Exam 12: The Role of Accounting in Business

In preparing financial statements,accountants adhere to a uniform set of rules called government-approved accounting principles (GAAP).

An account receivable is recorded as a current asset.

Its _____ ratio will measure overall company performance and tell you how successful management is at running the business.

The Code of Professional Ethics established by the American Institute of Certified Public Accountants states that accountants should be all of the following except

Accounting consists of measuring and summarizing business activities.

The Sarbanes-Oxley Act allows accountants to serve the same clients as both auditors and consultants.

A business that has perishable goods will have high inventory turnover.

To find an inventory turnover ratio,you multiply ending inventory by Cost of goods sold.

You've just been assigned to prepare a ____ ratio analysis showing your company's ability to pay interest on its debts from its operating income.

_____,which supply relevant,accurate,timely information in a format that will aid them in making decisions,are tailored to the needs of individual managers.

To help them operate the business,_____ accounting provides information and analysis to decision makers inside the organization.

Financial condition ratios tell you how efficiently your assets are being managed.

Its _____ ratio examines the relationship between funds acquired from creditors and funds invested by owners.

Auditors find _____ especially useful because it reveals the relationship of each item on the income statement to a specified base.

As a junior accountant for the Waterford Crystal Co. of New Bedford, Connecticut, you’ve just completed an intensive four-week initial training session. During your first week at Waterford, you’ll be applying many of the concepts that you worked so hard to understand over the course of four grueling years of college accounting classes: sales revenues, cost of goods sold, operating and administrative costs, taxes, interest expenses, and net profit. In week two, you’ll get some actual experience working with current and long-term assets, current and long-term liabilities, and owner’s equity. In your third week, you’ll be keeping track of all cash coming into and going out of the business. -Your balance sheet will report Waterford's _____.

Accountants do all of the following except _____.

Its _____ measures the number of times that a firm's operating income can cover its interest expense.

Bakersfield, Smith, and Babble LLC is a midsized accounting firm in New England. In order to project an image as a full service company, each partner specializes in a different field of accounting. Bakersfield provides information and analysis to business owners in order to help them operate their companies. Smith’s job is to furnish information to individuals and groups both inside and outside organizations to help them assess their firms’ financial performances. Babble is primarily responsible for preparing financial statements for business owners, managers, and investors and other users, such as creditors and government agencies. -Bakersfield works in management accounting.

As a junior accountant for the Waterford Crystal Co. of New Bedford, Connecticut, you’ve just completed an intensive four-week initial training session. During your first week at Waterford, you’ll be applying many of the concepts that you worked so hard to understand over the course of four grueling years of college accounting classes: sales revenues, cost of goods sold, operating and administrative costs, taxes, interest expenses, and net profit. In week two, you’ll get some actual experience working with current and long-term assets, current and long-term liabilities, and owner’s equity. In your third week, you’ll be keeping track of all cash coming into and going out of the business. -During week one at Waterford,you'll be working with _____.

Accountants communicate the meaning of _____ information and work with individuals and organizations to help them use that information to deal with business problems.