Exam 17: Understanding Accounting and Financial Information

Jill wants to start her own business,but knows little about how to set up an accounting system or interpret financial information."I'm not worried about accounting," she tells her friends."I'll just hire a part-time bookkeeper to handle all that type of stuff,and focus my attention on what I like-finding ways to satisfy my customers." Which of the following is the best response to Jill's comments?

Accountant Alison Padilla was asked by her company's CEO to calculate the current return on equity.She quickly gathers Total Assets from the company balance sheet and the total net income from the income statement.Armed with this information,she will be able to provide the CEO with the information he/she requested.

Which of the following agencies would have the greatest impact on the methods used to record,classify,summarize,and interpret accounting information for the State of Kentucky's Department of Transportation?

Referring to an accounting system,inputs refers to events and transactions that occur within the business,while outputs refers to the journal entries and ledger categorization that occurs after the events and transactions are recorded.

Accounting software has proven to be especially helpful for small business owners.

Profitability ratios are often used to measure management's earnings performance.

The balance sheet is set up to reflect the Fundamental Accounting Equation.This equation shows:

Leverage ratios are concerned with the extent to which a firm relies on borrowed funds in its operations.

Bob Stewart plans to visit his financial planner today to discuss investment strategy.As a young,"20 something" accountant,he knows he can afford to invest in a few riskier investments.Which of the following ratios will be an important measure of profitability for Bob?

Discuss the role of an independent auditor.Provide information about the types of accounting activities they perform and the recent laws that have emerged to help guide them as they do their job.

Accounting information is not relevant for nonprofit organizations.

Preferred Pet Care,Inc. ,has recorded the following on its income statement for the period ending,December 31,2010: The return on sales = 34%.This return is outstanding and there is no need to compare this return to competitors in the veterinary services industry.

GAAP refers to a set of standards concerning accounting principles that were established by the Financial Accounting Standards Board.

The accounting profession follows generally accepted accounting principles as defined by __________________.

At the time the Jepson Plumbing Supply prepared its financial statements,it had several customers who bought goods over the past three months on its "90 days same as cash" credit plan.These customers had not yet paid their bills,but they have good credit ratings and Jepson is confident that they will make their payments on time.The amount these credit customers owe would show up as part of the:

Brianna is a bookkeeper for Monograms,Limited.She takes the firm's transactions and records them in a record book or computer program referred to as:

Financial accounting involves activities such as preparing budgets and measuring production costs.

As the burden of taxes grows,the role of the auditor becomes increasingly important to the organization.

A series of high-profile scandals in the early 2000s put the accounting profession under intense scrutiny.

An individual who provides accounting services to individuals and businesses on a fee basis is referred to as a private accountant.