Question 1

________ are purchased as short-term investments and are only slightly less liquid than cash.

Accepted Answer

A)  Prepaid expenses 
B)  Patents 
C)  Accounts receivable 
D)  Marketable securities 
E)  Futures 
A)  Prepaid expenses 
B)  Patents 
C)  Accounts receivable 
D)  Marketable securities 
E)  Futures D

Question 2

Suppose a company unexpectedly receives a huge order for its main product.To cope with this,the owner borrows money to rent an additional facility to fill the orders and to pay the temporary workers who will produce the large order.The owner does this hoping that the additional costs will be more than covered by the revenue from selling the additional units of the product.Which ratio will be MOST affected by these decisions?

Accepted Answer

A)  the short-term solvency ratio 
B)  the long-term solvency ratio 
C)  the profitability ratio 
D)  the activity ratio 
E)  the equity ratio 
A)  the short-term solvency ratio 
B)  the long-term solvency ratio 
C)  the profitability ratio 
D)  the activity ratio 
E)  the equity ratio A

Question 3

Delavan Company has fixed assets of $5 billion,current assets of $2 billion,long-term liabilities of $2 billion,current liabilities of $1 billion,and owners' equity of $5 billion.What is Delavan's debt-to-equity ratio?

Accepted Answer

A)  .6 
B)  .9 
C)  1.2 
D)  .4 
E)  .8 
A)  .6 
B)  .9 
C)  1.2 
D)  .4 
E)  .8 A

Question 4

Jerry's Harley-Davidson Specialty Shop owes money to Johnson's Bookkeeping Services.This money is a(n)________ to Jerry's business.

Accepted Answer

A)  liability 
B)  debit 
C)  owners' equity 
D)  asset 
E)  credit 
A)  liability 
B)  debit 
C)  owners' equity 
D)  asset 
E)  credit

Question 5

What is the primary thing the inventory turnover ratio says about a business?

Accepted Answer

A)  How profitable it is 
B)  How risky it is 
C)  How much inventory it has 
D)  How much average inventory it has 
E)  How often new merchandise replaces old merchandise 
A)  How profitable it is 
B)  How risky it is 
C)  How much inventory it has 
D)  How much average inventory it has 
E)  How often new merchandise replaces old merchandise

Question 6

Jack wants to compare Algoma Steel and Dofasco's earnings per share.Which formula would Jack use?

Accepted Answer

A)  Net income divided by the market value of the common shares. 
B)  Net income divided by the market value of the preferred shares. 
C)  Total assets divided by number of common and preferred shares outstanding. 
D)  Total assets divided by value of common shares outstanding. 
E)  Net income divided by number of common shares outstanding. 
A)  Net income divided by the market value of the common shares. 
B)  Net income divided by the market value of the preferred shares. 
C)  Total assets divided by number of common and preferred shares outstanding. 
D)  Total assets divided by value of common shares outstanding. 
E)  Net income divided by number of common shares outstanding.

Question 7

The various users of accounting information include business managers,employees,unions,regulatory agencies,lenders,and the public.

Accepted Answer

A) True 
 B)False

Question 8

Revenue recognition is the formal recording and reporting of revenues in the financial statements.Earnings are not reported until

Accepted Answer

A)  the earnings cycle is completed. 
B)  the end of the refund period. 
C)  the money is in the bank. 
D)  the sale has been agreed upon. 
E)  the auditors have approved the sale. 
A)  the earnings cycle is completed. 
B)  the end of the refund period. 
C)  the money is in the bank. 
D)  the sale has been agreed upon. 
E)  the auditors have approved the sale.

Question 9

If the following facts were known,which one would strengthen the argument that a company will be able to meet its current financial obligations?

Accepted Answer

A)  The level of accounts payable is high. 
B)  Liabilities exceed assets. 
C)  The company currently has a negative cash flow. 
D)  The company needs to increase the number of customers it serves. 
E)  Assets exceed liabilities. 
A)  The level of accounts payable is high. 
B)  Liabilities exceed assets. 
C)  The company currently has a negative cash flow. 
D)  The company needs to increase the number of customers it serves. 
E)  Assets exceed liabilities.

Question 10

Managerial accounting is

Accepted Answer

A)  the field of accounting that serves internal users of a company's financial information. 
B)  the rules and procedures governing the content and form of financial reports. 
C)  the field of accounting concerned with external users of a company's financial information. 
D)  a systematic examination of a company's accounting system to determine whether its financial reports fairly represent its operations. 
E)  a bookkeeping system that balances the accounting equation by recording the dual effects of every financial transaction. 
A)  the field of accounting that serves internal users of a company's financial information. 
B)  the rules and procedures governing the content and form of financial reports. 
C)  the field of accounting concerned with external users of a company's financial information. 
D)  a systematic examination of a company's accounting system to determine whether its financial reports fairly represent its operations. 
E)  a bookkeeping system that balances the accounting equation by recording the dual effects of every financial transaction.

Question 11

Owners' equity = assets minus liabilities.

Accepted Answer

A) True 
 B)False

Question 12

Financial ratios are used to assess the financial health of a company.

Accepted Answer

A) True 
 B)False

Question 13

The current ratio is usually satisfactory at 2:1 or higher; that is,if current assets are at least double current liabilities.

Accepted Answer

A) True 
 B)False

Question 14

Corporation L has debt of $50 million and equity of $100 million.Its debt-to-equity ratio is therefore 0.50.

Accepted Answer

A) True 
 B)False

Question 15

ABC Company has net income of $5 million,$40 million of assets,and $10 million of liabilities.The number of outstanding shares of stock is 3 870 000 shares.What are earnings per share?

Accepted Answer

A)  $1.29 
B)  $0.77 
C)  $2.35 
D)  $7.75 
E)  Earnings per share cannot be computed with the information provided. 
A)  $1.29 
B)  $0.77 
C)  $2.35 
D)  $7.75 
E)  Earnings per share cannot be computed with the information provided.

Question 16

Documents generated by the financial accounting system focus on the activities of the company as a whole,rather than on individual departments or divisions.By contrast,documents generated by the management accounting system focus on individual departments.

Accepted Answer

A) True 
 B)False

Question 17

Don wants to compute the earnings per share for SFX Ltd.How does he do it?

Accepted Answer

A)  Divide sales by the number of common shares outstanding 
B)  Divide cost of goods sold by the number of common shares 
C)  Divide net income by the number of common shares outstanding 
D)  Divide cost of goods sold by average inventory 
E)  Divide net income by sales 
A)  Divide sales by the number of common shares outstanding 
B)  Divide cost of goods sold by the number of common shares 
C)  Divide net income by the number of common shares outstanding 
D)  Divide cost of goods sold by average inventory 
E)  Divide net income by sales

Question 18

The financial statement that shows the status of assets,liabilities,and owners' equity at a particular point in time is the balance sheet.

Accepted Answer

A) True 
 B)False

Question 19

Meredith recently bought a business,but she paid more for the business than the total of its current and fixed assets.What did she pay extra for?

Accepted Answer

A)  Land the company owns 
B)  Equipment in the company's factory 
C)  Goodwill 
D)  The franchise fee 
E)  Accounts receivable that are on the company's books 
A)  Land the company owns 
B)  Equipment in the company's factory 
C)  Goodwill 
D)  The franchise fee 
E)  Accounts receivable that are on the company's books

Question 20

Government agencies would be most interested in the output of ___________ accountants,while company salespeople would be most interested in the output of ______________ accountants.

Accepted Answer

A)  public; private 
B)  private; public 
C)  managerial; financial 
D)  financial; managerial 
E)  financial; financial 
A)  public; private 
B)  private; public 
C)  managerial; financial 
D)  financial; managerial 
E)  financial; financial

________ are purchased as short-term investments and are only slightly less liquid than cash.

Delavan Company has fixed assets of $5 billion,current assets of $2 billion,long-term liabilities of $2 billion,current liabilities of $1 billion,and owners' equity of $5 billion.What is Delavan's debt-to-equity ratio?

Jerry's Harley-Davidson Specialty Shop owes money to Johnson's Bookkeeping Services.This money is a(n)________ to Jerry's business.

What is the primary thing the inventory turnover ratio says about a business?

Jack wants to compare Algoma Steel and Dofasco's earnings per share.Which formula would Jack use?

The various users of accounting information include business managers,employees,unions,regulatory agencies,lenders,and the public.

Revenue recognition is the formal recording and reporting of revenues in the financial statements.Earnings are not reported until

If the following facts were known,which one would strengthen the argument that a company will be able to meet its current financial obligations?

Managerial accounting is

Owners' equity = assets minus liabilities.

Financial ratios are used to assess the financial health of a company.

The current ratio is usually satisfactory at 2:1 or higher; that is,if current assets are at least double current liabilities.

Corporation L has debt of $50 million and equity of $100 million.Its debt-to-equity ratio is therefore 0.50.

ABC Company has net income of $5 million,$40 million of assets,and $10 million of liabilities.The number of outstanding shares of stock is 3 870 000 shares.What are earnings per share?

Documents generated by the financial accounting system focus on the activities of the company as a whole,rather than on individual departments or divisions.By contrast,documents generated by the management accounting system focus on individual departments.

Don wants to compute the earnings per share for SFX Ltd.How does he do it?

The financial statement that shows the status of assets,liabilities,and owners' equity at a particular point in time is the balance sheet.

Meredith recently bought a business,but she paid more for the business than the total of its current and fixed assets.What did she pay extra for?

Government agencies would be most interested in the output of _ accountants,while company salespeople would be most interested in the output of ____ accountants.

Understanding the Canadian Business System

Understanding the Environments of Business

Conducting Business Ethically and Responsibly

Understanding Entrepreneurship, small Business, and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Managing Human Resources

Understanding Labourmanagement Relations

Motivating and Leading Employees

Producing Goods and Services

Increasing Productivity and Quality

Managing Information Systems and Communication Technology

Understanding Marketing Processes and Consumer Behaviour

Developing and Promoting Goods and Services

Pricing and Distributing Goods and Services

Understanding Money and Banking

Understanding Securities and Investments

Financial Decisions and Risk Management

Filters

Exam 14: Understanding Accounting Issues

________ are purchased as short-term investments and are only slightly less liquid than cash.

Delavan Company has fixed assets of $5 billion,current assets of $2 billion,long-term liabilities of $2 billion,current liabilities of $1 billion,and owners' equity of $5 billion.What is Delavan's debt-to-equity ratio?

Jerry's Harley-Davidson Specialty Shop owes money to Johnson's Bookkeeping Services.This money is a(n)________ to Jerry's business.

What is the primary thing the inventory turnover ratio says about a business?

Jack wants to compare Algoma Steel and Dofasco's earnings per share.Which formula would Jack use?

The various users of accounting information include business managers,employees,unions,regulatory agencies,lenders,and the public.

Revenue recognition is the formal recording and reporting of revenues in the financial statements.Earnings are not reported until

If the following facts were known,which one would strengthen the argument that a company will be able to meet its current financial obligations?

Managerial accounting is

Owners' equity = assets minus liabilities.

Financial ratios are used to assess the financial health of a company.

The current ratio is usually satisfactory at 2:1 or higher; that is,if current assets are at least double current liabilities.

Corporation L has debt of $50 million and equity of $100 million.Its debt-to-equity ratio is therefore 0.50.

ABC Company has net income of $5 million,$40 million of assets,and $10 million of liabilities.The number of outstanding shares of stock is 3 870 000 shares.What are earnings per share?

Documents generated by the financial accounting system focus on the activities of the company as a whole,rather than on individual departments or divisions.By contrast,documents generated by the management accounting system focus on individual departments.

Don wants to compute the earnings per share for SFX Ltd.How does he do it?

The financial statement that shows the status of assets,liabilities,and owners' equity at a particular point in time is the balance sheet.

Meredith recently bought a business,but she paid more for the business than the total of its current and fixed assets.What did she pay extra for?

Government agencies would be most interested in the output of ___________ accountants,while company salespeople would be most interested in the output of ______________ accountants.

Understanding the Canadian Business System

Understanding the Environments of Business

Conducting Business Ethically and Responsibly

Understanding Entrepreneurship, small Business, and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Managing Human Resources

Understanding Labourmanagement Relations

Motivating and Leading Employees

Producing Goods and Services

Increasing Productivity and Quality

Managing Information Systems and Communication Technology

Understanding Marketing Processes and Consumer Behaviour

Developing and Promoting Goods and Services

Pricing and Distributing Goods and Services

Understanding Money and Banking

Understanding Securities and Investments

Financial Decisions and Risk Management

Filters

Government agencies would be most interested in the output of _ accountants,while company salespeople would be most interested in the output of ____ accountants.