Exam 7: Accounting: Decision Making by the Numbers

What is the term for valuable things owned by the firm?

Due to accounting scandals at several large corporations, many accounting boards passed new ethics-related requirements.

It is standard practice to compare a firm's financial ratios to industry averages.

Sabiha is the small business loan officer at Regional National Bank. It is her job to approve loans for small businesses so that the local economy will grow. One factor she looks at carefully when making loan decisions is the amount of debt the firm already has outstanding. Which of the following financial statements should she look at to find this information?

Little Tots' liabilities are $130,000, and its owners' equity is $170,000. What do we also know about Little Tots?

When an external audit doesn't uncover any problems with the firm's financial methods and statements, the auditor will issue an unqualified opinion.

Managerial accounting uses procedures developed internally that are not required to follow accounting standards.

What must publicly traded corporations in Canada have a public accountant do?

Which of the following would provide stakeholders with information about how a firm obtained and used cash in the most recent accounting period, as well as its cash balance at the end of the accounting period?

A statement of cash flows is the financial statement identifying a firm's sources and uses of cash in a given accounting period.

An unqualified opinion should set off alarm bells to view the firm's financial statements with extreme skepticism.

If a company keeps an average of 100 finished bicycles in inventory each month, and it sold 1000 bicycles this year, then it turned its inventory ten times.

Shareholders are often interested in detailed accounting information about the individual departments or division within a company.

Which of the following is a fixed cost?

Net income is the difference between the revenue a firm earns and the expenses it incurs in a given time period.

By subtracting dividends paid to shareholders from the net income, which of the following are managers able to calculate?

While attorneys look for motive and opportunity, what do forensic accountants look for?

Comparative income statements allow users to compare inventory levels with assets listed on the income statement.

Assets = Liabilities + Net income.

Accountants define cost as the value of what is given up in exchange for something else.