance sheet shows: what the business owns, minus what the business owes, which equals the book value (or net worth) of the business.

Bailey is concerned because during the past four months her company has experienced difficulty in paying its bills on time. She knows if this continues, the firm will have difficulties in accomplishing its goals. What is Bailey concerned with?

If prices of inventory are unchanged throughout the year, LIFO and FIFO inventory valuation methods will produce the same reported net income.

Referring to an accounting system, inputs refers to events and transactions that occur within the business, while outputs refers to the journal entries and ledger categorization that occurs after the events and transactions are recorded.

The inventory turnover ratio measures the speed of inventory moving through the firm and its conversion into sales.

Expenses a firm incurs for insurance, office salaries, and rent are classified as

Double-entry bookkeeping requires that every transaction be recorded in two places.

Andrea is preparing her homework for her accounting class. She is uncertain as to the proper handling of patents and copyrights on a firm's financial statements. Which of the following is correct?

Abel just graduated earned a bachelor's degree in accounting. He plans to go to work for the American Red Cross as an accountant. What job will Abel hold?

The key financial statements are the balance sheet, the income statement, and the statement of cash flows.

Which financial statement reports the company's revenues and selling costs over a period of time?