Question 1

Most lenders would prefer to lend money to a firm that has a high debt-to-owners' equity ratio.

Accepted Answer

A) True 
 B)False

Question 2

The information provided by managerial accounting is of most benefit to a firm's _____.

Accepted Answer

A)  investors 
B)  creditors 
C)  managers 
D)  lenders 
E)  bankers 
A)  investors 
B)  creditors 
C)  managers 
D)  lenders 
E)  bankers

Question 3

For a corporation, the owners' equity amount is the total value of stock minus the retained earnings that have accumulated to date.

Accepted Answer

A) True 
 B)False

Question 4

Extreme Sports, a bicycle, ATV, and motorbike retailer, buys its inventory on credit.Before Extreme pays for this merchandise in 60 days, the money owed is classified on its balance sheet as a(n) _____.

Accepted Answer

A)  current asset 
B)  intangible asset 
C)  account payable 
D)  long-term liability 
E)  account receivable 
A)  current asset 
B)  intangible asset 
C)  account payable 
D)  long-term liability 
E)  account receivable

Question 5

Because of the Sarbanes-Oxley Act, accountants must maintain financial documents and audit work for _____.

Accepted Answer

A)  six months 
B)  one year 
C)  three years 
D)  five years 
E)  ten years 
A)  six months 
B)  one year 
C)  three years 
D)  five years 
E)  ten years

Question 6

The trial balance is the

Accepted Answer

A)  calculation of the net income. 
B)  verification that the firm earned a profit. 
C)  process of transferring journal entries to the general ledger. 
D)  summary of the information for the month. 
E)  summary of the firm's general ledger accounts at the end of the accounting period. 
A)  calculation of the net income. 
B)  verification that the firm earned a profit. 
C)  process of transferring journal entries to the general ledger. 
D)  summary of the information for the month. 
E)  summary of the firm's general ledger accounts at the end of the accounting period.

Question 7

The trial balance is prepared directly from the information contained in the general and specialized journals.

Accepted Answer

A) True 
 B)False

Question 8

Why are current assets listed before fixed assets on the balance sheet?

Accepted Answer

Current assets are listed before fixed a

Question 9

Ridgley, Cooper, and Ross (RCR)
Katie is the CEO of Ridgley, Cooper, and Ross (RCR), a regional accounting firm.RCR offers services in most areas of accounting, including auditing and consulting services.The firm must follow the GAAP rules, just like any other accounting firm.If there are information gaps that are not addressed and resolved by the firm, RCR could be considered a violator of the Sarbanes-Oxley Act.Katie understands what must be done and wants every employee of the firm to understand that they have to follow all the rules and regulations.Like any other industry, accounting is a competitive industry and employees of accounting firms must be productive, progressive, and well trained.
-Refer to Ridgley, Cooper, and Ross.If you applied for a job at RCR and were asked to state the accounting equation, which of these would you state?

Accepted Answer

A)  Assets = liabilities -owners' equity 
B)  Assets + liabilities = owners' equity 
C)  Assets /liabilities = owners' equity 
D)  Assets = liabilities + owners' equity 
E)  Assets = liabilities * owners' equity 
A)  Assets = liabilities -owners' equity 
B)  Assets + liabilities = owners' equity 
C)  Assets /liabilities = owners' equity 
D)  Assets = liabilities + owners' equity 
E)  Assets = liabilities * owners' equity

Question 10

Dave Murray's Pontiac dealership has an inventory turnover of 5.What does this figure mean?

Accepted Answer

A)  The average value of Dave's inventory is five times his sales. 
B)  For every $1 Dave spends on inventory, he reaps $5 in sales. 
C)  Dave's beginning inventory is five times his ending inventory. 
D)  Dave's average inventory is five times greater than his cost of goods sold. 
E)  Dave sells his merchandise five times each year. 
A)  The average value of Dave's inventory is five times his sales. 
B)  For every $1 Dave spends on inventory, he reaps $5 in sales. 
C)  Dave's beginning inventory is five times his ending inventory. 
D)  Dave's average inventory is five times greater than his cost of goods sold. 
E)  Dave sells his merchandise five times each year.

Question 11

Accounting information is, first and foremost, management information.

Accepted Answer

A) True 
 B)False

Question 12

Ridgley, Cooper, and Ross (RCR)
Katie is the CEO of Ridgley, Cooper, and Ross (RCR), a regional accounting firm.RCR offers services in most areas of accounting, including auditing and consulting services.The firm must follow the GAAP rules, just like any other accounting firm.If there are information gaps that are not addressed and resolved by the firm, RCR could be considered a violator of the Sarbanes-Oxley Act.Katie understands what must be done and wants every employee of the firm to understand that they have to follow all the rules and regulations.Like any other industry, accounting is a competitive industry and employees of accounting firms must be productive, progressive, and well trained.
-Refer to Ridgley, Cooper, and Ross.In order to be successful in the accounting industry, RCR employees must

Accepted Answer

A)  know all areas of accounting and marketing. 
B)  have complete human resources training. 
C)  be able to communicate in multiple languages. 
D)  know how to do accounting the old fashioned way-using the manual, double-entry system. 
E)  have a strong background in financial management. 
A)  know all areas of accounting and marketing. 
B)  have complete human resources training. 
C)  be able to communicate in multiple languages. 
D)  know how to do accounting the old fashioned way-using the manual, double-entry system. 
E)  have a strong background in financial management.

Question 13

Working capital is the difference between

Accepted Answer

A)  current assets and income. 
B)  fixed assets and operating expenses. 
C)  income and selling expenses. 
D)  current assets and current liabilities. 
E)  long-term liabilities and current liabilities. 
A)  current assets and income. 
B)  fixed assets and operating expenses. 
C)  income and selling expenses. 
D)  current assets and current liabilities. 
E)  long-term liabilities and current liabilities.

Question 14

As a stockholder, Charlotte is concerned about the level of long-term debt her company has.Which ratio would you recommend for determining whether or not her company has too much debt?

Accepted Answer

A)  return on owners' equity 
B)  debt turnover 
C)  acid-test ratio 
D)  debt-to-owners' equity 
E)  equity-to-debt return 
A)  return on owners' equity 
B)  debt turnover 
C)  acid-test ratio 
D)  debt-to-owners' equity 
E)  equity-to-debt return

Question 15

According to the Sarbanes-Oxley Act, the FTC is required to establish a full- time, five-member federal oversight board that will police the accounting industry.

Accepted Answer

A) True 
 B)False

Question 16

The president of Universal Foods Corporation is seeking your advice on the kinds of information provided by an accounting system that would be helpful to her.Since the president is developing a new, company-wide strategy, she would be most interested in the

Accepted Answer

A)  performance appraisals of employees in one of the three customer service centers. 
B)  total sales for all of the company's products. 
C)  sales for one of the company's products. 
D)  payroll figures for employees at one of the ten warehouse facilities. 
E)  lists of primary and secondary suppliers for one of the five production plants. 
A)  performance appraisals of employees in one of the three customer service centers. 
B)  total sales for all of the company's products. 
C)  sales for one of the company's products. 
D)  payroll figures for employees at one of the ten warehouse facilities. 
E)  lists of primary and secondary suppliers for one of the five production plants.

Question 17

The process of transferring information from a general journal to a general ledger is referred to as _____.

Accepted Answer

A)  posting 
B)  transposing 
C)  recording 
D)  debiting 
E)  journalizing 
A)  posting 
B)  transposing 
C)  recording 
D)  debiting 
E)  journalizing

Question 18

Information that is not divulged to anyone outside the business is commonly referred to as ____ information.

Accepted Answer

A)  summary 
B)  proprietary 
C)  financial 
D)  investors' 
E)  tax 
A)  summary 
B)  proprietary 
C)  financial 
D)  investors' 
E)  tax

Question 19

Ridgley, Cooper, and Ross (RCR)
Katie is the CEO of Ridgley, Cooper, and Ross (RCR), a regional accounting firm.RCR offers services in most areas of accounting, including auditing and consulting services.The firm must follow the GAAP rules, just like any other accounting firm.If there are information gaps that are not addressed and resolved by the firm, RCR could be considered a violator of the Sarbanes-Oxley Act.Katie understands what must be done and wants every employee of the firm to understand that they have to follow all the rules and regulations.Like any other industry, accounting is a competitive industry and employees of accounting firms must be productive, progressive, and well trained.
-Refer to Ridgley, Cooper, and Ross.Which of the following represents a key component of the Sarbanes-Oxley Act relating to consulting services?

Accepted Answer

A)  A public corporation must change its lead consulting firm every five years. 
B)  Accounting firms are prohibited from providing many types of nonaudit consulting services to the companies they audit. 
C)  Accounting firms who report violations of the Sarbanes-Oxley Act must be banned from consulting for five years. 
D)  The SEC is required to establish a full-time five-member federal oversight board that will police the consulting industry. 
E)  Consultants must maintain financial documents and audit work papers for fifteen years. 
A)  A public corporation must change its lead consulting firm every five years. 
B)  Accounting firms are prohibited from providing many types of nonaudit consulting services to the companies they audit. 
C)  Accounting firms who report violations of the Sarbanes-Oxley Act must be banned from consulting for five years. 
D)  The SEC is required to establish a full-time five-member federal oversight board that will police the consulting industry. 
E)  Consultants must maintain financial documents and audit work papers for fifteen years.

Question 20

When Josh sold his Internet auction site to eBay, he received $2,000,000 more than the total value of his assets as listed on his balance sheet.How will eBay classify this $2,000,000?

Accepted Answer

A)  goodwill 
B)  reputation 
C)  equipment 
D)  research and development 
E)  retained earnings 
A)  goodwill 
B)  reputation 
C)  equipment 
D)  research and development 
E)  retained earnings

Most lenders would prefer to lend money to a firm that has a high debt-to-owners' equity ratio.

The information provided by managerial accounting is of most benefit to a firm's _____.

For a corporation, the owners' equity amount is the total value of stock minus the retained earnings that have accumulated to date.

Extreme Sports, a bicycle, ATV, and motorbike retailer, buys its inventory on credit.Before Extreme pays for this merchandise in 60 days, the money owed is classified on its balance sheet as a(n) _____.

Because of the Sarbanes-Oxley Act, accountants must maintain financial documents and audit work for _____.

The trial balance is the

The trial balance is prepared directly from the information contained in the general and specialized journals.

Why are current assets listed before fixed assets on the balance sheet?

Dave Murray's Pontiac dealership has an inventory turnover of 5.What does this figure mean?

Accounting information is, first and foremost, management information.

Working capital is the difference between

As a stockholder, Charlotte is concerned about the level of long-term debt her company has.Which ratio would you recommend for determining whether or not her company has too much debt?

According to the Sarbanes-Oxley Act, the FTC is required to establish a full- time, five-member federal oversight board that will police the accounting industry.

The president of Universal Foods Corporation is seeking your advice on the kinds of information provided by an accounting system that would be helpful to her.Since the president is developing a new, company-wide strategy, she would be most interested in the

The process of transferring information from a general journal to a general ledger is referred to as _____.

Information that is not divulged to anyone outside the business is commonly referred to as ____ information.

When Josh sold his Internet auction site to eBay, he received $2,000,000 more than the total value of his assets as listed on his balance sheet.How will eBay classify this $2,000,000?

Exploring the World of Business and Economics

Being Ethical and Socially Responsible

Exploring Global Business

Choosing a Form of Business Ownership

Small Business, Entrepreneurship, and Franchises

Understanding the Management Process

Creating a Flexible Organization

Producing Quality Goods and Services

Attracting and Retaining the Best Employees

Motivating and Satisfying Employees and Teams

Building Customer Relationships Through Effective Marketing

Creating and Pricing Products That Satisfy Customers

Distributing and Promoting Products

Understanding Information and E-Business

Mastering Financial Management

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Exam 15: Using Accounting Information

Most lenders would prefer to lend money to a firm that has a high debt-to-owners' equity ratio.

The information provided by managerial accounting is of most benefit to a firm's _____.

For a corporation, the owners' equity amount is the total value of stock minus the retained earnings that have accumulated to date.

Extreme Sports, a bicycle, ATV, and motorbike retailer, buys its inventory on credit.Before Extreme pays for this merchandise in 60 days, the money owed is classified on its balance sheet as a(n) _____.

Because of the Sarbanes-Oxley Act, accountants must maintain financial documents and audit work for _____.

The trial balance is the

The trial balance is prepared directly from the information contained in the general and specialized journals.

Why are current assets listed before fixed assets on the balance sheet?

Dave Murray's Pontiac dealership has an inventory turnover of 5.What does this figure mean?

Accounting information is, first and foremost, management information.

Working capital is the difference between

As a stockholder, Charlotte is concerned about the level of long-term debt her company has.Which ratio would you recommend for determining whether or not her company has too much debt?

According to the Sarbanes-Oxley Act, the FTC is required to establish a full- time, five-member federal oversight board that will police the accounting industry.

The president of Universal Foods Corporation is seeking your advice on the kinds of information provided by an accounting system that would be helpful to her.Since the president is developing a new, company-wide strategy, she would be most interested in the

The process of transferring information from a general journal to a general ledger is referred to as _____.

Information that is not divulged to anyone outside the business is commonly referred to as ____ information.

When Josh sold his Internet auction site to eBay, he received $2,000,000 more than the total value of his assets as listed on his balance sheet.How will eBay classify this $2,000,000?

Exploring the World of Business and Economics

Being Ethical and Socially Responsible

Exploring Global Business

Choosing a Form of Business Ownership

Small Business, Entrepreneurship, and Franchises

Understanding the Management Process

Creating a Flexible Organization

Producing Quality Goods and Services

Attracting and Retaining the Best Employees

Motivating and Satisfying Employees and Teams

Building Customer Relationships Through Effective Marketing

Creating and Pricing Products That Satisfy Customers

Distributing and Promoting Products

Understanding Information and E-Business

Mastering Financial Management

Filters