Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Courtney McRae started the Row-Your-Boat paddle boat and row boat business at a nearby lake resort.She wanted to combine her accounting degree with her love of the outdoors and fishing.One of her first business purchases was a computerized accounting system.She learned in her college classes that a good software system will eliminate accounting cycle steps and the time it takes for her to interpret the results.As she put it,"It should make the decisions for me!"

Accepted Answer

A) True 
 B)False

Question 3

The purpose of a trial balance is to:

Accepted Answer

A)  Affirm whether the figures in the account ledgers are correct and balanced. 
B)  Prepare a mock up of a real balance sheet. 
C)  Review the income statement accounts. 
D)  Meet a reporting requirement of the Securities and Exchange Commission (SE
C) . 
A)  Affirm whether the figures in the account ledgers are correct and balanced. 
B)  Prepare a mock up of a real balance sheet. 
C)  Review the income statement accounts. 
D)  Meet a reporting requirement of the Securities and Exchange Commission (SE
C) .

Question 4

Backstreet Books,a small eclectic bookstore in a bustling college town wants to open another store at the west end of campus.Allison Robards,the store owner,plans to visit her banker in the hopes of obtaining additional financing.In preparation for her visit,the banker asks her for the following information: Calculate the debt to equity ratio for Backstreet Books.

Accepted Answer

A)  250% 
B)  105% 
C)  75% 
D)  30% 
A)  250% 
B)  105% 
C)  75% 
D)  30%

Question 5

Jeremy operates his own small business,but he doesn't want to be bothered with accounting information.He tells his friends,"All I need accounting for is to prepare my income tax return for my business.I'll hire someone to do that for me." Jeremy's attitude would be disastrous if he managed a large firm,but is a reasonable view for a small business owner.

Accepted Answer

A) True 
 B)False

Question 6

A tax accountant is responsible for preparing tax returns and developing tax strategies.

Accepted Answer

A) True 
 B)False

Question 7

The __________ is a six-step procedure that results in the preparation and analysis of the major financial statements.

Accepted Answer

A)  double-entry method 
B)  financial management process 
C)  financial performance appraisal 
D)  accounting cycle 
A)  double-entry method 
B)  financial management process 
C)  financial performance appraisal 
D)  accounting cycle

Question 8

Accounting software for small businesses has become so sophisticated that most small business owners will never need to consult with an actual accountant or understand accounting information themselves.

Accepted Answer

A) True 
 B)False

Question 9

__________ involves the review and evaluation of the records that are used to prepare the organization's financial statements.

Accepted Answer

A)  Auditing 
B)  Financial accounting 
C)  Managerial accounting 
D)  Certified bookkeeping 
A)  Auditing 
B)  Financial accounting 
C)  Managerial accounting 
D)  Certified bookkeeping

Question 10

Which of the following is a key step in the accounting cycle?

Accepted Answer

A)  Recording information into journals 
B)  Collecting data from customers 
C)  Forecasting expenses and revenues 
D)  Preparing the advertising message 
A)  Recording information into journals 
B)  Collecting data from customers 
C)  Forecasting expenses and revenues 
D)  Preparing the advertising message

Question 11

Marshall McBride inherited $10,000 from his Great Aunt Martha.He invested $5,000 in a new start-up venture,10th Generation,Inc. ,and the other $5,000 in Major Chemicals,Inc,a well-known chemical company that's been around for years.Yesterday,he gathered the following information from the financial statements of these companies At this time,Marshall's return on equity is:

Accepted Answer

A)  16% on the 10th Generation,Inc.stock;11% on the Major Chemicals,Inc.stock. 
B)  8.5% on the 10th Generation,Inc stock;10.5% on the Major Chemicals,Inc.stock. 
C)  2.24% on the 10th Generation,Inc stock;2.8% on the Major Chemicals,Inc.stock. 
D)  4.5% on the 10th Generation,Inc.stock;5.60% on the Major Chemicals,Inc.stock. 
A)  16% on the 10th Generation,Inc.stock;11% on the Major Chemicals,Inc.stock. 
B)  8.5% on the 10th Generation,Inc stock;10.5% on the Major Chemicals,Inc.stock. 
C)  2.24% on the 10th Generation,Inc stock;2.8% on the Major Chemicals,Inc.stock. 
D)  4.5% on the 10th Generation,Inc.stock;5.60% on the Major Chemicals,Inc.stock.

Question 12

The Balance Sheet,the Statement of Cash Flows,and the ______________ are three key financial statements prepared by accountants.

Accepted Answer

A)  Income Statement 
B)  Statement of Retained Earnings 
C)  Statement of Changes in Financial Position 
D)  Trial Balance 
A)  Income Statement 
B)  Statement of Retained Earnings 
C)  Statement of Changes in Financial Position 
D)  Trial Balance

Question 13

You have just calculated the acid-test ratio for Peak Performance Sporting Goods [acid test ratio = 1.0].As a loan officer for the local bank,you are called into your boss's office to interpret the results of this ratio.Which of the following statements best reflects an understanding of these results?

Accepted Answer

A)  A company with an acid-test ratio = 1.0 demonstrates the ability to operate very conservatively.The bank should anticipate that this firm will always be able to meet its short-term liabilities. 
B)  This company is already having problems meeting its short-term liabilities. 
C)  An acid-test ratio = 1.0 means that this firm has $1.00 in current assets for every $2.00 in current liabilities.Peak Performance is a well-run operation,as long as it can continue to sell-off its inventory. 
D)  An acid test ratio = 1.0 tells us that without adequate inventory turnover,this company may represent a higher risk.Peak Performance's acid test ratio shows that the firm maintains $1.00 in current assets for every $1.00 in current liabilities. 
A)  A company with an acid-test ratio = 1.0 demonstrates the ability to operate very conservatively.The bank should anticipate that this firm will always be able to meet its short-term liabilities. 
B)  This company is already having problems meeting its short-term liabilities. 
C)  An acid-test ratio = 1.0 means that this firm has $1.00 in current assets for every $2.00 in current liabilities.Peak Performance is a well-run operation,as long as it can continue to sell-off its inventory. 
D)  An acid test ratio = 1.0 tells us that without adequate inventory turnover,this company may represent a higher risk.Peak Performance's acid test ratio shows that the firm maintains $1.00 in current assets for every $1.00 in current liabilities.

Question 14

An analysis of the statement of cash flows can help a firm prevent cash shortages.

Accepted Answer

A) True 
 B)False

Question 15

The LIFO method of inventory valuation bases the cost of goods sold on the cost of:

Accepted Answer

A)  Merchandise that has been held in inventory for the longest period of time. 
B)  Most recent merchandise purchased by the firm. 
C)  Actual units customers purchased. 
D)  Merchandise the firm acquired at the lowest cost. 
A)  Merchandise that has been held in inventory for the longest period of time. 
B)  Most recent merchandise purchased by the firm. 
C)  Actual units customers purchased. 
D)  Merchandise the firm acquired at the lowest cost.

Question 16

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.

Accepted Answer

A) True 
 B)False

Question 17

Budget preparation is one aspect of managerial accounting.

Accepted Answer

A) True 
 B)False

Question 18

Patents and copyrights are classified as ___________ on the Balance Sheet.

Accepted Answer

A)  Fixed assets 
B)  Intangible assets 
C)  Current assets 
D)  Owners' equity 
A)  Fixed assets 
B)  Intangible assets 
C)  Current assets 
D)  Owners' equity

Question 19

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.

Accepted Answer

A) True 
 B)False

Question 20

In the current economic climate,banks are remaining very conservative in their lending practices.Peak Performance Sporting Goods is seeking a loan for expansion.As a loan officer for the local bank,you calculate the acid-test ratio for Peak Performance Sporting Goods.Using the information below,you determine Peak Performance's acid-test ratio = ____.

Accepted Answer

A)  1.0 
B)  1.5 
C)  2.5 
D)  3.0 
A)  1.0 
B)  1.5 
C)  2.5 
D)  3.0

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

The purpose of a trial balance is to:

A tax accountant is responsible for preparing tax returns and developing tax strategies.

The __________ is a six-step procedure that results in the preparation and analysis of the major financial statements.

Accounting software for small businesses has become so sophisticated that most small business owners will never need to consult with an actual accountant or understand accounting information themselves.

__________ involves the review and evaluation of the records that are used to prepare the organization's financial statements.

Which of the following is a key step in the accounting cycle?

The Balance Sheet,the Statement of Cash Flows,and the ______________ are three key financial statements prepared by accountants.

An analysis of the statement of cash flows can help a firm prevent cash shortages.

The LIFO method of inventory valuation bases the cost of goods sold on the cost of:

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.

Budget preparation is one aspect of managerial accounting.

Patents and copyrights are classified as ___________ on the Balance Sheet.

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.

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

Exam 17: Understanding Accounting and Financial Information

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

The purpose of a trial balance is to:

A tax accountant is responsible for preparing tax returns and developing tax strategies.

The __________ is a six-step procedure that results in the preparation and analysis of the major financial statements.

Accounting software for small businesses has become so sophisticated that most small business owners will never need to consult with an actual accountant or understand accounting information themselves.

__________ involves the review and evaluation of the records that are used to prepare the organization's financial statements.

Which of the following is a key step in the accounting cycle?

The Balance Sheet,the Statement of Cash Flows,and the ______________ are three key financial statements prepared by accountants.

An analysis of the statement of cash flows can help a firm prevent cash shortages.

The LIFO method of inventory valuation bases the cost of goods sold on the cost of:

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.

Budget preparation is one aspect of managerial accounting.

Patents and copyrights are classified as ___________ on the Balance Sheet.

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.

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