Exam 7: Accounting: Decision Making by the Numbers

A university student registers for classes and pays the tuition with a credit card. Because it uses accrual-basis accounting, the college will recognize the payment as revenue as soon as the transaction turns into cash in the school's bank account.

What does accounting provide to users?

If the auditor identifies some minor concerns, but believes that overall the firm's financial position is represented accurately, which opinion will be reported?

Which of the following summarizes a firm's financial position at a specific point in time (e.g., a specific quarter or year)?

Define fixed costs and variable costs. Provide an example of each.

Accrual-basis accounting is the method that recognizes revenue when it is earned and matches expenses to those revenues.

If an auditor identifies limited problems with the firm's financial methods and statements, but believes that in all other aspects the statements are fair and accurate, the auditor's report will express an adverse opinion.

Which of the following shows the cash flowing in and out of a firm through its operating, investing, and financing activities?

Variable costs rise when a firm increases its production of goods and services.

The GAAP accounting standards have replaced the IFRS accounting standards.

What occurs when inventory turnover ratios are too high?

At Chips and Dips, a local convenience market, what would an increase in the inventory turnover ratio indicate?

BUSN101 is one of the university courses delivered in classroom D310, which the cleaning staff maintains; therefore, the wages paid to the cleaning staff is considered a direct cost of delivering the BUSN101 course.

Liquidity ratios measure the ability of an organization to convert assets into the cash it needs to pay off liabilities that come due in the next year.

The debt-to-asset ratio measures the extent to which a firm relies on debt financing by dividing total debt by total assets.

Which of the following is true about a firm's current liabilities?

Public companies that trade on the stock exchanges are required to follow the IFRS.

Explain the current ratio. What does it measure? How is it computed? What is considered a good or positive result?

What are three major financial statements? Describe the key elements of those financial statements.

A liquid asset is one that is calculated by dividing net income by owner's equity.