Question 1

What is an audit?

Accepted Answer

An audit is a systematic exami

Question 2

Kershner says: "Our income statement should be looking good this year.We've been doing excellent business this year,so we have a lot of gross sales.The company should be in good shape." Michaels replies: "It remains to be seen how our income statement will look overall.Despite strong sales revenue,the overall income statement might not be as good as we might hope."
Which of the following does Kershner assume?

Accepted Answer

A) High revenues equate to a healthy income statement. 
B) Many factors must be considered to calculate the income statement. 
C) The company's revenue next year will be as good as this year's. 
D) Operating expenses have been relatively high this year. 
E) Gross profit is much lower than gross sales. 
A) High revenues equate to a healthy income statement. 
B) Many factors must be considered to calculate the income statement. 
C) The company's revenue next year will be as good as this year's. 
D) Operating expenses have been relatively high this year. 
E) Gross profit is much lower than gross sales.

Question 3

Describe the major elements of an income statement.

Accepted Answer

- Revenues: monies received as a result

Question 4

Which of the following is an accountant's examination of a company's financial records to determine if it used proper procedures to prepare its financial records?

Accepted Answer

A) Verification 
B) Review 
C) Investigation 
D) Analysis 
E) Audit 
A) Verification 
B) Review 
C) Investigation 
D) Analysis 
E) Audit

Question 5

All expenses directly involved in producing or selling a good or service during a given time period is called cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 6

An activity ratio measures a firm's

Accepted Answer

A) sales per employee. 
B) frequency of purchases. 
C) level of inventory. 
D) efficiency in using its assets. 
E) sales per selling expense dollar. 
A) sales per employee. 
B) frequency of purchases. 
C) level of inventory. 
D) efficiency in using its assets. 
E) sales per selling expense dollar.

Question 7

________ is an asset that represents the cost of merchandise which was made or bought for sale to customers and that is still on hand.

Accepted Answer

A) Accounts payable 
B) Prepaid expenses 
C) Cost of goods sold 
D) Merchandise inventory 
E) Accounts receivable 
A) Accounts payable 
B) Prepaid expenses 
C) Cost of goods sold 
D) Merchandise inventory 
E) Accounts receivable

Question 8

Which of the following best illustrates cash flow from operations?

Accepted Answer

A) The revenue from selling bread at a local bakery 
B) The revenue from selling stocks by an insurance company 
C) The revenue from new investors in a software start-up 
D) The revenue from selling obsolescent trucks by a delivery company 
E) The revenue from issuing stock by a financial management firm 
A) The revenue from selling bread at a local bakery 
B) The revenue from selling stocks by an insurance company 
C) The revenue from new investors in a software start-up 
D) The revenue from selling obsolescent trucks by a delivery company 
E) The revenue from issuing stock by a financial management firm

Question 9

A new Canadian Chartered Professional Accounting Code of Ethics is evolving that borrows from the best practices of the three current designations.

Accepted Answer

A) True 
 B)False

Question 10

Streeter & Sons is a regional service company that has been in business for a few years but has not employed a controller or anyone else full-time to keep track of its financial state.The company needs to take a good look at its financial state to determine whether it needs to make any changes in its practices,in order to prevent possible financial meltdown. Which of the following,if true,would strengthen the case that Streeter & Sons will be able to meet its current financial obligations?

Accepted Answer

A) The company has high levels of accounts payable. 
B) The company's liabilities exceed its assets. 
C) The company currently has a negative cash flow. 
D) The company needs to expand its number of customers. 
E) The company has more assets than it has liabilities. 
A) The company has high levels of accounts payable. 
B) The company's liabilities exceed its assets. 
C) The company currently has a negative cash flow. 
D) The company needs to expand its number of customers. 
E) The company has more assets than it has liabilities.

Question 11

The financial statement detailing a firm's assets,liabilities,and owners' equity is the

Accepted Answer

A) income statement. 
B) statement of cash flows. 
C) balance sheet. 
D) manufacturing statement. 
E) statement of retained earnings. 
A) income statement. 
B) statement of cash flows. 
C) balance sheet. 
D) manufacturing statement. 
E) statement of retained earnings.

Question 12

Which of the following calculates the debt-to-owners' equity ratio?

Accepted Answer

A) Long-term liabilities divided by owners' equity 
B) Current liabilities divided by owners' equity 
C) Long-term liabilities divided by retained earnings 
D) Total liabilities divided by retained earnings 
E) Total liabilities divided by owners' equity 
A) Long-term liabilities divided by owners' equity 
B) Current liabilities divided by owners' equity 
C) Long-term liabilities divided by retained earnings 
D) Total liabilities divided by retained earnings 
E) Total liabilities divided by owners' equity

Question 13

If a company needs cash for emergencies,it typically uses the money in retained earnings.

Accepted Answer

A) True 
 B)False

Question 14

How is the debt-to-owners'-equity ratio used?

Accepted Answer

A) To describe the extent to which the firm is financed through borrowed money 
B) To determine how much net income the business earns for each dollar invested 
C) To determine how readily the firm can meet unexpected demands for cash 
D) To indicate the percentage of revenue which will be profit 
E) To determine the percentage of profits paid out to debtholders 
A) To describe the extent to which the firm is financed through borrowed money 
B) To determine how much net income the business earns for each dollar invested 
C) To determine how readily the firm can meet unexpected demands for cash 
D) To indicate the percentage of revenue which will be profit 
E) To determine the percentage of profits paid out to debtholders

Question 15

All firms are legally required to issue a statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 16

A balance sheet would not be able to help a manager answer which question?

Accepted Answer

A) Is it a good time to try to grow the business? 
B) Can the company survive if a period of low revenues happens? 
C) Does the company have an excessive number of employees? 
D) Is the company able to take on more debt? 
E) What is the total value of all the company's assets? 
A) Is it a good time to try to grow the business? 
B) Can the company survive if a period of low revenues happens? 
C) Does the company have an excessive number of employees? 
D) Is the company able to take on more debt? 
E) What is the total value of all the company's assets?

Question 17

What are the steps in the accounting cycle?

Accepted Answer

The steps are (1)analyze data that are g

Question 18

A company has $3.25 million in revenue and has a revenue cost of $1 million.Which of the following statements is true?

Accepted Answer

A) In order to have a net income of more than $1.5 million,the operating expenses and income taxes need to be less than $0.25 million. 
B) In order to have a net income of more than $1.5 million,the operating expenses and income taxes need to be less than $0.75 million. 
C) In order to have a net income of more than $1.5 million,the operating expenses and income taxes need to be less than $1.75 million. 
D) In order to have a net income of more than $1.5 million,the operating expenses and income taxes need to be less than $2.25 million. 
E) In order to have a net income of more than $1.5 million,the operating expenses and income taxes need to be less than $2.75 million. 
A) In order to have a net income of more than $1.5 million,the operating expenses and income taxes need to be less than $0.25 million. 
B) In order to have a net income of more than $1.5 million,the operating expenses and income taxes need to be less than $0.75 million. 
C) In order to have a net income of more than $1.5 million,the operating expenses and income taxes need to be less than $1.75 million. 
D) In order to have a net income of more than $1.5 million,the operating expenses and income taxes need to be less than $2.25 million. 
E) In order to have a net income of more than $1.5 million,the operating expenses and income taxes need to be less than $2.75 million.

Question 19

What is cash and other assets that can be converted into cash within a year called?

Accepted Answer

A) Liquid assets 
B) Convertible assets 
C) Working assets 
D) Fixed assets 
E) Current assets 
A) Liquid assets 
B) Convertible assets 
C) Working assets 
D) Fixed assets 
E) Current assets

Question 20

What is an income statement?

Accepted Answer

An income statement reports re

What is an audit?

Describe the major elements of an income statement.

Which of the following is an accountant's examination of a company's financial records to determine if it used proper procedures to prepare its financial records?

All expenses directly involved in producing or selling a good or service during a given time period is called cost of goods sold.

An activity ratio measures a firm's

________ is an asset that represents the cost of merchandise which was made or bought for sale to customers and that is still on hand.

Which of the following best illustrates cash flow from operations?

A new Canadian Chartered Professional Accounting Code of Ethics is evolving that borrows from the best practices of the three current designations.

The financial statement detailing a firm's assets,liabilities,and owners' equity is the

Which of the following calculates the debt-to-owners' equity ratio?

If a company needs cash for emergencies,it typically uses the money in retained earnings.

How is the debt-to-owners'-equity ratio used?

All firms are legally required to issue a statement of cash flows.

A balance sheet would not be able to help a manager answer which question?

What are the steps in the accounting cycle?

A company has $3.25 million in revenue and has a revenue cost of $1 million.Which of the following statements is true?

What is cash and other assets that can be converted into cash within a year called?

What is an income statement?

Understanding the Canadian Business System

The Environment of Business

Conducting Business Ethically and Responsibly

Entrepreneurship,small Business,and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Organizing the Business Enterprise

Managing Human Resources and Labour Relations

Motivating,satisfying,and Leading Employees

Operations Management,productivity,and Quality

Understanding Marketing Principles and Developing Products

Pricing,promoting,and Distributing Products

Money and Banking

Financial Decisions and Risk Management

Filters

Exam 11: Understanding Accounting

What is an audit?

Describe the major elements of an income statement.

Which of the following is an accountant's examination of a company's financial records to determine if it used proper procedures to prepare its financial records?

All expenses directly involved in producing or selling a good or service during a given time period is called cost of goods sold.

An activity ratio measures a firm's

________ is an asset that represents the cost of merchandise which was made or bought for sale to customers and that is still on hand.

Which of the following best illustrates cash flow from operations?

A new Canadian Chartered Professional Accounting Code of Ethics is evolving that borrows from the best practices of the three current designations.

The financial statement detailing a firm's assets,liabilities,and owners' equity is the

Which of the following calculates the debt-to-owners' equity ratio?

If a company needs cash for emergencies,it typically uses the money in retained earnings.

How is the debt-to-owners'-equity ratio used?

All firms are legally required to issue a statement of cash flows.

A balance sheet would not be able to help a manager answer which question?

What are the steps in the accounting cycle?

A company has $3.25 million in revenue and has a revenue cost of $1 million.Which of the following statements is true?

What is cash and other assets that can be converted into cash within a year called?

What is an income statement?

Understanding the Canadian Business System

The Environment of Business

Conducting Business Ethically and Responsibly

Entrepreneurship,small Business,and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Organizing the Business Enterprise

Managing Human Resources and Labour Relations

Motivating,satisfying,and Leading Employees

Operations Management,productivity,and Quality

Understanding Marketing Principles and Developing Products

Pricing,promoting,and Distributing Products

Money and Banking

Financial Decisions and Risk Management

Filters