Exam 17: Understanding Accounting and Financial Information

Accountants do the work involved in recording financial events and transactions, but the actual classifying and interpreting of this data is left to financial managers.

Your firm is a supplier to a major chain of discount stores. You have heard rumors that this chain of discount stores is struggling financially. Which financial ratios would indicate the discount store's ability or inability to pay its short-term debts?

Barkatorium's balance sheet shows: what the business owns, minus what the business owes, which equals the book value (or net worth) of the business.

If a firm has a debt to owners' equity ratio of .75 (or 75%) we can conclude that

As an accountant, Janice's responsibilities include

The sixth and final step in the accounting cycle involves

The preparation of financial statements for people outside the firm (creditors, unions, suppliers, and others) is the goal of

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

The current ratio is a type of ________ ratio.

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 =

Recent accounting scandals raised serious questions about the legitimacy of an accounting firm performing both auditing and consulting work for the same company.

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

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 firm's balance sheet reports its financial condition on a specific date.

Many business decisions are made in hopes of improving a firm's bottom line. Which of the following financial statements will reveal a firm's bottom line?

Eric holds a bachelor's degree in accounting and additional training in tax law. He is responsible for preparing tax returns and developing tax strategies for his employer, and has done so for the past seven years. Eric is a certified government accountant.

Depreciation is a systematic write-off of the cost of a tangible asset that is listed on

Music Masters sells a unique assortment of sheet music including just about any published music ever written before 1970. Its customers are high school and college band directors and choir directors who require several copies of the same music, including music written for a variety of instruments. To buy inventory for resale, the business seeks out wholesalers with large inventories. Due to the fact that cash flow is always an important concern, the owner keeps a watchful eye on how quickly various genres of sheet music sell. To help him in this assessment, which of the following ratios would be an important part of this company's financial analysis?

With increased computer technology, the ability to read and understand financial statements is no longer an important skill for managers.

To effectively run a business, it is necessary to