Exam 15: Understanding Accounting and Financial Statements

If a company has an acid test ratio of 1.00,$5 million in inventory,and $10 million in current liabilities,what are its total current assets?

Which ratios are designed to evaluate a firm's ability to generate revenues in excess of operating costs and other expenses?

One of the fastest growing segments of accounting practice is the not-for-profit sector.

Which of the following statements is correct?

Which activities provide the necessary funds to start a business and to expand it after it begins operations?

The Securities and Exchange Commission is the chief federal regulator of financial markets and the accounting industry.

Not-for-profit organizations use only public accountants.

Ricardo wants to assess his firm's ability to meet its short-term obligations.Which of the following ratios are the most relevant?

Rodrigues Inc.a construction company,recorded a gross profit of $12,000.Its operating expenses stood at $2,000.The amount of depreciation was calculated to be $3,000.Rodrigues paid out $2,500 in income taxes.Which of the following figures captures Rodrigues' bottom line?

What happens when the value of dollar drops?

Last year,ABC Tools had a current ratio of 2.0 and an acid-test ratio of 1.0.This year the firm's current ratio is 2.5 and its acid-test ratio is 1.5.ABC's _____ has _____.

Which principles encompass the conventions,rules,and procedures for determining acceptable accounting and financial reporting practices at a particular time?

Accrual accounting recognizes revenues and expenses when cash changes hands.

Accountants play fundamental roles in not only business but also other aspects of society.

Double-entry bookkeeping refers to the process by which accounting transactions are recorded.

A firm's acid-test ratio can never be higher than its current ratio.

A firm's balance sheet shows its financial position over a period of time.

Meryl is a corporate certified public accountant (CPA)working on a new budget.When she lists the company's liabilities,which of the following will she include?

The natural progression of a business begins with

Altoona Products buys a $500,000 machine by taking out a bank loan.The company's assets will _____ by $500,000 while its liabilities will _?____?? by $500,000.