Deck 17: Using Accounting and Financial Information

Question 1

As the owner of a landscaping business, you review how your company did last month. You mowed over 300 lawns and made $8000. After paying your two employees, buying gas and supplies, and a new weed eater, your profit was $3500. All of this information is found on which financial statement?

A) income statement
B) statement of cash flows
C) balance sheet
D) cash flows from investing statement

Answer 1

A

Question 2

Accountants in Canada typically follow which of the following to present financial information and for financial reports to be accurate and consistent?

A) International Accounting Standards (IAS)
B) the Uniform Commercial Accounting Code (UCAC)
C) International Financial Reporting Standards (IFRS)
D) Canadian Securities and Exchange Commission (SEC) guidelines

Answer 2

A

Question 3

Which financial statement illustrates how the company's operating, investing, and financing activities have affected cash over a specified period of time?

A) balance sheet
B) statement of cash flows
C) income statement
D) profit and loss statement

Answer 3

B

Question 4

Which report is NOT a financial statement?

A) income statement
B) tax return
C) balance sheet
D) statement of cash flows

Question 5

An executive at a manufacturing firm thinks his company should open a second manufacturing plant, but first needs to check a series of reports before making a decision. What will the executive use to make this decision?

A) financial accounting
B) managerial accounting
C) the statement of cash flows
D) a balance sheet

Question 6

Which financial statement would indicate whether a company has made a profit or loss during the reporting period?

A) balance sheet
B) statement of financial position
C) statement of changes in equity
D) income statement

Question 7

Raymond works for a manufacturing company in the accounting department. He is primarily responsible for the preparation of financial statements and reports that will be used by bankers, investors, creditors, and the government. Raymond is which type of accountant?

A) investment
B) managerial
C) financial
D) cost

Question 8

Shivam's new company has about $800,000, but Shivam is nervous because all of that money is either from investors or bank loans. The company hasn't actually made any money from operations yet. Which of the following displays whether they made money or not?

A) expense statement
B) revenue report
C) balance sheet
D) income statement

Question 9

What does Keurig look at to see its assets, liabilities, and net worth?

A) income statement
B) balance sheet
C) statement of cash flows
D) bank statement

Question 10

On January 1, 2011, Canada adopted the International Financial Reporting Standards (IFRS) for publicly traded companies to provide international consistency in financial reporting. Which of the following administers IFRS in Canada?

A) Canadian Association of Certified Public Accountants
B) International Accounting Standards Board
C) Canadian Accounting Standards Board
D) Canadian Securities and Exchange Commission

Question 11

Which type of accounting provides information for managers within a company to make informed decisions about financing, investing, marketing, and operating activities?

A) general
B) cost
C) financial
D) managerial

Question 12

Which of the following is the process of systematically collecting, analyzing, and reporting financial information?

A) accounting
B) bookkeeping
C) auditing
D) financial reporting

Question 13

Along with the types of financial reports that are produced, which of the following is another difference between managerial and financial accounting?

A) whether the reports are prepared monthly or quarterly
B) whether the accountant is a CPA
C) the audience for whom the reports are intended
D) the accuracy and authenticity of the reports

Question 14

What are generally accepted accounting principles?

A) a set of globally accepted accounting standards for public companies
B) accounting rules and standards used only for private companies
C) the former financial accounting rules and standards for accountants in Canada
D) what is taught in accounting courses

Question 15

What does an airplane that FedEx owns and uses to deliver packages represent for FedEx?

A) liability
B) asset
C) fixed cost
D) expense

Question 16

Jennifer is hired by Ruby Tuesday to help with budgeting, determining the costs of the firm's meal services, and recording transactions and creating financial statements for use by its restaurant managers. Which type of accountant is Jennifer?

A) managerial
B) financial
C) public
D) tax

Question 17

Which of the following is the term for resources that a firm owns?

A) revenues
B) owner's equities
C) assets
D) expenses

Question 18

When Nathaniel Products applied for a loan to expand its sailboat business, the bank requested several financial reports so that it could assess the company's ability to repay the loan. Which category of accounting would be responsible for the preparation of these financial reports?

A) managerial accounting
B) financial accounting
C) forensic accounting
D) cost accounting

Question 19

As the marketing manager for a yoga studio, you need to know how much you've spent on marketing this year. Which of the following can you use to access a report that will provide this information?

A) sales data
B) the income statement
C) financial accounting
D) managerial accounting

Question 20

Chopra Industries is preparing for its annual shareholders meeting. What will Chopra's managers use to provide shareholders with information about how fast the company is growing, how much it is worth, and how they are performing compared to others in the industry?

A) formulas
B) bank statements
C) financials
D) inventory statements

Question 21

Chase starts a new auto detailing business. He obtains a loan for $10,000 and uses the funds to build a small workshop in his backyard and to buy tools and supplies. At this point, his assets are _____, liabilities are _____, and owners' equity is _____.

A) $10,000; $5000; $15,000
B) $10,000; $10,000; $0
C) $5000; $0; $5000
D) $10,000; $5000; $5000

Question 22

How would trademarks and copyrights be listed on a company's balance sheet?

A) fixed assets
B) intangible assets
C) owners' equity
D) short-term investments

Question 23

If total liabilities were subtracted from total assets, what would be the residual value?

A) revenues
B) owners' equity
C) working capital
D) expenses

Question 24

If assets of Martin's Pet Store are $107,000 and owners' equity is $75,000, which of the following statements is correct?

A) The current assets are worth $32,000.
B) The new income for the period is $32,000.
C) The long-term liabilities are $75,000.
D) The liabilities are $32,000.

Question 25

Suppose a local catering company owes $15,000 on a van it uses for deliveries. The owner's equity is $72,000. What must the value be of the company's owner's equity?

A) $75,000
B) $87,000
C) $57,000
D) $43,000

Question 26

Which of the following is the correct order for the balance sheet?

A) assets, owners' equity, liabilities
B) owners' equity, financial position, assets
C) assets, liabilities, owners' equity
D) owners' equity, assets, liabilities

Question 27

The owner of a small consulting business paid for a new copy machine on his company credit card. This item is listed as which of the following on the company's balance sheet?

A) owner's equity
B) loans payable
C) an asset
D) a liability

Question 28

What is another name for the statement of financial position?

A) income statement
B) statement of owners' equity
C) earnings statement
D) balance sheet

Question 29

Assets = liabilities + owners' equity is the equation for information reported on which of the following?

A) balance sheet
B) income statement
C) earnings statement
D) statement of owners' equity

Question 30

Pepperidge Farm stores items like flour, salt, and sugar as raw materials it will use to produce a variety of food items. These raw materials are listed as which of the following on the company's balance sheet?

A) equipment
B) owner's equity
C) short-term loans
D) liabilities

Question 31

What are the debts owed by a business called?

A) assets
B) owners' equity
C) liabilities
D) revenues

Question 32

A local specialty gift store had to borrow money from a local bank to purchase Christmas merchandise to sell in the store. What is this debt owed to the bank called?

A) liability
B) debit
C) owners' equity
D) credit

Question 33

What are the components of the balance sheet?

A) owners' equity, assets, and liabilities
B) expenses, revenue, and net income
C) revenue, expenses, and owners' equity
D) assets, liabilities, and revenues

Question 34

If your liabilities total $448,000 and owner's equity totals $1,542,000, what do your assets total?

A) $946,000
B) $1,542,000
C) $1,094,000
D) $1,108,000

Question 35

An automobile manufacturer purchases a piece of new equipment for the factory using cash. The equipment is considered which of the following on the balance sheet?

A) an asset
B) owner's equity
C) inventory
D) a short-term investment

Question 36

The resources owned by David's Spa and Salon total $148,000. The total amount of debt that it owes to others is $87,000. Which of the following describes David's Spa and Salon?

A) owners' equity is $61,000
B) liabilities are $148,000
C) liabilities are $61,000
D) owners' equity is $235,000

Question 37

According to the accountant for Virunder's Floral Supply, the firm's assets are $124,000 and its liabilities are $31,000. Which of the following statements is correct?

A) The owners' equity is $93,000.
B) The firm's current assets are $62,000.
C) The firm's current liabilities are $24,000.
D) The firm's accounting equation won't balance.

Question 38

All of the following are acceptable ways of stating the accounting equation EXCEPT which one?

A) owners' equity = assets - liabilities
B) assets = liabilities + owners' equity
C) owners' equity - liabilities = assets
D) assets - liabilities = owners' equity

Question 39

If the assets for your small business are $22,349 and your liabilities are $6,825, what is the owner's equity?

A) $14,128
B) $15,524
C) $29,174
D) $16,394

Question 40

The Cheese Shoppe's liabilities total $59,000 and its owners' equity is $124,000. Which of the following statements is correct?

A) the total assets equal $65,000
B) the firm's assets are $124,000
C) the total assets equal $183,000
D) the firm's sales are $183,000

Question 41

A small candy company is required to make quarterly payments of withholding taxes to the federal government. What are the upcoming payments called?

A) accounts payable
B) accounts receivable
C) loans payable
D) accrued expenses

Question 42

Cash, marketable securities, notes receivable, and merchandise inventory are examples of which of the following?

A) current assets
B) expenses
C) intangible assets
D) fixed assets

Question 43

All of the following are classified as fixed assets EXCEPT which one?

A) factory equipment
B) trademarks
C) property
D) buildings

Question 44

George has a large collection of hockey and baseball cards. His tuition bill is due next week, and he is thinking about selling his collection for the cash he can use to pay his tuition. What problem is he going to have?

A) his cards are illiquid
B) cards are not popular anymore
C) very few people use cash anymore
D) cards have depreciated in value

Question 45

Which of the following presents assets in the correct balance sheet order?

A) marketable securities, equipment, prepaid insurance, inventory
B) cash, inventory, equipment
C) accounts receivable, buildings, inventory, land
D) buildings, prepaid expenses, inventory, equipment

Question 46

Which of the following describes the ease with which an asset can be converted into cash?

A) liquidity
B) profitability
C) solvency
D) convertibility

Question 47

Angela has a small bed and breakfast (B&B) in a lakeside resort town. If she listed all of the B&B's assets on the balance sheet, which of the following assets would be listed last?

A) furniture and appliances
B) cleaning equipment and supplies
C) office equipment and supplies
D) building

Question 48

Which of the following describes the debts of a business that will be paid in one year or less?

A) current liabilities
B) expenses
C) prepaid expenses
D) long-term liabilities

Question 49

Buster's Hot Dogs bought supplies on credit from a supplier. Which of the following is the amount the firm owes to the supplier?

A) long-term liabilities
B) loans payable
C) accounts receivable
D) accounts payable

Question 50

If the liabilities of a business are $85,000 and the owners' equity is $110,000, which of the following statements is correct?

A) assets equal $25,000
B) assets equal $195,000
C) assets equal $110,000
D) assets equal $85,000

Question 51

Kim's Copy Shop is in the process of organizing its assets in the appropriate order. The manager asks you for help in arranging the following assets: equipment, accounts receivable, cash, merchandise inventory, and notes receivable. If you list cash first, which of the following will you list last?

A) merchandise inventory
B) note receivable
C) accounts receivable
D) equipment

Question 52

Teanna sells hand-painted wood signs for $30 each. If her cost of producing each sign is $7, which of the following is $23?

A) cost of goods sold
B) net income
C) gross profit
D) operating expense

Question 53

Furniture and store equipment for Rose's Boutique will be held or used for a period longer than one year, and as such are considered to be which of the following?

A) fixed assets
B) owner's equities
C) current assets
D) prepaid expenses

Question 54

What are assets that are not easily converted into cash or are expected to be held for longer than a year called?

A) current assets
B) fixed assets
C) intangible assets
D) long-term equity

Question 55

What is the term for variable expenses that are directly related to the production or purchase of a product?

A) long-term liabilities
B) fixed expenses
C) cost of goods sold
D) operating expenses

Question 56

All of the following are current assets EXCEPT which one?

A) office equipment
B) cash
C) prepaid insurance
D) accounts receivable

Question 57

Dr. Shalhoub runs a chiropractic clinic. He typically bills his customers for services he performs and gives them about 30 days to make the payments. What are these amounts of money that his customers owe called?

A) prepaid expenses
B) unearned revenues
C) intangible assets
D) accounts receivable

Question 58

When Betty Tran prepared a personal income statement, she subtracted her expenses from her income. What is the remainder or residual value called?

A) total assets
B) total revenues
C) retained earnings
D) cash surplus

Question 59

The owner of a jewellery store calculates which of the following by adding up her rent, salary, electricity and phone payments?

A) cost of goods sold
B) operating expenses
C) gross profit
D) revenue

Question 60

Which of the following assets is the most liquid?

A) accounts receivable
B) marketable securities
C) cash
D) capital

Question 61

Indigo would like to know how effectively it uses resources to generate profits. Which of the following ratios would Indigo use?

A) current assets ÷ current liabilities
B) net profit after taxes ÷ total investment
C) net revenue after taxes ÷ revenue
D) sales ÷ total assets

Question 62

On the statement of cash flows, how would the payment of cash dividends to company shareholders be characterized?

A) cash flows from operating activities
B) cash flows from financing activities
C) cash flows from investing activities
D) long-term liability

Question 63

Which section of the statement of cash flows would show Santhya's payments for food ingredients and wages paid to employees?

A) cash flows from operating activities
B) cash flows from financing activities
C) non-business-related cash flows
D) cash flows from investing activities

Question 64

On an income statement, revenue less cost of goods sold (COGS) equals which of the following?

A) net income or loss
B) gross profit
C) operating expenses
D) net profit

Question 65

Which financial statement is characterized as revenues - cost of goods sold - expenses = net income?

A) balance sheet
B) statement of cash flows
C) statement of financial position
D) income statement

Question 66

Which of the following is a summary of a firm's revenues and expenses during a specified accounting period, such as a year?

A) income statement
B) balance sheet
C) statement of financial position
D) statement of owners' equity

Question 67

Which of the following is a leverage ratio?

A) inventory turnover ratio
B) return on sales
C) debt-to-equity ratio
D) acid-test ratio

Question 68

What are the three activities according to which a statement of cash flows is organized?

A) operating, selling, and investing
B) financing, buying, and selling
C) investing, financing, and expensing
D) operating, investing, and financing

Question 69

After Collin subtracts the taxes and interest from operating income, he gets a total of -$224. What does this represent for Collin?

A) net loss
B) operating expenses
C) net income
D) gross profit

Question 70

Which of the following describes assets that can be quickly converted into cash or consumed in one year or less?

A) overhead costs
B) current assets
C) acid-test assets
D) fixed assets

Question 71

Which of the following ratios would show you the level of debt compared to assets or equity?

A) liquidity ratio
B) leverage ratio
C) activity ratio
D) quick ratio

Question 72

Which ratio would tell you if the company has sufficient short-term assets to pay its short-term liabilities?

A) leverage ratio
B) profitability ratio
C) debt-to-equity ratio
D) current ratio

Question 73

Which of the following best describes the organization of a statement of cash flows?

A) assets = liabilities + shareholders' equity
B) operating, investing, and financing cash flows
C) cash in, cash out
D) payments - receipts = cash

Question 74

Cash and payments received from customers would be classified on the statement of cash flows as which of the following?

A) cash flows from financing activities
B) cash flows from investing activities
C) revenue
D) cash flows from operating activities

Question 75

When Alibaba went public and sold shares of the company on the New York Stock Exchange, it raised $25 billion. This was listed as which of the following on Alibaba's statement of cash flows?

A) cash flows from investing activities
B) revenue
C) cash flows from operating activities
D) cash flows from financing activities

Question 76

Whirlpool purchases land to build a new factory. How is this listed on the statement of cash flows?

A) cash flows from operating activities
B) a liability
C) cash flows from investing activities
D) operating expenses

Question 77

The statement of cash flows offers information on all of the following EXCEPT which one?

A) available cash to pay a company's bills
B) expenses during a particular accounting period
C) the company's use of cash during the reporting period
D) sources of the company's cash during the reporting period

Question 78

If Reebok wanted to know how quickly it could convert its assets to cash in order to pay off short-term debts, which ratio would it use?

A) current assets ÷ current liabilities
B) total liabilities ÷ total owner's equity
C) net revenue after taxes ÷ revenue
D) sales ÷ total assets

Question 79

Which financial statement provides information about a firm's operating, investing, and financing activities during an accounting period?

A) balance sheet
B) income statement
C) cash flow statement
D) financial analysis statement

Question 80

Joanne provides piano lessons to students in her home four days a week. The money she earns from providing these services would be characterized as which of the following on an income statement?

A) assets
B) revenues
C) retained earnings
D) equity