Question 1

One of the key financial statements prepared in the fifth step of the accounting cycle is:

Accepted Answer

A) general journal. 
B)  statement of cash flows. 
C)  asset summary. 
D)  social audit. 
A) general journal. 
B)  statement of cash flows. 
C)  asset summary. 
D)  social audit.

Question 2

The fundamental accounting equation is as follows: Assets = Liabilities + Owners' equity.

Accepted Answer

A) True 
 B)False

Question 3

Because each business is unique, the accounting profession recognizes that the accounting principles followed by one company may need to be completely different from the accounting principles followed by another firm.

Accepted Answer

A) True 
 B)False

Question 4

The Barkley Company will refer to its income statements to determine whether it was profitable, or, whether it lost money over the past year.

Accepted Answer

A) True 
 B)False

Question 5

The Barkley Company wants to know the value of its owners' equity. It will total its assets and subtract its liabilities.

Accepted Answer

A) True 
 B)False

Question 6

Generally accepted accounting principles (GAAP) permits firms to choose among different methods of depreciation and inventory valuation.

Accepted Answer

A) True 
 B)False

Question 7

Assets are listed on the balance sheet in order of liquidity, with the most liquid assets listed first.

Accepted Answer

A) True 
 B)False

Question 8

Unfortunately, during bad economic times, and a fear of job loss, company executives are more likely to ask an accountant to "cook the books." If a boss or manager should ask a staff accountant to change data to make the firm's financial position look better in the eyes of investors, what are the accountant's alternatives?

Accepted Answer

A) According to the FASB (Financial Accounting Standards Board) ruling says if the boss agrees to sign-off on accounting documents, the accountant is safe from prosecution. 
B) According to the FASB, as long as you are not a certified internal auditor, you will not be held accountable for such actions. 
C) As a professional, the accountant is held to the standards of generally accepted accounting principles and the FASB. If these guidelines are not followed, the accountant is potentially liable for illegal and unethical behavior. 
D) Investors use a variety of methods to determine if a firm is fundamentally sound, so they are less likely to grimace at your actions as the 
A) According to the FASB (Financial Accounting Standards Board) ruling says if the boss agrees to sign-off on accounting documents, the accountant is safe from prosecution. 
B) According to the FASB, as long as you are not a certified internal auditor, you will not be held accountable for such actions. 
C) As a professional, the accountant is held to the standards of generally accepted accounting principles and the FASB. If these guidelines are not followed, the accountant is potentially liable for illegal and unethical behavior. 
D) Investors use a variety of methods to determine if a firm is fundamentally sound, so they are less likely to grimace at your actions as the

Question 9

Harrison Manufacturing owns land worth $600,000 and has $130,000 worth of cash in its bank account. In the asset section of the balance sheet, Harrison lists its land holdings prior to listing its cash since it is a higher value.

Accepted Answer

A) True 
 B)False

Question 10

There are five key working areas in accounting: financial accounting, managerial accounting, auditing, tax accounting, and government and not-for-profit accounting.

Accepted Answer

A) True 
 B)False

Question 11

Miko 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?

Accepted Answer

A) Patents and copyrights are included with the firm's intangible assets on the balance sheet. 
B) Patents and copyrights are included with the firm's long-term liabilities on the balance sheet. 
C) Patents and copyrights are included with the firm's cost of goods sold on the income statement. 
D) Patents and copyrights are included with the firm's fixed assets on the balance sheet. 
A) Patents and copyrights are included with the firm's intangible assets on the balance sheet. 
B) Patents and copyrights are included with the firm's long-term liabilities on the balance sheet. 
C) Patents and copyrights are included with the firm's cost of goods sold on the income statement. 
D) Patents and copyrights are included with the firm's fixed assets on the balance sheet.

Question 12

The ratio helps determine the ability of a firm to repay its short-term debts even if it has difficulty selling its inventory.

Accepted Answer

A) acid-test 
B) cash flow 
C) diluted current asset 
D) required reserve 
A) acid-test 
B) cash flow 
C) diluted current asset 
D) required reserve

Question 13

The balance sheet reports revenues and selling costs for a period of time.

Accepted Answer

A) True 
 B)False

Question 14

Cash flow difficulties are unlikely for a firm that is profitable.

Accepted Answer

A) True 
 B)False

Question 15

Peak Performance Sporting Goods Company has reported net income after taxes = $3,750,000, with 18,250,000 shares outstanding. Basic Earning per Share for Peak Performance = .

Accepted Answer

A) approximately $.21/share 
B) approximately $20.50/share 
C) approximately $4.87/share 
D) approximately - $2.00/share 
A) approximately $.21/share 
B) approximately $20.50/share 
C) approximately $4.87/share 
D) approximately - $2.00/share

Question 16

One important source of financing for most small businesses is the owners savings. If the owner contributes money to the business from his/her personal savings, it is will be recorded in the Owner's Equity account on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 17

All firms with more than four employees should have a full-time accountant.

Accepted Answer

A) True 
 B)False

Question 18

A summarizes all the data from the account ledgers to verify that they are correct and balanced.

Accepted Answer

A) ledger statement 
B) balance sheet 
C) trial balance 
D) statement of cash flows 
A) ledger statement 
B) balance sheet 
C) trial balance 
D) statement of cash flows

Question 19

Accountant Alan Wingspan has just finished working on the balance sheet, income statement, and statement of cash flows for his company. The next step in the accounting cycle involves:

Accepted Answer

A) Posting the results of these statements to the appropriate journal. 
B) Analyzing the firm's financial statements to evaluate the financial condition of the firm. 
C) Conducting forensic tests of the data to ensure its accuracy. 
D) Placing the data used to construct the statements into an archive known as a data warehouse. 
A) Posting the results of these statements to the appropriate journal. 
B) Analyzing the firm's financial statements to evaluate the financial condition of the firm. 
C) Conducting forensic tests of the data to ensure its accuracy. 
D) Placing the data used to construct the statements into an archive known as a data warehouse.

Question 20

An important difference between accounting and other business functions, such as marketing and management, is that:

Accepted Answer

A) Accounting functions must be performed by an "outsider" (rather than by an employee of the business) in order to avoid conflicts of interest. 
B) Accounting offers us insight into whether the business is financially sound. 
C) Accounting involves mainly clerical activities and thus requires very little analysis. 
D) Accounting deals exclusively with numbers. 
A) Accounting functions must be performed by an "outsider" (rather than by an employee of the business) in order to avoid conflicts of interest. 
B) Accounting offers us insight into whether the business is financially sound. 
C) Accounting involves mainly clerical activities and thus requires very little analysis. 
D) Accounting deals exclusively with numbers.

One of the key financial statements prepared in the fifth step of the accounting cycle is:

The fundamental accounting equation is as follows: Assets = Liabilities + Owners' equity.

Because each business is unique, the accounting profession recognizes that the accounting principles followed by one company may need to be completely different from the accounting principles followed by another firm.

The Barkley Company will refer to its income statements to determine whether it was profitable, or, whether it lost money over the past year.

The Barkley Company wants to know the value of its owners' equity. It will total its assets and subtract its liabilities.

Generally accepted accounting principles (GAAP) permits firms to choose among different methods of depreciation and inventory valuation.

Assets are listed on the balance sheet in order of liquidity, with the most liquid assets listed first.

Harrison Manufacturing owns land worth $600,000 and has $130,000 worth of cash in its bank account. In the asset section of the balance sheet, Harrison lists its land holdings prior to listing its cash since it is a higher value.

There are five key working areas in accounting: financial accounting, managerial accounting, auditing, tax accounting, and government and not-for-profit accounting.

Miko 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?

The ratio helps determine the ability of a firm to repay its short-term debts even if it has difficulty selling its inventory.

The balance sheet reports revenues and selling costs for a period of time.

Cash flow difficulties are unlikely for a firm that is profitable.

Peak Performance Sporting Goods Company has reported net income after taxes = $3,750,000, with 18,250,000 shares outstanding. Basic Earning per Share for Peak Performance = .

One important source of financing for most small businesses is the owners savings. If the owner contributes money to the business from his/her personal savings, it is will be recorded in the Owner's Equity account on the balance sheet.

All firms with more than four employees should have a full-time accountant.

A summarizes all the data from the account ledgers to verify that they are correct and balanced.

Accountant Alan Wingspan has just finished working on the balance sheet, income statement, and statement of cash flows for his company. The next step in the accounting cycle involves:

An important difference between accounting and other business functions, such as marketing and management, is that:

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding Economics and How It Affects Business

Doing Business in Global Markets

Demanding Ethical and Socially Responsible Behavior

How to Form a Business

Entrepreneurship and Starting a Small Business

Management and Leadership

Structuring Organizations for Todays Challenges

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Union and Employeemanagement Issues

Marketing: Helping Buyers Buy

Developing and Pricing Goods and Services

Distributing Products

Using Effective Promotions

Financial Management

Using Securities Markets for Financing and Investing Opportunities

Money, Financial Institutions, and the Federal Reserve

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Exam 17: Understanding Accounting and Financial Information

One of the key financial statements prepared in the fifth step of the accounting cycle is:

The fundamental accounting equation is as follows: Assets = Liabilities + Owners' equity.

Because each business is unique, the accounting profession recognizes that the accounting principles followed by one company may need to be completely different from the accounting principles followed by another firm.

The Barkley Company will refer to its income statements to determine whether it was profitable, or, whether it lost money over the past year.

The Barkley Company wants to know the value of its owners' equity. It will total its assets and subtract its liabilities.

Generally accepted accounting principles (GAAP) permits firms to choose among different methods of depreciation and inventory valuation.

Assets are listed on the balance sheet in order of liquidity, with the most liquid assets listed first.

Harrison Manufacturing owns land worth $600,000 and has $130,000 worth of cash in its bank account. In the asset section of the balance sheet, Harrison lists its land holdings prior to listing its cash since it is a higher value.

There are five key working areas in accounting: financial accounting, managerial accounting, auditing, tax accounting, and government and not-for-profit accounting.

Miko 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?

The ratio helps determine the ability of a firm to repay its short-term debts even if it has difficulty selling its inventory.

The balance sheet reports revenues and selling costs for a period of time.

Cash flow difficulties are unlikely for a firm that is profitable.

Peak Performance Sporting Goods Company has reported net income after taxes = $3,750,000, with 18,250,000 shares outstanding. Basic Earning per Share for Peak Performance = .

One important source of financing for most small businesses is the owners savings. If the owner contributes money to the business from his/her personal savings, it is will be recorded in the Owner's Equity account on the balance sheet.

All firms with more than four employees should have a full-time accountant.

A summarizes all the data from the account ledgers to verify that they are correct and balanced.

Accountant Alan Wingspan has just finished working on the balance sheet, income statement, and statement of cash flows for his company. The next step in the accounting cycle involves:

An important difference between accounting and other business functions, such as marketing and management, is that:

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding Economics and How It Affects Business

Doing Business in Global Markets

Demanding Ethical and Socially Responsible Behavior

How to Form a Business

Entrepreneurship and Starting a Small Business

Management and Leadership

Structuring Organizations for Todays Challenges

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Union and Employeemanagement Issues

Marketing: Helping Buyers Buy

Developing and Pricing Goods and Services

Distributing Products

Using Effective Promotions

Financial Management

Using Securities Markets for Financing and Investing Opportunities

Money, Financial Institutions, and the Federal Reserve

Filters