Question 1

The Internal Revenue Service is responsible for establishing accounting standards used by accountants working in government accounting.

Accepted Answer

A) True 
 B)False

Question 2

According to generally accepted accounting principles (GAAP), a firm must use the inventory valuation method that most accurately reflects the actual movement of goods through its inventory.

Accepted Answer

A) True 
 B)False

Question 3

refers to the value that stockholders or owners have in a company.

Accepted Answer

A) Assets. 
B) Liabilities. 
C) Owners' equity. 
D) Contra receivables. 
A) Assets. 
B) Liabilities. 
C) Owners' equity. 
D) Contra receivables.

Question 4

Net income before taxes is found by deducting total operating expenses from gross profit.

Accepted Answer

A) True 
 B)False

Question 5

The accounting profession is divided into two main fields: bookkeeping and auditing.

Accepted Answer

A) True 
 B)False

Question 6

The current ratio is a good indicator of the degree to which a firm relies on borrowed funds in its operations.

Accepted Answer

A) True 
 B)False

Question 7

A company's income statement is important to accountants and other stakeholders. It reveals:

Accepted Answer

A) A company's sources of funding. 
B) A company's ability to distribute goods or services in a timely manner. 
C) A company's ability to earn a profit over time. 
D) A company's capitalized value. 
A) A company's sources of funding. 
B) A company's ability to distribute goods or services in a timely manner. 
C) A company's ability to earn a profit over time. 
D) A company's capitalized value.

Question 8

An extremely high inventory turnover ratio may represent lost sales due to holding inadequate stocks of merchandise.

Accepted Answer

A) True 
 B)False

Question 9

The accounting cycle is a six-step procedure that results in the preparation and analysis of major financial statements.

Accepted Answer

A) True 
 B)False

Question 10

Posting is a step in the accounting cycle that involves transferring information from the journal into the appropriate accounts in a ledger.

Accepted Answer

A) True 
 B)False

Question 11

FIFO and LIFO are two common:

Accepted Answer

A) depreciation strategies. 
B) ways to structure a balance sheet. 
C) inventory valuation methods. 
D) current ratios. 
A) depreciation strategies. 
B) ways to structure a balance sheet. 
C) inventory valuation methods. 
D) current ratios.

Question 12

There are two major financial statements prepared at the completion of the accounting cycle: the journal and the ledger.

Accepted Answer

A) True 
 B)False

Question 13

One of the statements prepared in the accounting cycle is the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 14

The steps in the accounting cycle do not need to be followed in the order stated. Monthly financial statements can be prepared with a good amount of accuracy, prior to posting in the ledger or preparing the trail balance.

Accepted Answer

A) True 
 B)False

Question 15

Peak Performance Sporting Goods Company continues to perform well in spite of an economic recession. Company executives credit this to the strong partnerships it enjoys with category killer and large discount chains. Last week Peak Performance reported basic EPS [earnings per share] = $.80/share. If the firm has 4,000,000 shares outstanding, net income after taxes for the same period = .

Accepted Answer

A) $80,000 
B) $5,000,000 
C) $3,200,000 
D) $32,000 
A) $80,000 
B) $5,000,000 
C) $3,200,000 
D) $32,000

Question 16

The Balance Sheet for Renuvation LLC shows assets totaling $107,000 and liabilities totaling $75,000. Which of the following statements is correct?

Accepted Answer

A) Owner's Equity equals $182,000. 
B) Current Assets are worth $32,000. 
C) Net Income for the period is $32,000. 
D) Owner's Equity equals $32,000. 
A) Owner's Equity equals $182,000. 
B) Current Assets are worth $32,000. 
C) Net Income for the period is $32,000. 
D) Owner's Equity equals $32,000.

Question 17

The Barkley Company has recorded its unpaid bill for supplies under a current liabilities account on the balance sheet. This payment will be due to the supplier in less than a year.

Accepted Answer

A) True 
 B)False

Question 18

As a certified public accountant (CPA), Kay might become involved in helping clients select appropriate accounting computer software for their firm.

Accepted Answer

A) True 
 B)False

Question 19

Purchasing insurance, paying employees, and using supplies are examples of financial transactions.

Accepted Answer

A) True 
 B)False

Question 20

As the burden of taxes grows, the role of the auditor becomes increasingly important to the organization.

Accepted Answer

A) True 
 B)False

The Internal Revenue Service is responsible for establishing accounting standards used by accountants working in government accounting.

According to generally accepted accounting principles (GAAP), a firm must use the inventory valuation method that most accurately reflects the actual movement of goods through its inventory.

refers to the value that stockholders or owners have in a company.

Net income before taxes is found by deducting total operating expenses from gross profit.

The accounting profession is divided into two main fields: bookkeeping and auditing.

The current ratio is a good indicator of the degree to which a firm relies on borrowed funds in its operations.

A company's income statement is important to accountants and other stakeholders. It reveals:

An extremely high inventory turnover ratio may represent lost sales due to holding inadequate stocks of merchandise.

The accounting cycle is a six-step procedure that results in the preparation and analysis of major financial statements.

Posting is a step in the accounting cycle that involves transferring information from the journal into the appropriate accounts in a ledger.

FIFO and LIFO are two common:

There are two major financial statements prepared at the completion of the accounting cycle: the journal and the ledger.

One of the statements prepared in the accounting cycle is the statement of cash flows.

The steps in the accounting cycle do not need to be followed in the order stated. Monthly financial statements can be prepared with a good amount of accuracy, prior to posting in the ledger or preparing the trail balance.

The Balance Sheet for Renuvation LLC shows assets totaling $107,000 and liabilities totaling $75,000. Which of the following statements is correct?

The Barkley Company has recorded its unpaid bill for supplies under a current liabilities account on the balance sheet. This payment will be due to the supplier in less than a year.

As a certified public accountant (CPA), Kay might become involved in helping clients select appropriate accounting computer software for their firm.

Purchasing insurance, paying employees, and using supplies are examples of financial transactions.

As the burden of taxes grows, the role of the auditor becomes increasingly important to the organization.

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

The Internal Revenue Service is responsible for establishing accounting standards used by accountants working in government accounting.

According to generally accepted accounting principles (GAAP), a firm must use the inventory valuation method that most accurately reflects the actual movement of goods through its inventory.

refers to the value that stockholders or owners have in a company.

Net income before taxes is found by deducting total operating expenses from gross profit.

The accounting profession is divided into two main fields: bookkeeping and auditing.

The current ratio is a good indicator of the degree to which a firm relies on borrowed funds in its operations.

A company's income statement is important to accountants and other stakeholders. It reveals:

An extremely high inventory turnover ratio may represent lost sales due to holding inadequate stocks of merchandise.

The accounting cycle is a six-step procedure that results in the preparation and analysis of major financial statements.

Posting is a step in the accounting cycle that involves transferring information from the journal into the appropriate accounts in a ledger.

FIFO and LIFO are two common:

There are two major financial statements prepared at the completion of the accounting cycle: the journal and the ledger.

One of the statements prepared in the accounting cycle is the statement of cash flows.

The steps in the accounting cycle do not need to be followed in the order stated. Monthly financial statements can be prepared with a good amount of accuracy, prior to posting in the ledger or preparing the trail balance.

The Balance Sheet for Renuvation LLC shows assets totaling $107,000 and liabilities totaling $75,000. Which of the following statements is correct?

The Barkley Company has recorded its unpaid bill for supplies under a current liabilities account on the balance sheet. This payment will be due to the supplier in less than a year.

As a certified public accountant (CPA), Kay might become involved in helping clients select appropriate accounting computer software for their firm.

Purchasing insurance, paying employees, and using supplies are examples of financial transactions.

As the burden of taxes grows, the role of the auditor becomes increasingly important to the organization.

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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