Deck 12: The Role of Accounting in Business

Question 1

Bakersfield, Smith, and Babble LLC is a midsized accounting firm in New England. In order to project an image as a full service company, each partner specializes in a different field of accounting. Bakersfield provides information and analysis to business owners in order to help them operate their companies. Smith’s job is to furnish information to individuals and groups both inside and outside organizations to help them assess their firms’ financial performances. Babble is primarily responsible for preparing financial statements for business owners, managers, and investors and other users, such as creditors and government agencies.

-Smith specializes in management accounting.

Answer 1

False

Question 2

_____,which supply relevant,accurate,timely information in a format that will aid them in making decisions,are tailored to the needs of individual managers.

A)Reports
B)Summaries
C)Department updates
D)Data sheets

Answer 2

A

Question 3

Accountants find the money that a company needs to operate.

Answer 3

False

Question 4

In preparing financial statements,accountants adhere to a uniform set of rules called government-approved accounting principles (GAAP).

Question 5

Bakersfield, Smith, and Babble LLC is a midsized accounting firm in New England. In order to project an image as a full service company, each partner specializes in a different field of accounting. Bakersfield provides information and analysis to business owners in order to help them operate their companies. Smith’s job is to furnish information to individuals and groups both inside and outside organizations to help them assess their firms’ financial performances. Babble is primarily responsible for preparing financial statements for business owners, managers, and investors and other users, such as creditors and government agencies.

-Babble spends his time in financial accounting.

Question 6

Accountants communicate the meaning of _____ information and work with individuals and organizations to help them use that information to deal with business problems.

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

Question 7

Management accounting furnishes information to individuals and groups both inside and outside the organization.

Question 8

_____ are principles for financial reporting established by an independent agency called the Financial Accounting Standards Board.

A)Accounting guidelines
B)Government-approved accounting standards
C)Certified rules and regulations
D)Generally accepted accounting principles

Question 9

All of the following appear in the financial statements prepared by accountants except _____.

A)marketing budgets
B)income statements
C)balance sheets
D)statements of cash flows

Question 10

Working in the field of _____ accounting,John Bates furnishes information to individuals and groups both inside and outside his organization to help them assess the firm's financial performance.

A)comprehensive
B)financial
C)advisory
D)management

Question 11

Accountants do all of the following except _____.

A)measure business activities
B)summarize business activities
C)interpret financial information
D)locate capital

Question 12

The purpose of accounting is to help _____,who are interested in the activities of a business because they're affected by them.

A)shareholders
B)fiduciaries
C)investors
D)stakeholders

Question 13

Which of the following groups is typically not interested in financial accounting information?

A)Labor unions
B)Creditors
C)Suppliers
D)All of these groups have some use for financial accounting information

Question 14

If you were asked to identify "the language of business," you should reply: _____.

A)"Finance"
B)"Money"
C)"Accounting"
D)"Data keeping"

Question 15

To help them operate the business,_____ accounting provides information and analysis to decision makers inside the organization.

A)financial
B)internal
C)management
D)executive

Question 16

Accounting is often called "the language of business."

Question 17

The best way to prepare to be an investor is to learn all the _____ that you can.

A)bookkeeping
B)accounting
C)stock market tips
D)spreadsheet

Question 18

Bakersfield, Smith, and Babble LLC is a midsized accounting firm in New England. In order to project an image as a full service company, each partner specializes in a different field of accounting. Bakersfield provides information and analysis to business owners in order to help them operate their companies. Smith’s job is to furnish information to individuals and groups both inside and outside organizations to help them assess their firms’ financial performances. Babble is primarily responsible for preparing financial statements for business owners, managers, and investors and other users, such as creditors and government agencies.

-Bakersfield works in management accounting.

Question 19

Accounting consists of measuring and summarizing business activities.

Question 20

The purpose of accounting is to help employees.

Question 21

To find out if you have made a profit,you will prepare a so-called "general statement," which shows revenues and expenses.

Question 22

Bakersfield, Smith, and Babble LLC is a midsized accounting firm in New England. In order to project an image as a full service company, each partner specializes in a different field of accounting. Bakersfield provides information and analysis to business owners in order to help them operate their companies. Smith’s job is to furnish information to individuals and groups both inside and outside organizations to help them assess their firms’ financial performances. Babble is primarily responsible for preparing financial statements for business owners, managers, and investors and other users, such as creditors and government agencies.

-Government agencies would have little interest in the kind of information supplied by this firm.

Question 23

Bakersfield, Smith, and Babble LLC is a midsized accounting firm in New England. In order to project an image as a full service company, each partner specializes in a different field of accounting. Bakersfield provides information and analysis to business owners in order to help them operate their companies. Smith’s job is to furnish information to individuals and groups both inside and outside organizations to help them assess their firms’ financial performances. Babble is primarily responsible for preparing financial statements for business owners, managers, and investors and other users, such as creditors and government agencies.

-Given the nature of their firm,none of these accountants would have much daily use for GAAP (generally accepted accounting principles).

Question 24

Which of the following may cause a company to have cash problems?

A)The product in which it has invested isn't selling as well as had been forecast.
B)It tied up too much money in a plant that's too large for its operations.
C)It sold products to customers who can't pay.
D)All of these

Question 25

Expenses are divided into two categories-cost of goods sold and operating expenses.

Question 26

_____ is another word for revenues.

A)Bottom line
B)Profits
C)Sales
D)Income

Question 27

The debt owed by a business to an outside individual or organization is called its _____.

A)liability
B)equity
C)asset base
D)variable outflow

Question 28

We read in business publications that net income is often called the _____.

A)banker's best friend
B)bottom line
C)language of business
D)core line

Question 29

Gross profit is the negative difference between revenues and the cost of goods sold.

Question 30

_____ is/are the resources from which a company expects to gain some future benefit.

A)Liabilities
B)Owner's equity
C)Assets
D)Capital

Question 31

Breakeven analysis is a method of determining the level of sales at which a company will have no profit or loss.

Question 32

Contribution margin per unit is the shortage of revenue per unit over variable cost per unit.

Question 33

The key to surviving in business is generating cash to keep operating.

Question 34

Its statement of cash flows tells a business only where its cash was spent.

Question 35

Your statement of cash flows shows how much cash you have coming in and going out.

Question 36

Fixed cost/contribution margin per unit equals a company's breakeven point in units.

Question 37

Your income statement shows how much cash you have coming in and going out.

Question 38

Your balance sheet shows what your sales and expenses are.

Question 39

A company's balance sheet reports its owner's equity.

Question 40

Its fiscal year is a company's designated business year.

Question 41

_____ costs vary with quantity of goods sold but remain constant on a per-unit basis.

A)Breakeven
B)Variable
C)Fixed
D)Flat

Question 42

Your balance sheet is based on the _____ equation: Assets = Liabilities + Owner's equity.

A)accounting
B)bookkeeping
C)financial
D)profit

Question 43

Cash flows from _____ activities result from obtaining or paying back the funds with which you've financed your business.

A)investing
B)operating
C)inflow-outflow
D)financing

Question 44

Your _____ shows organizational sales,expenses,and profit.

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

Question 45

Rather than record sales and purchases made on credit,your statement of _____ tells you where your cash came from and where it went.

A)assets
B)cash equity
C)cash flows
D)current cash

Question 46

Calvin's Calendar Company has assets of $75,000 and liabilities of $15,000.How much is Calvin's owner equity?

A)$90,000
B)20%
C)$60,000
D)80%

Question 47

Your _____ statement shows your revenues and expenses.

A)income
B)profit
C)operating
D)balance

Question 48

_____ costs don't vary with quantity of goods sold.

A)Fixed
B)Variable
C)Breakeven
D)Flat

Question 49

_____ shows when your total sales revenues exactly equal your expenses.

A)Odd-even analysis
B)Profit analysis
C)Breakeven analysis
D)The equilibrium point

Question 50

As a junior accountant for the Waterford Crystal Co. of New Bedford, Connecticut, you’ve just completed an intensive four-week initial training session. During your first week at Waterford, you’ll be applying many of the concepts that you worked so hard to understand over the course of four grueling years of college accounting classes: sales revenues, cost of goods sold, operating and administrative costs, taxes, interest expenses, and net profit. In week two, you’ll get some actual experience working with current and long-term assets, current and long-term liabilities, and owner’s equity. In your third week, you’ll be keeping track of all cash coming into and going out of the business.

-Your balance sheet will report Waterford's _____.

A)assets
B)liabilities
C)owner's equity
D)all of these

Question 51

Cash flows from _____ activities are derived from the day-to-day operations of your main line of business.

A)operating
B)investing
C)sales
D)quotidian

Question 52

_____ is the selling price per unit minus the variable cost per unit.

A)Contribution margin per unit
B)The breakeven point in units
C)Fixed price
D)Survival price

Question 53

The difference between your sales and your cost of goods sold is known as your _____.

A)net profit
B)cost of doing business
C)owner's equity
D)gross profit or gross margin

Question 54

The difference between gross profit and operating expenses is _____.

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

Question 55

As a junior accountant for the Waterford Crystal Co. of New Bedford, Connecticut, you’ve just completed an intensive four-week initial training session. During your first week at Waterford, you’ll be applying many of the concepts that you worked so hard to understand over the course of four grueling years of college accounting classes: sales revenues, cost of goods sold, operating and administrative costs, taxes, interest expenses, and net profit. In week two, you’ll get some actual experience working with current and long-term assets, current and long-term liabilities, and owner’s equity. In your third week, you’ll be keeping track of all cash coming into and going out of the business.

-During your third week at Waterford,you'll be working with _____.

A)income statements
B)balance sheets
C)cash flow statements
D)tax returns

Question 56

Accounting can help your business in all of the following ways except:

A)by revealing whether you made a profit.
B)by permitting you to play what-if games to determine your profit under different assumptions.
C)by legalizing your financial records.
D)by showing the value and sources of your assets.

Question 57

You're reading an article entitled _____,which explains how and why a business divides its fixed costs by its contribution margin per unit.

A)"Revenue Margin per Unit"
B)"Variable Costs"
C)"Contribution Margin per Unit"
D)"Breakeven Point in Units"

Question 58

Your _____ shows the amount of cash that you have coming in and going out.

A)balance sheet
B)income report
C)statement of cash flows
D)revenue summary

Question 59

_____ analysis allows a business to determine the level of sales that it must reach to avoid losing money.

A)Receivership
B)Equity
C)Breakeven
D)Revenue

Question 60

This past year Donald's Duck Farm had revenues of $25,000.The company spent $1,000 per month on duck eggs and $700 per month on feed,rent,and utilities to keep incubators running.What was Donald's net income?

A)$8,000
B)$13,000
C)$4,600
D)$6,400

Question 61

Long-term assets such as cars are also called fixed assets.

Question 62

If a company arranges to pay later rather than in cash for materials and other expenses,its accountant must set up accounts _____.

A)payable
B)receivable
C)on hand
D)accrued

Question 63

If you sell merchandise rather than services,your financial statements won't have a cost-of-goods sold line.

Question 64

Holt Industries Ltd.has a(n)_____ loan that's payable in one year.

A)long-term
B)annual
C)temporary
D)short-range

Question 65

A long-term asset that will be used for several years-say,a vehicle-appears on the income statement as a depreciation expense.

Question 66

A _____ is a company that makes a profit by selling goods.

A)consumer-goods dealer
B)merchandiser
C)B2B dealer
D)broker

Question 67

The system that requires an accountant to record a transaction when it occurs is called immediate accounting.

Question 68

As a junior accountant for the Waterford Crystal Co. of New Bedford, Connecticut, you’ve just completed an intensive four-week initial training session. During your first week at Waterford, you’ll be applying many of the concepts that you worked so hard to understand over the course of four grueling years of college accounting classes: sales revenues, cost of goods sold, operating and administrative costs, taxes, interest expenses, and net profit. In week two, you’ll get some actual experience working with current and long-term assets, current and long-term liabilities, and owner’s equity. In your third week, you’ll be keeping track of all cash coming into and going out of the business.

-During week two,you'll get some experience working with _____.

A)income statements
B)balance sheets
C)cash flow statements
D)tax returns

Question 69

As a junior accountant for the Waterford Crystal Co. of New Bedford, Connecticut, you’ve just completed an intensive four-week initial training session. During your first week at Waterford, you’ll be applying many of the concepts that you worked so hard to understand over the course of four grueling years of college accounting classes: sales revenues, cost of goods sold, operating and administrative costs, taxes, interest expenses, and net profit. In week two, you’ll get some actual experience working with current and long-term assets, current and long-term liabilities, and owner’s equity. In your third week, you’ll be keeping track of all cash coming into and going out of the business.

-During week one at Waterford,you'll be working with _____.

A)income statements
B)balance sheets
C)cash flow statements
D)tax returns

Question 70

An account receivable is recorded as a current asset.

Question 71

If you buy something with the intent to pay later rather than in cash,the seller will set up an account _____.

A)depreciable
B)receivable
C)expense
D)liability

Question 72

As a junior accountant for the Waterford Crystal Co. of New Bedford, Connecticut, you’ve just completed an intensive four-week initial training session. During your first week at Waterford, you’ll be applying many of the concepts that you worked so hard to understand over the course of four grueling years of college accounting classes: sales revenues, cost of goods sold, operating and administrative costs, taxes, interest expenses, and net profit. In week two, you’ll get some actual experience working with current and long-term assets, current and long-term liabilities, and owner’s equity. In your third week, you’ll be keeping track of all cash coming into and going out of the business.

-In preparing the company's income statement,you'll report on all of the following items except _____.

A)sales revenues
B)costs of goods sold
C)short-term assets
D)operating expenses

Question 73

A current loan is due in two years.

Question 74

Under accrual accounting,accounts receivable are recorded when sales are made and accounts payable when payments have been received.

Question 75

Companies that manufacture goods and hold onto them for a while before selling them and companies that buy goods and hold them temporarily for resale have created ______.

A)receivable assets
B)accrual assets
C)receivable storage
D)inventories

Question 76

A more sophisticated kind of balance sheet is called a classified balance sheet.

Question 77

In order to find the difference between a company's cash inflow from operating activities and its cash inflow from investing activities,you would examine its balance sheet.

Question 78

A merchandiser is a company that makes a profit by selling goods.

Question 79

You can regard the "bottom line" and "net income" as the same thing.

Question 80

When you sell goods,you generate a _____ profit.

A)net
B)consumer
C)merchandise
D)gross