Question 1

Profitability ratios such as _____ can be used to analyze and assess a company's financial performance.

Accepted Answer

A)  fixed assets turnover 
B)  current ratios 
C)  dividend payout ratios 
D)  return on assets 
A)  fixed assets turnover 
B)  current ratios 
C)  dividend payout ratios 
D)  return on assets

Question 2

Which of the following is true of rate of return on assets?

Accepted Answer

A)  It is a measure of a company's profitability. 
B)  It is used to evaluate a company's ability to pay off its short-term debts. 
C)  It is used to determine the financial leverage of a company. 
D)  It is a measure of the optimum capital structure. 
A)  It is a measure of a company's profitability. 
B)  It is used to evaluate a company's ability to pay off its short-term debts. 
C)  It is used to determine the financial leverage of a company. 
D)  It is a measure of the optimum capital structure.

Question 3

The branch of accounting related to the management's financial decisions is known as financial accounting.

Accepted Answer

A) True 
 B)False

Question 4

The stockholders' equity of a company should equal the sum of its total assets and total liabilities.

Accepted Answer

A) True 
 B)False

Question 5

Rights to payments from customers are:

Accepted Answer

A)  liabilities. 
B)  prepaid expenses. 
C)  accounts receivable. 
D)  accounts payable. 
A)  liabilities. 
B)  prepaid expenses. 
C)  accounts receivable. 
D)  accounts payable.

Question 6

Which of the following is true about the cost principle?

Accepted Answer

A)  It limits the economic data recorded in an accounting system to data related to the activities of that company. 
B)  It initially records assets in the accounting records at their purchase price. 
C)  It assumes that a company will continue in business indefinitely. 
D)  It reports the revenues earned by a company for a period with the expenses incurred in generating the revenues. 
A)  It limits the economic data recorded in an accounting system to data related to the activities of that company. 
B)  It initially records assets in the accounting records at their purchase price. 
C)  It assumes that a company will continue in business indefinitely. 
D)  It reports the revenues earned by a company for a period with the expenses incurred in generating the revenues.

Question 7

The return on assets is calculated by _____.

Accepted Answer

A)  dividing interest expense by average total asset and average current assets 
B)  dividing net income before taxes and interest expense by average total asset 
C)  dividing average total asset and interest expense by net income taxes 
D)  dividing net income before taxes and interest expense by average current assets 
A)  dividing interest expense by average total asset and average current assets 
B)  dividing net income before taxes and interest expense by average total asset 
C)  dividing average total asset and interest expense by net income taxes 
D)  dividing net income before taxes and interest expense by average current assets

Question 8

A primary disadvantage of corporations is that the financial resources available to them are limited.

Accepted Answer

A) True 
 B)False

Question 9

Merchandising businesses produce products rather than provide services to customers.

Accepted Answer

A) True 
 B)False

Question 10

_____ is an example of internal stakeholders.

Accepted Answer

A)  Managers 
B)  Creditors 
C)  Stockholders 
D)  Suppliers 
A)  Managers 
B)  Creditors 
C)  Stockholders 
D)  Suppliers

Question 11

Which of the following is considered an asset until consumed?

Accepted Answer

A)  Accounts payable 
B)  Prepaid expense 
C)  Accounts receivable 
D)  Stockholders' equity 
A)  Accounts payable 
B)  Prepaid expense 
C)  Accounts receivable 
D)  Stockholders' equity

Question 12

The balance sheet represents the accounting equation.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is an intangible asset?

Accepted Answer

A)  Patent 
B)  Cash 
C)  Land 
D)  Equipment 
A)  Patent 
B)  Cash 
C)  Land 
D)  Equipment

Question 14

The performance evaluation of the managers of a company is dependent on the company's:

Accepted Answer

A)  common stock. 
B)  volatility. 
C)  economic performance. 
D)  nonrecurring activities. 
A)  common stock. 
B)  volatility. 
C)  economic performance. 
D)  nonrecurring activities.

Question 15

Which of the items below is not a business organization form?

Accepted Answer

A)  Venture entrepreneurship 
B)  Proprietorship 
C)  Partnership 
D)  Corporation 
A)  Venture entrepreneurship 
B)  Proprietorship 
C)  Partnership 
D)  Corporation

Question 16

The resources a business owns are called:

Accepted Answer

A)  assets. 
B)  liabilities. 
C)  earnings. 
D)  stockholders' equity. 
A)  assets. 
B)  liabilities. 
C)  earnings. 
D)  stockholders' equity.

Question 17

A liability is a legal obligation to repay the amount borrowed according to the terms of the borrowing agreement.

Accepted Answer

A) True 
 B)False

Question 18

Expressing financial data as if a business will continue operating for an indefinite period time refers to which concept?

Accepted Answer

A)  Business entity concept 
B)  Going concern concept 
C)  Objectivity concept 
D)  Adequate disclosure concept 
A)  Business entity concept 
B)  Going concern concept 
C)  Objectivity concept 
D)  Adequate disclosure concept

Profitability ratios such as _____ can be used to analyze and assess a company's financial performance.

Which of the following is true of rate of return on assets?

The branch of accounting related to the management's financial decisions is known as financial accounting.

The stockholders' equity of a company should equal the sum of its total assets and total liabilities.

Rights to payments from customers are:

Which of the following is true about the cost principle?

The return on assets is calculated by _____.

A primary disadvantage of corporations is that the financial resources available to them are limited.

Merchandising businesses produce products rather than provide services to customers.

_____ is an example of internal stakeholders.

Which of the following is considered an asset until consumed?

The balance sheet represents the accounting equation.

Which of the following is an intangible asset?

The performance evaluation of the managers of a company is dependent on the company's:

Which of the items below is not a business organization form?

The resources a business owns are called:

A liability is a legal obligation to repay the amount borrowed according to the terms of the borrowing agreement.

Expressing financial data as if a business will continue operating for an indefinite period time refers to which concept?

Basic Accounting Systems: Cash Basis

Basic Accounting Systems: Accrual Basis

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables and Inventories

Fixed Assets, Natural Resources, and Intangible Assets

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Exam 1: The Role of Accounting in Business

Profitability ratios such as _____ can be used to analyze and assess a company's financial performance.

Which of the following is true of rate of return on assets?

The branch of accounting related to the management's financial decisions is known as financial accounting.

The stockholders' equity of a company should equal the sum of its total assets and total liabilities.

Rights to payments from customers are:

Which of the following is true about the cost principle?

The return on assets is calculated by _____.

A primary disadvantage of corporations is that the financial resources available to them are limited.

Merchandising businesses produce products rather than provide services to customers.

_____ is an example of internal stakeholders.

Which of the following is considered an asset until consumed?

The balance sheet represents the accounting equation.

Which of the following is an intangible asset?

The performance evaluation of the managers of a company is dependent on the company's:

Which of the items below is not a business organization form?

The resources a business owns are called:

A liability is a legal obligation to repay the amount borrowed according to the terms of the borrowing agreement.

Expressing financial data as if a business will continue operating for an indefinite period time refers to which concept?

Basic Accounting Systems: Cash Basis

Basic Accounting Systems: Accrual Basis

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables and Inventories

Fixed Assets, Natural Resources, and Intangible Assets

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters