Question 1

Different amortization methods could result in a different net income for a company.

Accepted Answer

A) True 
 B)False

Question 2

What are the benefits of computerized accounting software programs to managers?

Accepted Answer

The answer of What are the benefits of computerized accounting...

Question 3

Generally accepted accounting principles permit accountants to use different methods of valuing a firm's inventory.

Accepted Answer

A) True 
 B)False

Question 4

Liquidity refers to how soon liabilities must be paid.

Accepted Answer

A) True 
 B)False

Question 5

In businesses that handle a lot of perishable items (such as supermarkets)the actual movement of goods through inventory most closely resembles the assumed movement in the LIFO inventory valuation technique.

Accepted Answer

A) True 
 B)False

Question 6

Deron has a bachelor's degree in accounting and additional training in tax law.He is responsible for preparing tax returns and developing tax strategies for his employer,Lighting Freight Service,and has done so for the last seven years.Deron is a certified government accountant.

Accepted Answer

A) True 
 B)False

Question 7

The reports and financial statements prepared by accountants:

Accepted Answer

A) are much more useful for profit-seeking businesses than for non-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) have lost much of their relevance as firms have moved into a more global environment.

Question 8

Managerial accountants primarily work in industry,but have recently been given the right to work in public practice.

Accepted Answer

A) True 
 B)False

Question 9

Computer-based continuous auditing can be used to discover cash flow problems.

Accepted Answer

A) True 
 B)False

Question 10

Bookkeeping is part of accounting,but accounting goes far beyond the activities involved in bookkeeping.

Accepted Answer

A) True 
 B)False

Question 11

Patents and copyrights would be classified as:

Accepted Answer

A) fixed assets. 
B) intangible assets. 
C) current assets. 
D) owners' equity.

Question 12

Hap owns and operates a small business with only four full time employees and less than $500 thousand in annual sales.He currently uses a manual accounting system and relies on a part-time bookkeeper to keep his records in order.In evaluating the possible adoption of a computerized accounting system,Hap will probably discover that:

Accepted Answer

A) the expense of setting up a computerized accounting system would be beyond his financial ability at this time. 
B) he would be better off hiring a full time accountant. 
C) he could benefit greatly from adopting such a system,but should also consult with an accountant for advice. 
D) a computerized system would be affordable,but that he would have little need for it unless his company grew and became significantly larger.

Question 13

Jill wants to start her own business,but knows little about how to set up an accounting system or interpret financial information."I'm not worried about accounting",she tells her friends."I'll just hire a part-time bookkeeper to handle all that type of stuff,and focus my attention on what I like-finding ways to satisfy my customers".Which of the following is the best response to Jill's comments?

Accepted Answer

A) Jill should make sure the bookkeeper she hires knows how to use a database,since this type of software is the heart of any efficient accounting system. 
B) Although Jill can hire someone for bookkeeping,she'll still need to know how to read,understand,and interpret basic accounting reports in order to make good business decisions. 
C) Most entrepreneurs would agree with Jill's opinion.The work done by accountants is mainly clerical in nature,so time spent by business owners on accounting tends to take them away from more important tasks. 
D) Jill has a good plan.Only managers of large firms require knowledge of accounting.Owners and managers of small businesses can easily get away with just a part-time bookkeeper.

Question 14

Which group of ratios would you be most interested in if you wanted to determine how efficiently your managers were using the assets that are available to them?

Accepted Answer

A) Liquidity ratios. 
B) Leverage ratios. 
C) Activity ratios. 
D) Profitability ratios.

Question 15

A lower than average inventory turnover ratio indicates excellent inventory management practices.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following would be found on an income statement?

Accepted Answer

A) current assets 
B) cost of goods sold 
C) cash flows from investments 
D) owners' equity

Question 17

McCartney Consulting Group is a management-consulting firm that provides its expertise to businesses that employ its services.Since it does not hold an inventory of goods or produce any goods itself:

Accepted Answer

A) its revenue will equal its net income. 
B) its gross profit could be identical to its net revenue. 
C) it is unlikely to have any operating expenses. 
D) its balance sheet will not record any current assets.

Question 18

Explain the differences between managerial and financial accounting,and give examples of the types of problems and issues examined by each of these areas of accounting.

Accepted Answer

The answer of Explain the differences between managerial and financial...

Question 19

The debt to owners' equity ratio is a common type of liquidity ratio.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 16: Understanding Accounting and Financial Information

Different amortization methods could result in a different net income for a company.

What are the benefits of computerized accounting software programs to managers?

Generally accepted accounting principles permit accountants to use different methods of valuing a firm's inventory.

Liquidity refers to how soon liabilities must be paid.

In businesses that handle a lot of perishable items (such as supermarkets)the actual movement of goods through inventory most closely resembles the assumed movement in the LIFO inventory valuation technique.

Deron has a bachelor's degree in accounting and additional training in tax law.He is responsible for preparing tax returns and developing tax strategies for his employer,Lighting Freight Service,and has done so for the last seven years.Deron is a certified government accountant.

The reports and financial statements prepared by accountants:

Managerial accountants primarily work in industry,but have recently been given the right to work in public practice.

Computer-based continuous auditing can be used to discover cash flow problems.

Bookkeeping is part of accounting,but accounting goes far beyond the activities involved in bookkeeping.

Patents and copyrights would be classified as:

Which group of ratios would you be most interested in if you wanted to determine how efficiently your managers were using the assets that are available to them?

A lower than average inventory turnover ratio indicates excellent inventory management practices.

Which of the following would be found on an income statement?

McCartney Consulting Group is a management-consulting firm that provides its expertise to businesses that employ its services.Since it does not hold an inventory of goods or produce any goods itself:

Explain the differences between managerial and financial accounting,and give examples of the types of problems and issues examined by each of these areas of accounting.

The debt to owners' equity ratio is a common type of liquidity ratio.

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