Question 1

Resources that a firm owns are called:

Accepted Answer

A)  Revenues. 
B)  Assets. 
C)  Equities. 
D)  Credits. 
A)  Revenues. 
B)  Assets. 
C)  Equities. 
D)  Credits.

Question 2

Thoroughly describe each of six parts of the accounting cycle.

Accepted Answer

Part 1 requires the bookkeeper or accoun

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

The purpose of a trial balance is to prepare a practice balance sheet.

Accepted Answer

A) True 
 B)False

Question 5

Accounting recognizes that assets,such as machinery and buildings,lose value over time.Accountants will record a portion of the cost of an asset as an expense each year through the use of:

Accepted Answer

A)  Asset valuation. 
B)  Asset audits. 
C)  Appreciation. 
D)  Depreciation. 
A)  Asset valuation. 
B)  Asset audits. 
C)  Appreciation. 
D)  Depreciation.

Question 6

The job of reviewing and evaluating the records used to prepare a company's financial statements is referred to as auditing.

Accepted Answer

A) True 
 B)False

Question 7

Liquidity ratios are of particular importance to stockholders,but have little relevance for creditors.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Accounting involves both the recording and the interpreting of financial events.

Accepted Answer

A) True 
 B)False

Question 10

Johnson Products is a small manufacturing firm specializing in custom-order tool and die work.A computerized accounting system would help Johnson Products by:

Accepted Answer

A)  Making key accounting and financial decisions. 
B)  Helping management identify cash flow and other financial difficulties more quickly. 
C)  Eliminating the need to prepare financial statements and other reports. 
D)  Eliminating the need to perform the three middle steps of the accounting cycle. 
A)  Making key accounting and financial decisions. 
B)  Helping management identify cash flow and other financial difficulties more quickly. 
C)  Eliminating the need to prepare financial statements and other reports. 
D)  Eliminating the need to perform the three middle steps of the accounting cycle.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Mini-Case
Minnie A.Wright-Hoff works as an accountant for Double Entry Doors,Inc.Her company sells and installs oversized garage doors needed by large vehicles.Most of Minnie's work involves helping department heads and other decision-makers by measuring and reporting costs for their departments,and by identifying areas where departments are exceeding their budgets.However,as one of only three accountants employed by Double Entry Doors,Minnie is something of a "jill-of-all-trades" in terms of her accounting assignments.For example,she recently spent several hours summarizing all of the financial data in account ledgers to see if the information was correct and balanced.Her efforts revealed no problems,so she is now ready to start working on the firm's financial statements.Minnie is interested in this part of the accounting cycle because she likes to be one of the first to know the "bottom line" her company will report.She knows that she and the other accountants who work on these statements can influence the results by the choices they make about the way they report certain items.
-The fact that Minnie wants to determine the "bottom line" for Double Entry Doors means that she is particularly interested in preparing her firm's:

Accepted Answer

A)  Income statement. 
B)  Cash flow statement. 
C)  Master budget. 
D)  Capital budget. 
A)  Income statement. 
B)  Cash flow statement. 
C)  Master budget. 
D)  Capital budget.

Question 13

The LIFO method of inventory valuation assumes the newest items in inventory are sold first.

Accepted Answer

A) True 
 B)False

Question 14

Accountants not only provide financial information to the firm,they:

Accepted Answer

A)  Replace the firm's need for managers. 
B)  Also provide information regarding competitors. 
C)  Assist in interpreting that information. 
D)  Design the computer information systems. 
A)  Replace the firm's need for managers. 
B)  Also provide information regarding competitors. 
C)  Assist in interpreting that information. 
D)  Design the computer information systems.

Question 15

Which of the following would be classified as a general expense on an income statement?

Accepted Answer

A)  Salaries paid to salespeople 
B)  Dividends paid to stockholders 
C)  Payments made for insurance 
D)  Costs associated with an advertising campaign 
A)  Salaries paid to salespeople 
B)  Dividends paid to stockholders 
C)  Payments made for insurance 
D)  Costs associated with an advertising campaign

Question 16

Double-entry bookkeeping requires that every transaction be recorded in two places.

Accepted Answer

A) True 
 B)False

Question 17

The accounting book or computer program where each day's transactions are first recorded is called a:

Accepted Answer

A)  posting workbook. 
B)  general ledger. 
C)  balance sheet. 
D)  journal. 
A)  posting workbook. 
B)  general ledger. 
C)  balance sheet. 
D)  journal.

Question 18

The two major classes of operating expenses are current expenses and long-term expenses.

Accepted Answer

A) True 
 B)False

Question 19

Zoey was asked by the company controller to determine if the company could borrow more money for an expansion project.When she calculated a leverage ratio,she determined that the company already had 1.5 times as much debt as equity.Do you agree with her assessment that the company should back off with borrowing more funds at this time?

Accepted Answer

A)  Yes,but if the company would increase sales,it could go ahead with borrowing more funds. 
B)  Not necessarily.She should investigate the debt to equity ratios of other firms in the same industry. 
C)  Yes,but the firm should pursue equity investment until the ratio equals 1:1. 
D)  Not necessarily.In poor economic times,it is good financial strategy for a firm to be highly leverageD. 
A)  Yes,but if the company would increase sales,it could go ahead with borrowing more funds. 
B)  Not necessarily.She should investigate the debt to equity ratios of other firms in the same industry. 
C)  Yes,but the firm should pursue equity investment until the ratio equals 1:1. 
D)  Not necessarily.In poor economic times,it is good financial strategy for a firm to be highly leverageD.

Question 20

What is ratio analysis? Explain the four different types of ratios and how each is used.

Accepted Answer

Ratio analysis is the assessment of a fi

Resources that a firm owns are called:

Thoroughly describe each of six parts of the accounting cycle.

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

The purpose of a trial balance is to prepare a practice balance sheet.

Accounting recognizes that assets,such as machinery and buildings,lose value over time.Accountants will record a portion of the cost of an asset as an expense each year through the use of:

The job of reviewing and evaluating the records used to prepare a company's financial statements is referred to as auditing.

Liquidity ratios are of particular importance to stockholders,but have little relevance for creditors.

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

Accounting involves both the recording and the interpreting of financial events.

Johnson Products is a small manufacturing firm specializing in custom-order tool and die work.A computerized accounting system would help Johnson Products by:

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

The LIFO method of inventory valuation assumes the newest items in inventory are sold first.

Accountants not only provide financial information to the firm,they:

Which of the following would be classified as a general expense on an income statement?

Double-entry bookkeeping requires that every transaction be recorded in two places.

The accounting book or computer program where each day's transactions are first recorded is called a:

The two major classes of operating expenses are current expenses and long-term expenses.

What is ratio analysis? Explain the four different types of ratios and how each is used.

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding How Economics 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

Adapting Organizations to Todays Markets

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Employee-Management Issues and Relationships

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

Appendix A: Using Technology to Manage Information

Appendix B: Managing Risk

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Exam 17: Understanding Accounting and Financial Information

Resources that a firm owns are called:

Thoroughly describe each of six parts of the accounting cycle.

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

The purpose of a trial balance is to prepare a practice balance sheet.

Accounting recognizes that assets,such as machinery and buildings,lose value over time.Accountants will record a portion of the cost of an asset as an expense each year through the use of:

The job of reviewing and evaluating the records used to prepare a company's financial statements is referred to as auditing.

Liquidity ratios are of particular importance to stockholders,but have little relevance for creditors.

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

Accounting involves both the recording and the interpreting of financial events.

Johnson Products is a small manufacturing firm specializing in custom-order tool and die work.A computerized accounting system would help Johnson Products by:

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

The LIFO method of inventory valuation assumes the newest items in inventory are sold first.

Accountants not only provide financial information to the firm,they:

Which of the following would be classified as a general expense on an income statement?

Double-entry bookkeeping requires that every transaction be recorded in two places.

The accounting book or computer program where each day's transactions are first recorded is called a:

The two major classes of operating expenses are current expenses and long-term expenses.

What is ratio analysis? Explain the four different types of ratios and how each is used.

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding How Economics 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

Adapting Organizations to Todays Markets

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Employee-Management Issues and Relationships

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

Appendix A: Using Technology to Manage Information

Appendix B: Managing Risk

Filters