Question 1

Debts owed by a business are called __________.

Accepted Answer

A)  revenues 
B)  liabilities 
C)  equities 
D)  assets 
A)  revenues 
B)  liabilities 
C)  equities 
D)  assets

Question 2

General expenses include office salaries,rent,and insurance.

Accepted Answer

A) True 
 B)False

Question 3

Explain the meaning of the fundamental accounting equation and its relation to the Balance Sheet.If it is helpful,create an example using numbers.

Accepted Answer

The fundamental accounting equation is a

Question 4

An accountant who has a bachelor's degree,two years of experience in internal auditing and who has passed an exam by the Institute of Internal Auditors can become recognized as a certified internal auditor.

Accepted Answer

A) True 
 B)False

Question 5

When creating the income statement,which of the following statements is accurate?

Accepted Answer

A)  Revenues,minus general operating expenses = gross profit. 
B)  Revenues,minus tax expense = gross profit. 
C)  Revenues,minus depreciation expense = gross profit. 
D)  Revenues,minus cost of goods sold = gross profit. 
A)  Revenues,minus general operating expenses = gross profit. 
B)  Revenues,minus tax expense = gross profit. 
C)  Revenues,minus depreciation expense = gross profit. 
D)  Revenues,minus cost of goods sold = gross profit.

Question 6

The statement of cash flows calculates cash flows from operations,investing activities,and financing activities.

Accepted Answer

A) True 
 B)False

Question 7

For the past several years,Bill Reynolds has retained accountant Chelsea Jones for help in preparing his personal income tax forms.Bill's boss recommended Chelsea because she had done a good job setting-up the company's new accounting system.Bill is very satisfied with Chelsea's work and feels that the fees she charges are quite reasonable.Chelsea would be classified as a(n):

Accepted Answer

A)  Independent auditor. 
B)  Private accountant. 
C)  Public accountant. 
D)  Accounting broker. 
A)  Independent auditor. 
B)  Private accountant. 
C)  Public accountant. 
D)  Accounting broker.

Question 8

The Statement of Cash flows identifies cash receipts and disbursements that result ______________.

Accepted Answer

A)  from selling goods and/or services,exclusively 
B)  solely from a firm's investments 
C)  from a firm's operations and investment activities,but not from financing activities 
D)  from a firm's operations,investment,and financing activities 
A)  from selling goods and/or services,exclusively 
B)  solely from a firm's investments 
C)  from a firm's operations and investment activities,but not from financing activities 
D)  from a firm's operations,investment,and financing activities

Question 9

Julio borrowed money from a close friend to obtain a liquor license for his pub,and gave him a written promise to repay the amount within six months.Julio should list this business debt as an operating expense on his pub's balance sheet.

Accepted Answer

A) True 
 B)False

Question 10

The reports and financial statements prepared by accountants:

Accepted Answer

A)  Are more useful for profit-seeking businesses than they are for not-for-profit organizations. 
B)  Are mainly used to help the firm complete its tax forms. 
C)  Provide information that can be used by decision-makers both inside and outside the organization. 
D)  Are not as useful now that firms have moved into a more global environment. 
A)  Are more useful for profit-seeking businesses than they are for not-for-profit organizations. 
B)  Are mainly used to help the firm complete its tax forms. 
C)  Provide information that can be used by decision-makers both inside and outside the organization. 
D)  Are not as useful now that firms have moved into a more global environment.

Question 11

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.
-Minnie knows that Double Entry has a lot of short-term debt coming due in the next year,and wants to make sure that the company will have the ability to make the required payments.Given a troubling downturn in construction activity over the past couple of months,she is not confident that Double Entry can count on selling its current inventory of doors before the debt comes due.Which of the following ratios would be most relevant to Minnie?

Accepted Answer

A)  current ratio 
B)  debt to equity ratio 
C)  return on sales 
D)  acid-test ratio 
A)  current ratio 
B)  debt to equity ratio 
C)  return on sales 
D)  acid-test ratio

Question 12

Accounting,as the language of business,is solely concerned with providing information useful to managers of profit-seeking firms.

Accepted Answer

A) True 
 B)False

Question 13

When valuing items in inventory for financial reporting purposes,generally accepted accounting principles (GAAP)requires firms to value the cost of goods sold by assuming that the items that have been in inventory the longest are the ones that are sold first.

Accepted Answer

A) True 
 B)False

Question 14

Bark Three Times Pet Store recently hired an accountant to make sense of each day's transactions,and keep better financial records for the business.The accountant showed the owner that the ledger in a computerized accounting system would automatically take entries and post them to the correct accounts in the ledger,making the bookkeeping tasks much easier.

Accepted Answer

A) True 
 B)False

Question 15

The current ratio is a type of ________ ratio.

Accepted Answer

A)  leverage 
B)  profitability 
C)  activity 
D)  liquidity 
A)  leverage 
B)  profitability 
C)  activity 
D)  liquidity

Question 16

_________ refers to how quickly an asset can be converted into cash.

Accepted Answer

A)  Liquidity 
B)  Velocity 
C)  Fundability 
D)  Accessibility 
A)  Liquidity 
B)  Velocity 
C)  Fundability 
D)  Accessibility

Question 17

If a firm can reduce its cost of goods sold and continue to sell its product for the same price,we would expect the firm to enjoy an increase in its:

Accepted Answer

A)  revenue. 
B)  liabilities. 
C)  employee turnover. 
D)  gross profit. 
A)  revenue. 
B)  liabilities. 
C)  employee turnover. 
D)  gross profit.

Question 18

_________ is the systematic write-off of the value of a tangible asset over its useful life.

Accepted Answer

A)  Expense structuring 
B)  Depreciation 
C)  Capital budgeting 
D)  Gross margin allocation 
A)  Expense structuring 
B)  Depreciation 
C)  Capital budgeting 
D)  Gross margin allocation

Question 19

Accounting provides information about the financial condition and operating performance of a firm.

Accepted Answer

A) True 
 B)False

Question 20

Accounting is an easy subject for people to understand because almost everyone is exposed to basic accounting concepts in their everyday life.

Accepted Answer

A) True 
 B)False

Debts owed by a business are called __________.

General expenses include office salaries,rent,and insurance.

Explain the meaning of the fundamental accounting equation and its relation to the Balance Sheet.If it is helpful,create an example using numbers.

An accountant who has a bachelor's degree,two years of experience in internal auditing and who has passed an exam by the Institute of Internal Auditors can become recognized as a certified internal auditor.

When creating the income statement,which of the following statements is accurate?

The statement of cash flows calculates cash flows from operations,investing activities,and financing activities.

The Statement of Cash flows identifies cash receipts and disbursements that result ______________.

Julio borrowed money from a close friend to obtain a liquor license for his pub,and gave him a written promise to repay the amount within six months.Julio should list this business debt as an operating expense on his pub's balance sheet.

The reports and financial statements prepared by accountants:

Accounting,as the language of business,is solely concerned with providing information useful to managers of profit-seeking firms.

When valuing items in inventory for financial reporting purposes,generally accepted accounting principles (GAAP)requires firms to value the cost of goods sold by assuming that the items that have been in inventory the longest are the ones that are sold first.

The current ratio is a type of ________ ratio.

_________ refers to how quickly an asset can be converted into cash.

If a firm can reduce its cost of goods sold and continue to sell its product for the same price,we would expect the firm to enjoy an increase in its:

_________ is the systematic write-off of the value of a tangible asset over its useful life.

Accounting provides information about the financial condition and operating performance of a firm.

Accounting is an easy subject for people to understand because almost everyone is exposed to basic accounting concepts in their everyday life.

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

Debts owed by a business are called __________.

General expenses include office salaries,rent,and insurance.

Explain the meaning of the fundamental accounting equation and its relation to the Balance Sheet.If it is helpful,create an example using numbers.

An accountant who has a bachelor's degree,two years of experience in internal auditing and who has passed an exam by the Institute of Internal Auditors can become recognized as a certified internal auditor.

When creating the income statement,which of the following statements is accurate?

The statement of cash flows calculates cash flows from operations,investing activities,and financing activities.

The Statement of Cash flows identifies cash receipts and disbursements that result ______________.

Julio borrowed money from a close friend to obtain a liquor license for his pub,and gave him a written promise to repay the amount within six months.Julio should list this business debt as an operating expense on his pub's balance sheet.

The reports and financial statements prepared by accountants:

Accounting,as the language of business,is solely concerned with providing information useful to managers of profit-seeking firms.

When valuing items in inventory for financial reporting purposes,generally accepted accounting principles (GAAP)requires firms to value the cost of goods sold by assuming that the items that have been in inventory the longest are the ones that are sold first.

The current ratio is a type of ________ ratio.

_________ refers to how quickly an asset can be converted into cash.

If a firm can reduce its cost of goods sold and continue to sell its product for the same price,we would expect the firm to enjoy an increase in its:

_________ is the systematic write-off of the value of a tangible asset over its useful life.

Accounting provides information about the financial condition and operating performance of a firm.

Accounting is an easy subject for people to understand because almost everyone is exposed to basic accounting concepts in their everyday life.

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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