Exam 17: Understanding Accounting and Financial Information

The sole purpose of accounting is to help managers evaluate the financial condition of the firm so that they may make better pricing decisions.

A bookkeeper's first task is to record the firm's transactions in a journal.

Accounting provides financial information that can be useful to owners, creditors, suppliers, employees, and competitors of an organization.

Revenue, minus cost of goods sold = .

The top managers of Highbrow Bookstores want to indicate to the firm's shareholders how effectively they have managed the company. Perhaps the most meaningful way to do this would be by reporting strong:

An individual who provides accounting services to individuals and businesses on a fee basis is referred to as a private accountant.

Green Living Construction Company installs solar panels in large newly constructed buildings. The company employs several expert installers who work on a full-time basis. Although the installers work everyday, the company pays them at the end of the month, for the previous month's work. Employee salaries are recorded as on Green Living's Balance Sheet.

Brianna is a bookkeeper for Monograms, Limited. She takes the firm's transactions and record them in a record book or computer program referred to as:

One way to make ratio analysis more meaningful is to compare the ratios of one firm to those of other firms in the same industry.

A statement of cash flows summarizes a company's cash receipts and cash payments over a period of time.

Liquidity refers to how quickly liabilities must be paid.

A balance sheet is composed of assets, liabilities, and revenues.

Which of the following ratios is a liquidity ratio?

Rents, salaries, utilities and insurance are examples of operating expenses.

Heather works in the accounting department of Colorado Manufacturing. Today she will use the firm's ledger to summarize information that was posted over the most recent time period. Her goal is to determine if the accounts are balanced as required by the double-entry method of bookkeeping. To be sure they are correct, Heather will prepare a(n):

Monica noted that she disbursed $6,347 in payments for operations in her travel agency and received $6,189 in cash receipts for services rendered. She had no cash receipts or disbursements from investments or financing activities. Thus, Monica had a:

The U.S. government is a user of a firm's accounting information.

Patents and copyrights are examples of intangible assets.

Nebraska Communications is considering the purchase of a new satellite. The firm believes the satellite will help generate future earnings. In addition, the firm recognizes the tax benefits of a lower net income provided by the annual of the asset.

The Financial Accounting Standards Board only sets standards for accountants in the private sector; however, government accountants have no universally accepted procedures that they must follow.