Question 1

The standard form of the accounting equation is assets equal liabilities minus owners' equity.

Accepted Answer

A) True 
 B)False

Question 2

Debts that will be repaid in one year or less are known as current liabilities.

Accepted Answer

A) True 
 B)False

Question 3

Television sets that Best Buy owns for selling to its customers are classified as

Accepted Answer

A) equipment. 
B) machinery. 
C) receivables. 
D) merchandise inventory. 
E) prepaid merchandise. 
A) equipment. 
B) machinery. 
C) receivables. 
D) merchandise inventory. 
E) prepaid merchandise.

Question 4

Chase invests $5,000 of his own money in his new auto detailing business. He then obtains a loan and builds a small workshop in his backyard for $10,000. At this point assets are ____, liabilities are ____, and owners' equity is ____.

Accepted Answer

A) $10,000; $5,000; $15,000 
B) $15,000; $10,000; $5,000 
C) $5,000; $0; $5,000 
D) $15,000; $10,000; $0 
E) $10,000; $5,000; $5,000 
A) $10,000; $5,000; $15,000 
B) $15,000; $10,000; $5,000 
C) $5,000; $0; $5,000 
D) $15,000; $10,000; $0 
E) $10,000; $5,000; $5,000

Question 5

Equipment and patents are known as intangible assets.

Accepted Answer

A) True 
 B)False

Question 6

When Nathan applied for a loan to expand his sailboat business, the bank required that his financial statements be carefully examined by a CPA. The bank is requiring Nathan to have his financial statements

Accepted Answer

A) verified. 
B) audited. 
C) affirmed. 
D) certified. 
E) insured. 
A) verified. 
B) audited. 
C) affirmed. 
D) certified. 
E) insured.

Question 7

An accountant can calculate a return on sales ratio to determine how well the firm is using the money invested by the owners.

Accepted Answer

A) True 
 B)False

Question 8

While chief executives and financial officers are currently not subject to criminal penalties, they are required to certify periodic financial reports.

Accepted Answer

A) True 
 B)False

Question 9

Which type of manager would be most concerned with information about the products offered by competitors?

Accepted Answer

A) Financial 
B) Marketing 
C) Operations 
D) Administrative 
E) Human resources 
A) Financial 
B) Marketing 
C) Operations 
D) Administrative 
E) Human resources

Question 10

A private accountant is an accountant whose services may be hired on a fee basis by individuals or business firms.

Accepted Answer

A) True 
 B)False

Question 11

Revenues − cost of goods sold − expenses = net income characterizes which financial statement?

Accepted Answer

A) Balance sheet 
B) Statement of retained earnings 
C) Statement of cash flows 
D) Statement of financial position 
E) Income statement 
A) Balance sheet 
B) Statement of retained earnings 
C) Statement of cash flows 
D) Statement of financial position 
E) Income statement

Question 12

Christine has just earned her undergraduate degree in accounting and has successfully completed the CPA exam. She recently interviewed with a relatively small and new company and was offered a job. The offer sounded very promising; the job had opportunities to grow with the company and provided diverse challenges. Christine accepted the job.
Once Christine started working, she realized that the owners and employees did not have a general understanding of accounting. She had to teach them the steps in an accounting cycle so they would be able to understand how she was going to create reports. When she talked about the statement of financial position, they had no idea what she was talking about. She was the qualified individual responsible for accounting. No one else working with her had much knowledg
-Refer to Christine's First Job. When Christine explained the asset side of the statement, she included which of the following?

Accepted Answer

A) Retained earnings 
B) Notes payable 
C) Merchandise inventory 
D) Long-term liabilities 
E) Stockholders' equity 
A) Retained earnings 
B) Notes payable 
C) Merchandise inventory 
D) Long-term liabilities 
E) Stockholders' equity

Question 13

Ruin Company's net sales for the period were $175,000. Its cost of goods sold was $85,000. What is this firm's gross profit on sales?

Accepted Answer

A) $175,000 
B) $135,000 
C) $125,000 
D) $100,000 
E) $90,000 
A) $175,000 
B) $135,000 
C) $125,000 
D) $100,000 
E) $90,000

Question 14

The ratio obtained by dividing net income after taxes by net sales is the

Accepted Answer

A) return on sales ratio. 
B) acid-test ratio. 
C) return on equity ratio. 
D) earnings per share. 
E) working capital. 
A) return on sales ratio. 
B) acid-test ratio. 
C) return on equity ratio. 
D) earnings per share. 
E) working capital.

Question 15

Salaries payable, accounts payable, and taxes payable are examples of

Accepted Answer

A) expenses. 
B) current liabilities. 
C) current assets. 
D) long-term liabilities. 
E) owners' equity. 
A) expenses. 
B) current liabilities. 
C) current assets. 
D) long-term liabilities. 
E) owners' equity.

Question 16

How might the information needs of a marketing manager differ from those of an operations manager?

Accepted Answer

Marketing managers need detailed informa

Question 17

Schluster Hardware, Inc., had a gross profit of $380,000, operating expenses of $210,000, and income taxes of $48,000. What is Schluster's net income after taxes?

Accepted Answer

A) $122,000 
B) $80,000 
C) $208,000 
D) $170,000 
E) $332,000 
A) $122,000 
B) $80,000 
C) $208,000 
D) $170,000 
E) $332,000

Question 18

Explain why a firm's financial statements should be audited.

Accepted Answer

It is important that managers, investors

Question 19

Managers often compare financial and accounting data with previous accounting periods and with competing firms.

Accepted Answer

A) True 
 B)False

Question 20

Define a balance sheet (also called a statement of financial position). What does it balance?

Accepted Answer

A balance sheet, also called a statement

The standard form of the accounting equation is assets equal liabilities minus owners' equity.

Debts that will be repaid in one year or less are known as current liabilities.

Television sets that Best Buy owns for selling to its customers are classified as

Chase invests $5,000 of his own money in his new auto detailing business. He then obtains a loan and builds a small workshop in his backyard for $10,000. At this point assets are , liabilities are , and owners' equity is .

Equipment and patents are known as intangible assets.

When Nathan applied for a loan to expand his sailboat business, the bank required that his financial statements be carefully examined by a CPA. The bank is requiring Nathan to have his financial statements

An accountant can calculate a return on sales ratio to determine how well the firm is using the money invested by the owners.

While chief executives and financial officers are currently not subject to criminal penalties, they are required to certify periodic financial reports.

Which type of manager would be most concerned with information about the products offered by competitors?

A private accountant is an accountant whose services may be hired on a fee basis by individuals or business firms.

Revenues − cost of goods sold − expenses = net income characterizes which financial statement?

Ruin Company's net sales for the period were $175,000. Its cost of goods sold was $85,000. What is this firm's gross profit on sales?

The ratio obtained by dividing net income after taxes by net sales is the

Salaries payable, accounts payable, and taxes payable are examples of

How might the information needs of a marketing manager differ from those of an operations manager?

Schluster Hardware, Inc., had a gross profit of $380,000, operating expenses of $210,000, and income taxes of $48,000. What is Schluster's net income after taxes?

Explain why a firm's financial statements should be audited.

Managers often compare financial and accounting data with previous accounting periods and with competing firms.

Define a balance sheet (also called a statement of financial position). What does it balance?

Exploring the World of Business and Economics

Being Ethical and Socially Responsible

Exploring Global Business

Choosing a Form of Business Ownership

Small Business, Entrepreneurship, and Franchises

Understanding the Management Process

Creating a Flexible Organization

Producing Quality Goods and Services

Attracting and Retaining the Best Employees

Motivating and Satisfying Employees and Teams

Building Customer Relationships Through Effective Marketing

Creating and Pricing Products That Satisfy Customers

Distributing and Promoting Products

Understanding Social Media and E-Business

Mastering Financial Management

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Exam 15: Using Management Information Systems and Accounting Information

The standard form of the accounting equation is assets equal liabilities minus owners' equity.

Debts that will be repaid in one year or less are known as current liabilities.

Television sets that Best Buy owns for selling to its customers are classified as

Chase invests $5,000 of his own money in his new auto detailing business. He then obtains a loan and builds a small workshop in his backyard for $10,000. At this point assets are ____, liabilities are ____, and owners' equity is ____.

Equipment and patents are known as intangible assets.

When Nathan applied for a loan to expand his sailboat business, the bank required that his financial statements be carefully examined by a CPA. The bank is requiring Nathan to have his financial statements

An accountant can calculate a return on sales ratio to determine how well the firm is using the money invested by the owners.

While chief executives and financial officers are currently not subject to criminal penalties, they are required to certify periodic financial reports.

Which type of manager would be most concerned with information about the products offered by competitors?

A private accountant is an accountant whose services may be hired on a fee basis by individuals or business firms.

Revenues − cost of goods sold − expenses = net income characterizes which financial statement?

Ruin Company's net sales for the period were $175,000. Its cost of goods sold was $85,000. What is this firm's gross profit on sales?

The ratio obtained by dividing net income after taxes by net sales is the

Salaries payable, accounts payable, and taxes payable are examples of

How might the information needs of a marketing manager differ from those of an operations manager?

Schluster Hardware, Inc., had a gross profit of $380,000, operating expenses of $210,000, and income taxes of $48,000. What is Schluster's net income after taxes?

Explain why a firm's financial statements should be audited.

Managers often compare financial and accounting data with previous accounting periods and with competing firms.

Define a balance sheet (also called a statement of financial position). What does it balance?

Exploring the World of Business and Economics

Being Ethical and Socially Responsible

Exploring Global Business

Choosing a Form of Business Ownership

Small Business, Entrepreneurship, and Franchises

Understanding the Management Process

Creating a Flexible Organization

Producing Quality Goods and Services

Attracting and Retaining the Best Employees

Motivating and Satisfying Employees and Teams

Building Customer Relationships Through Effective Marketing

Creating and Pricing Products That Satisfy Customers

Distributing and Promoting Products

Understanding Social Media and E-Business

Mastering Financial Management

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Chase invests $5,000 of his own money in his new auto detailing business. He then obtains a loan and builds a small workshop in his backyard for $10,000. At this point assets are , liabilities are , and owners' equity is .