Deck 12: The Role of Accounting in Business

Question 1

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

Answer 1

A

Question 2

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

Answer 2

D

Question 3

_____ 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

Answer 3

D

Question 4

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

Question 5

Babble spends his time in financial accounting.

Question 6

Smith specializes in management accounting.

Question 7

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

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

Question 8

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 9

Accounting is often called "the language of business."

Question 10

The purpose of accounting is to help employees.

Question 11

Bakersfield works in management accounting.

Question 12

Accountants find the money that a company needs to operate.

Question 13

Accounting consists of measuring and summarizing business activities.

Question 14

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 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

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 17

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

Question 18

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 19

_____, 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

Question 20

Accountants do all of the following except _____.

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

Question 21

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

Question 22

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

Question 23

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

Question 24

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

Question 25

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

Question 26

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 27

Your balance sheet shows what your sales and expenses are.

Question 28

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

Question 29

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

Question 30

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

Question 31

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

Question 32

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

Question 33

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 34

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

Question 35

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 36

_____ 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 37

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

Question 38

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

Question 39

_____ is another word for revenues.

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

Question 40

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

Question 41

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 42

Your balance sheet will report Waterford's _____.

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

Question 43

_____ 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 44

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 45

_____ 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 46

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 47

The difference between gross profit and operating expenses is _____.

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

Question 48

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 49

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 50

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 51

Your _____ shows organizational sales, expenses, and profit.

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

Question 52

Your _____ statement shows your revenues and expenses.

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

Question 53

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 54

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

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

Question 55

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 56

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

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

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

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

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

Question 59

_____ 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 60

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 61

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

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

Question 62

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

Question 63

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

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

Question 64

An account receivable is recorded as a current asset.

Question 65

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

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

Question 66

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

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

Question 67

What's the purpose of a balance sheet?

Question 68

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

Question 69

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

Question 70

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

Question 71

A current loan is due in two years.

Question 72

Define gross profit and net income.

Question 73

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

Question 74

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

Question 75

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

Question 76

What two items does an income statement show?

Question 77

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

Question 78

Explain breakeven analysis.

Question 79

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 80

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