Question 1

Which of the following ratios is a liquidity ratio?

Accepted Answer

A) inventory turnover ratio 
B) acid-test ratio 
C) debt to owners' equity ratio 
D) basic earnings per share 
A) inventory turnover ratio 
B) acid-test ratio 
C) debt to owners' equity ratio 
D) basic earnings per share

Question 2

Olivia is a public accountant.She prepares monthly financial statements for her client,Chick's Auto Body Shop.Presently,though,she must summarize the data in the accounting ledgers to determine if the figures are correct and balanced.Olivia will prepare a statement of cash flows in order to complete this step of the cycle.

Accepted Answer

A) True 
 B)False

Question 3

Before starting his landscape business,Andrew took a marketing class at the local Community College.He decided that his time would be better utilized in this class because if he could learn to sell his services well,the revenues and profits would follow.Your assessment of his plan might include which of the following?

Accepted Answer

A) Andrew understands that Marketing is the life-blood of the company,and he is right on track with his approach. 
B) Andrew has elected to operate like a virtual company and leave various parts of the business including accounting,environmental trends scanning,and management to outsourcers. 
C) Andrew knows that increasing revenues will always keep the business profitable and in a positive cash position. 
D) Andrew needs to realize that the ability to understand and interpret financial statements provided by his accountant might enhance his profits. 
A) Andrew understands that Marketing is the life-blood of the company,and he is right on track with his approach. 
B) Andrew has elected to operate like a virtual company and leave various parts of the business including accounting,environmental trends scanning,and management to outsourcers. 
C) Andrew knows that increasing revenues will always keep the business profitable and in a positive cash position. 
D) Andrew needs to realize that the ability to understand and interpret financial statements provided by his accountant might enhance his profits.

Question 4

The basic earnings per share ratio does not take stock options,warrants,and preferred stock into account.

Accepted Answer

A) True 
 B)False

Question 5

Explain the differences between managerial and financial accounting,and give examples of the types of problems and issues examined by each of these areas of accounting.

Accepted Answer

Managerial accounting is used to provide

Question 6

Assets are economic resources that are owned by a firm.

Accepted Answer

A) True 
 B)False

Question 7

In addition to the tasks of recording and classifying accounting information,the best accounting software programs currently available for small businesses have the ability to make financial decisions,thus eliminating the need for owners of small businesses to consult with accountants or understand accounting terminology.

Accepted Answer

A) True 
 B)False

Question 8

Peak Performance Sporting Goods Company has just applied for a bank loan in order to expand the business.Using the most recent Balance Sheet data provided by the company owner,you calculate that the company's current ratio is 2.5.In your presentation to the company boss,you remark:

Accepted Answer

A) Peak Performance is currently having trouble meeting its short-term obligations. 
B) Peak Performance has $2.50 that it owes each month,for every $1.00 of cash that it is generating. 
C) Peak Performance has $2.50 of current assets for each $1.00 of currently liabilities. 
D) Due to the fact that most of Peak Performance's current assets are tied-up in inventory,there is no need to worry about whether Peak Performance will be able to make loan payments. 
A) Peak Performance is currently having trouble meeting its short-term obligations. 
B) Peak Performance has $2.50 that it owes each month,for every $1.00 of cash that it is generating. 
C) Peak Performance has $2.50 of current assets for each $1.00 of currently liabilities. 
D) Due to the fact that most of Peak Performance's current assets are tied-up in inventory,there is no need to worry about whether Peak Performance will be able to make loan payments.

Question 9

Meg Malloy is running an income statement on her QuickBooks™ computer accounting program.Which of the following accounts will be used to calculate gross profit?

Accepted Answer

A) Revenues,net sales,depreciation,and operating expenses 
B) Revenues,general expenses 
C) Revenues,cost of goods sold,tax expenses,net income before taxes 
D) Revenues,cost of goods sold 
A) Revenues,net sales,depreciation,and operating expenses 
B) Revenues,general expenses 
C) Revenues,cost of goods sold,tax expenses,net income before taxes 
D) Revenues,cost of goods sold

Question 10

FIFO is a method of computing net cash flows by subtracting financial inflows from financial outflows.

Accepted Answer

A) True 
 B)False

Question 11

A firm's efficient use of its assets in running the business is key to maintaining sufficient cash flow.Ratios that accountants utilize to measure the efficient use of assets are called ____________ ratios.

Accepted Answer

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

Question 12

Mini-Case
Minnie A.Wright-Hoff works as an accountant for Double Entry Doors,Inc.Her company sells and installs oversized garage doors needed by large vehicles.Most of Minnie's work involves helping department heads and other decision-makers by measuring and reporting costs for their departments,and by identifying areas where departments are exceeding their budgets.However,as one of only three accountants employed by Double Entry Doors,Minnie is something of a "jill-of-all-trades" in terms of her accounting assignments.For example,she recently spent several hours summarizing all of the financial data in account ledgers to see if the information was correct and balanced.Her efforts revealed no problems,so she is now ready to start working on the firm's financial statements.Minnie is interested in this part of the accounting cycle because she likes to be one of the first to know the "bottom line" her company will report.She knows that she and the other accountants who work on these statements can influence the results by the choices they make about the way they report certain items.
-The last major task Minnie completed before getting ready to prepare the firm's financial statements was the preparation of the:

Accepted Answer

A) Cash budget. 
B) Master budget. 
C) Trial balance. 
D) Internal audit. 
A) Cash budget. 
B) Master budget. 
C) Trial balance. 
D) Internal audit.

Question 13

An analysis of the statement of cash flows can help a firm prevent cash shortages.

Accepted Answer

A) True 
 B)False

Question 14

Accounting involves both the recording and the interpreting of financial events.

Accepted Answer

A) True 
 B)False

Question 15

The Barkley Company wants to know the value of its owners' equity.It will total its assets and subtract its liabilities.

Accepted Answer

A) True 
 B)False

Question 16

A journal is where the initial record of a day's transactions is entered.

Accepted Answer

A) True 
 B)False

Question 17

If the goal of a business is to pay lower taxes on its income during an inflationary period,it is likely to use the FIFO inventory costing method.

Accepted Answer

A) True 
 B)False

Question 18

In the course of their jobs,bookkeepers:

Accepted Answer

A) Interpret accounting data. 
B) Approve decisions about major expenditures. 
C) Record business transactions. 
D) Prepare financial statements. 
A) Interpret accounting data. 
B) Approve decisions about major expenditures. 
C) Record business transactions. 
D) Prepare financial statements.

Question 19

To effectively run a business,it is necessary to:

Accepted Answer

A) Hire a full-time accountant. 
B) Use a public accounting firm. 
C) Understand and use accounting information. 
D) Make certain that you do not spend too much time on your accounting system. 
A) Hire a full-time accountant. 
B) Use a public accounting firm. 
C) Understand and use accounting information. 
D) Make certain that you do not spend too much time on your accounting system.

Question 20

One of the problems with current accounting procedures is that there is no way for firms to systematically write off the costs of property and equipment over time.

Accepted Answer

A) True 
 B)False

Which of the following ratios is a liquidity ratio?

The basic earnings per share ratio does not take stock options,warrants,and preferred stock into account.

Explain the differences between managerial and financial accounting,and give examples of the types of problems and issues examined by each of these areas of accounting.

Assets are economic resources that are owned by a firm.

Peak Performance Sporting Goods Company has just applied for a bank loan in order to expand the business.Using the most recent Balance Sheet data provided by the company owner,you calculate that the company's current ratio is 2.5.In your presentation to the company boss,you remark:

Meg Malloy is running an income statement on her QuickBooks™ computer accounting program.Which of the following accounts will be used to calculate gross profit?

FIFO is a method of computing net cash flows by subtracting financial inflows from financial outflows.

A firm's efficient use of its assets in running the business is key to maintaining sufficient cash flow.Ratios that accountants utilize to measure the efficient use of assets are called ____________ ratios.

An analysis of the statement of cash flows can help a firm prevent cash shortages.

Accounting involves both the recording and the interpreting of financial events.

The Barkley Company wants to know the value of its owners' equity.It will total its assets and subtract its liabilities.

A journal is where the initial record of a day's transactions is entered.

If the goal of a business is to pay lower taxes on its income during an inflationary period,it is likely to use the FIFO inventory costing method.

In the course of their jobs,bookkeepers:

To effectively run a business,it is necessary to:

One of the problems with current accounting procedures is that there is no way for firms to systematically write off the costs of property and equipment over time.

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

Exam 17: Understanding Accounting and Financial Information

Which of the following ratios is a liquidity ratio?

The basic earnings per share ratio does not take stock options,warrants,and preferred stock into account.

Explain the differences between managerial and financial accounting,and give examples of the types of problems and issues examined by each of these areas of accounting.

Assets are economic resources that are owned by a firm.

Peak Performance Sporting Goods Company has just applied for a bank loan in order to expand the business.Using the most recent Balance Sheet data provided by the company owner,you calculate that the company's current ratio is 2.5.In your presentation to the company boss,you remark:

Meg Malloy is running an income statement on her QuickBooks™ computer accounting program.Which of the following accounts will be used to calculate gross profit?

FIFO is a method of computing net cash flows by subtracting financial inflows from financial outflows.

A firm's efficient use of its assets in running the business is key to maintaining sufficient cash flow.Ratios that accountants utilize to measure the efficient use of assets are called ____________ ratios.

An analysis of the statement of cash flows can help a firm prevent cash shortages.

Accounting involves both the recording and the interpreting of financial events.

The Barkley Company wants to know the value of its owners' equity.It will total its assets and subtract its liabilities.

A journal is where the initial record of a day's transactions is entered.

If the goal of a business is to pay lower taxes on its income during an inflationary period,it is likely to use the FIFO inventory costing method.

In the course of their jobs,bookkeepers:

To effectively run a business,it is necessary to:

One of the problems with current accounting procedures is that there is no way for firms to systematically write off the costs of property and equipment over time.

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