Question 1

The current ratio is a type of ________ ratio.

Accepted Answer

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

Question 2

An independent audit is an evaluation and unbiased opinion about the accuracy of a company's financial statements.

Accepted Answer

A) True 
 B)False

Question 3

During a period of rising prices,the FIFO technique of inventory valuation will result in a lower net income figure than would the LIFO technique.

Accepted Answer

A) True 
 B)False

Question 4

Purchasing insurance,paying employees,and using supplies are examples of financial transactions.

Accepted Answer

A) True 
 B)False

Question 5

As a first step in the accounting cycle,_________ involves the recording of business transactions.

Accepted Answer

A) marketing 
B) bookkeeping 
C) auditing 
D) economics 
A) marketing 
B) bookkeeping 
C) auditing 
D) economics

Question 6

Churches,schools,and charitable organizations all hire accountants.

Accepted Answer

A) True 
 B)False

Question 7

Double-entry bookkeeping requires that every transaction be recorded in two places.

Accepted Answer

A) True 
 B)False

Question 8

If a firm has a debt to owners' equity ratio of .54 (or 54%)we can conclude that:

Accepted Answer

A) It has relied more on debt than equity to finance its operations. 
B) The firm is likely to have trouble paying its short term debts when they come due. 
C) Its total liabilities are less than its owners' equity. 
D) The firm has expenses that are exactly 54% of its gross profit. 
A) It has relied more on debt than equity to finance its operations. 
B) The firm is likely to have trouble paying its short term debts when they come due. 
C) Its total liabilities are less than its owners' equity. 
D) The firm has expenses that are exactly 54% of its gross profit.

Question 9

April works in the accounting department at Henson's Tire & Auto.She is concerned that the company has been placing too many orders for office supplies and wants to look at all of the transactions involving the purchase of office supplies for the past several months.April can find such information by looking at the supplies account in the:

Accepted Answer

A) ledger. 
B) cash flow statement. 
C) journal. 
D) account debit book. 
A) ledger. 
B) cash flow statement. 
C) journal. 
D) account debit book.

Question 10

The Barkley Company is a fast growing start-up.The accountant calculated earnings per share = $.13.This information will provide him/her with insight into the firm's ability to pay dividends.

Accepted Answer

A) True 
 B)False

Question 11

The firm's most valuable assets are listed at the top of its balance sheet.

Accepted Answer

A) True 
 B)False

Question 12

Retailers attempt to sell older merchandise before more recently acquired merchandise is sold.The assumptions made by the __________ method of inventory valuation are most consistent with this approach.

Accepted Answer

A) FIFO (first in,first out) 
B) LIFO (last in,first out) 
C) average costing 
D) accelerated costing 
A) FIFO (first in,first out) 
B) LIFO (last in,first out) 
C) average costing 
D) accelerated costing

Question 13

The Balance Sheet for Renuvation LLC shows assets totaling $107,000 and liabilities totaling $75,000.Which of the following statements is correct?

Accepted Answer

A) Owner's Equity equals $182,000. 
B) Current Assets are worth $32,000. 
C) Net Income for the period is $32,000. 
D) Owner's Equity equals $32,000. 
A) Owner's Equity equals $182,000. 
B) Current Assets are worth $32,000. 
C) Net Income for the period is $32,000. 
D) Owner's Equity equals $32,000.

Question 14

Net income is simply the difference between revenue and cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 15

Financial ratios that reflect the degree to which a firm relies on borrowed funds are called ________ ratios.

Accepted Answer

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

Question 16

The reports and financial statements prepared by accountants:

Accepted Answer

A) Are more useful for profit-seeking businesses than they are for not-for-profit organizations. 
B) Are mainly used to help the firm complete its tax forms. 
C) Provide information that can be used by decision-makers both inside and outside the organization. 
D) Are not as useful now that firms have moved into a more global environment. 
A) Are more useful for profit-seeking businesses than they are for not-for-profit organizations. 
B) Are mainly used to help the firm complete its tax forms. 
C) Provide information that can be used by decision-makers both inside and outside the organization. 
D) Are not as useful now that firms have moved into a more global environment.

Question 17

The Barkley Company will refer to its income statements to determine whether it was profitable,or,whether it lost money over the past year.

Accepted Answer

A) True 
 B)False

Question 18

Jose just graduated from college with a bachelor's degree in accounting.He plans to go to work for the American Cancer Society as an accountant.Jose will be a(n):

Accepted Answer

A) private accountant. 
B) public accountant. 
C) forensic accountant. 
D) independent accountant. 
A) private accountant. 
B) public accountant. 
C) forensic accountant. 
D) independent accountant.

Question 19

_________ is the systematic write-off of the value of a tangible asset over its useful life.

Accepted Answer

A) Expense structuring 
B) Depreciation 
C) Capital budgeting 
D) Gross margin allocation 
A) Expense structuring 
B) Depreciation 
C) Capital budgeting 
D) Gross margin allocation

Question 20

The balance sheet reports revenues and selling costs for a period of time.

Accepted Answer

A) True 
 B)False

Exam 17: Understanding Accounting and Financial Information

The current ratio is a type of ________ ratio.

An independent audit is an evaluation and unbiased opinion about the accuracy of a company's financial statements.

During a period of rising prices,the FIFO technique of inventory valuation will result in a lower net income figure than would the LIFO technique.

Purchasing insurance,paying employees,and using supplies are examples of financial transactions.

As a first step in the accounting cycle,_________ involves the recording of business transactions.

Churches,schools,and charitable organizations all hire accountants.

Double-entry bookkeeping requires that every transaction be recorded in two places.

If a firm has a debt to owners' equity ratio of .54 (or 54%)we can conclude that:

The Barkley Company is a fast growing start-up.The accountant calculated earnings per share = $.13.This information will provide him/her with insight into the firm's ability to pay dividends.

The firm's most valuable assets are listed at the top of its balance sheet.

Retailers attempt to sell older merchandise before more recently acquired merchandise is sold.The assumptions made by the __________ method of inventory valuation are most consistent with this approach.

The Balance Sheet for Renuvation LLC shows assets totaling $107,000 and liabilities totaling $75,000.Which of the following statements is correct?

Net income is simply the difference between revenue and cost of goods sold.

Financial ratios that reflect the degree to which a firm relies on borrowed funds are called ________ ratios.

The reports and financial statements prepared by accountants:

The Barkley Company will refer to its income statements to determine whether it was profitable,or,whether it lost money over the past year.

Jose just graduated from college with a bachelor's degree in accounting.He plans to go to work for the American Cancer Society as an accountant.Jose will be a(n):

_________ is the systematic write-off of the value of a tangible asset over its useful life.

The balance sheet reports revenues and selling costs for a period of 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

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