Question 1

What is ratio analysis? Explain the four different types of ratios and how each is used.

Accepted Answer

Ratio analysis is the assessment of a fi

Question 2

Assets are listed on the balance sheet in order of liquidity,with the most liquid assets listed first.

Accepted Answer

A) True 
 B)False

Question 3

The current ratio is found by dividing the firm's total assets by its total liabilities.

Accepted Answer

A) True 
 B)False

Question 4

FIFO and LIFO are two common:

Accepted Answer

A) depreciation strategies. 
B) ways to structure a balance sheet. 
C) inventory valuation methods. 
D) current ratios. 
A) depreciation strategies. 
B) ways to structure a balance sheet. 
C) inventory valuation methods. 
D) current ratios.

Question 5

Your firm is a supplier to a major chain of discount stores.You have heard rumors that this chain of discount stores is in financial difficulty.Which financial ratios would indicate the discount store's ability or inability to pay its short-term debts?

Accepted Answer

A) liquidity ratios 
B) leverage ratios 
C) activity ratios 
D) profitability ratios 
A) liquidity ratios 
B) leverage ratios 
C) activity ratios 
D) profitability ratios

Question 6

The "bottom line" of an income statement shows the firm's:

Accepted Answer

A) Retained earnings. 
B) Gross profit. 
C) Net income or net loss. 
D) Owners' equity. 
A) Retained earnings. 
B) Gross profit. 
C) Net income or net loss. 
D) Owners' equity.

Question 7

The cost of goods sold includes all the costs of buying and keeping merchandise available for sale.

Accepted Answer

A) True 
 B)False

Question 8

A balance sheet lists assets in order of their ______________.

Accepted Answer

A) dollar value,from smallest to largest 
B) date of acquisition,with the most recently acquired assets listed first 
C) liquidity,with the most liquid assets listed first 
D) income generating ability 
A) dollar value,from smallest to largest 
B) date of acquisition,with the most recently acquired assets listed first 
C) liquidity,with the most liquid assets listed first 
D) income generating ability

Question 9

As noted in the story about the Bakery Barn,CPA Sean Perich's small business venture,trying to be everything for your business is often an impossible task.Due to the fact that solid accounting procedures are one of the lifelines for your business,it makes sense to hire an accountant even if you are knowledgeable about that functional unit of the business.

Accepted Answer

A) True 
 B)False

Question 10

Carole Grand and Bonnie Lamore run a shuttle service from Western Illinois to the busy Chicago O'Hare airport.Last month,they recorded the following: If 25% of their net income is paid to the government in taxes,what is their net income after taxes?

Accepted Answer

A) $1410.00 
B) $1160.00 
C) $682.00 
D) $870.00 
A) $1410.00 
B) $1160.00 
C) $682.00 
D) $870.00

Question 11

Debts that are due in one year or less are classified on the Balance Sheet as:

Accepted Answer

A) Current liabilities. 
B) Bonds payable. 
C) Callable bonds. 
D) Immediate expenses. 
A) Current liabilities. 
B) Bonds payable. 
C) Callable bonds. 
D) Immediate expenses.

Question 12

Heather works in the accounting department of Colorado Manufacturing.Today she will use the firm's ledger to summarize information that was posted over the most recent time period.Her goal is to determine if the accounts are balanced as required by the double-entry method of bookkeeping.To be sure they are correct,Heather will prepare a(n):

Accepted Answer

A) Account analysis. 
B) Statement of cash flows. 
C) Balance sheet. 
D) Trial balance. 
A) Account analysis. 
B) Statement of cash flows. 
C) Balance sheet. 
D) Trial balance.

Question 13

Activities of managerial accountants include measuring and reporting the costs of production,marketing and other functions within the organization.

Accepted Answer

A) True 
 B)False

Question 14

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

Question 15

A _________ summarizes all the data from the account ledgers to verify that they are correct and balanced.

Accepted Answer

A) ledger statement 
B) balance sheet 
C) trial balance 
D) statement of cash flows 
A) ledger statement 
B) balance sheet 
C) trial balance 
D) statement of cash flows

Question 16

Potential investors are interested in both a firm's balance sheet and income statement when evaluating whether or not to invest in a firm.

Accepted Answer

A) True 
 B)False

Question 17

For the past several years,Bill Reynolds has retained accountant Chelsea Jones for help in preparing his personal income tax forms.Bill's boss recommended Chelsea because she had done a good job setting-up the company's new accounting system.Bill is very satisfied with Chelsea's work and feels that the fees she charges are quite reasonable.Chelsea would be classified as a(n):

Accepted Answer

A) Independent auditor. 
B) Private accountant. 
C) Public accountant. 
D) Accounting broker. 
A) Independent auditor. 
B) Private accountant. 
C) Public accountant. 
D) Accounting broker.

Question 18

We would expect the inventory turnover ratio for a ski shop to be _______ than the turnover for a convenience store.

Accepted Answer

A) higher 
B) more meaningful 
C) lower 
D) less helpful 
A) higher 
B) more meaningful 
C) lower 
D) less helpful

Question 19

The accounting cycle usually involves the work of both the bookkeeper and the accountant.

Accepted Answer

A) True 
 B)False

Question 20

Leverage ratios indicate the extent to which ________ has been used to fund a business's operations.

Accepted Answer

A) debt 
B) equity 
C) owner invested capital 
D) profit 
A) debt 
B) equity 
C) owner invested capital 
D) profit

What is ratio analysis? Explain the four different types of ratios and how each is used.

Assets are listed on the balance sheet in order of liquidity,with the most liquid assets listed first.

The current ratio is found by dividing the firm's total assets by its total liabilities.

FIFO and LIFO are two common:

Your firm is a supplier to a major chain of discount stores.You have heard rumors that this chain of discount stores is in financial difficulty.Which financial ratios would indicate the discount store's ability or inability to pay its short-term debts?

The "bottom line" of an income statement shows the firm's:

The cost of goods sold includes all the costs of buying and keeping merchandise available for sale.

A balance sheet lists assets in order of their ______________.

Carole Grand and Bonnie Lamore run a shuttle service from Western Illinois to the busy Chicago O'Hare airport.Last month,they recorded the following: If 25% of their net income is paid to the government in taxes,what is their net income after taxes?

Debts that are due in one year or less are classified on the Balance Sheet as:

Activities of managerial accountants include measuring and reporting the costs of production,marketing and other functions within the organization.

A _________ summarizes all the data from the account ledgers to verify that they are correct and balanced.

Potential investors are interested in both a firm's balance sheet and income statement when evaluating whether or not to invest in a firm.

We would expect the inventory turnover ratio for a ski shop to be _______ than the turnover for a convenience store.

The accounting cycle usually involves the work of both the bookkeeper and the accountant.

Leverage ratios indicate the extent to which ________ has been used to fund a business's operations.

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

Bonus A: Using Technology to Manage Information

Bonus B: Managing Risk

Bonus C: Managing Your Personal Finances

Appendix: Working Within the Legal Environment

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Exam 17: Understanding Accounting and Financial Information

What is ratio analysis? Explain the four different types of ratios and how each is used.

Assets are listed on the balance sheet in order of liquidity,with the most liquid assets listed first.

The current ratio is found by dividing the firm's total assets by its total liabilities.

FIFO and LIFO are two common:

Your firm is a supplier to a major chain of discount stores.You have heard rumors that this chain of discount stores is in financial difficulty.Which financial ratios would indicate the discount store's ability or inability to pay its short-term debts?

The "bottom line" of an income statement shows the firm's:

The cost of goods sold includes all the costs of buying and keeping merchandise available for sale.

A balance sheet lists assets in order of their ______________.

Carole Grand and Bonnie Lamore run a shuttle service from Western Illinois to the busy Chicago O'Hare airport.Last month,they recorded the following: If 25% of their net income is paid to the government in taxes,what is their net income after taxes?

Debts that are due in one year or less are classified on the Balance Sheet as:

Activities of managerial accountants include measuring and reporting the costs of production,marketing and other functions within the organization.

A _________ summarizes all the data from the account ledgers to verify that they are correct and balanced.

Potential investors are interested in both a firm's balance sheet and income statement when evaluating whether or not to invest in a firm.

We would expect the inventory turnover ratio for a ski shop to be _______ than the turnover for a convenience store.

The accounting cycle usually involves the work of both the bookkeeper and the accountant.

Leverage ratios indicate the extent to which ________ has been used to fund a business's operations.

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

Bonus A: Using Technology to Manage Information

Bonus B: Managing Risk

Bonus C: Managing Your Personal Finances

Appendix: Working Within the Legal Environment

Filters