Question 1

If a firm has an asset turnover ratio of 2.00,it means that it needs $2 in assets to generate a $1 in sales.

Accepted Answer

A) True 
 B)False

Question 2

Whereas the ______ reflects a company's financial situation at a specific point in time,the ____ indicates the flow of resources that reveals the performance of the organization over a specific time period.

Accepted Answer

A) statement of changes in retained earnings; balance sheet 
B) income statement; balance sheet 
C) statement of cash flows; income statement 
D) balance sheet; income statement

Question 3

Which of the following is true of Mint.com?

Accepted Answer

A) It is an online tool for managing personal finances. 
B) It tracks a company's cash inflows and outflows. 
C) It is a complex and sophisticated budgeting system. 
D) It promotes worldwide consistency in financial reporting practices.

Question 4

Profitability ratios measure a firm's ability to meet its short-term obligations.

Accepted Answer

A) True 
 B)False

Question 5

Few not-for-profit organizations publish financial information since they are not required by law to do so.

Accepted Answer

A) True 
 B)False

Question 6

Investing activities focus on selling goods and services,but they also consider cost control as an important element of sound financial management.

Accepted Answer

A) True 
 B)False

Question 7

A ______ provides accounting services to individuals or companies for a fee.

Accepted Answer

A) management consultant 
B) public accountant 
C) management accountant 
D) government accountant

Question 8

Assume a company buys a machine worth $1 million and pays for it by borrowing the funds from a bank.The firm's assets will rise by $1 million and its liabilities will decrease by $1 million.

Accepted Answer

A) True 
 B)False

Question 9

Even today,most companies refuse to share any financial information with employees.

Accepted Answer

A) True 
 B)False

Question 10

If a firm has a current ratio of 2.5,it means that for every $2.50 in _____ it has $1.00 in

Accepted Answer

A) current assets; current liabilities 
B) total assets; total liabilities 
C) current assets; total liabilities 
D) total assets; current liabilities

Question 11

Financing activities focus on providing valuable assets required to run a business.

Accepted Answer

A) True 
 B)False

Question 12

The natural progression of a business begins with operating the business.

Accepted Answer

A) True 
 B)False

Question 13

The CEO of an online retail store plans to share all financial information with the company's employees.The CEO believes that in doing so,employees will understand how they contribute to the success of the company.The CEO,in this scenario,is implementing

Accepted Answer

A) knowledge management. 
B) double-entry bookkeeping. 
C) open book management. 
D) on-demand computing.

Question 14

Which of these describes the process of measuring,interpreting,and communicating financial information to enable people inside and outside the company to make informed decisions?

Accepted Answer

A) Selling 
B) Accounting 
C) Operating 
D) Investing

Question 15

Expenses that have been incurred (such as wages)but have yet to be paid are reported on the balance sheet as

Accepted Answer

A) accruals. 
B) accounts receivable. 
C) accounts payable. 
D) notes payable.

Exam 15: Understanding Accounting and Financial Statements

If a firm has an asset turnover ratio of 2.00,it means that it needs $2 in assets to generate a $1 in sales.

Whereas the __ reflects a company's financial situation at a specific point in time,the indicates the flow of resources that reveals the performance of the organization over a specific time period.

Which of the following is true of Mint.com?

Profitability ratios measure a firm's ability to meet its short-term obligations.

Few not-for-profit organizations publish financial information since they are not required by law to do so.

Investing activities focus on selling goods and services,but they also consider cost control as an important element of sound financial management.

A ______ provides accounting services to individuals or companies for a fee.

Assume a company buys a machine worth $1 million and pays for it by borrowing the funds from a bank.The firm's assets will rise by $1 million and its liabilities will decrease by $1 million.

Even today,most companies refuse to share any financial information with employees.

If a firm has a current ratio of 2.5,it means that for every $2.50 in _____ it has $1.00 in

Financing activities focus on providing valuable assets required to run a business.

The natural progression of a business begins with operating the business.

The CEO of an online retail store plans to share all financial information with the company's employees.The CEO believes that in doing so,employees will understand how they contribute to the success of the company.The CEO,in this scenario,is implementing

Which of these describes the process of measuring,interpreting,and communicating financial information to enable people inside and outside the company to make informed decisions?

Expenses that have been incurred (such as wages) but have yet to be paid are reported on the balance sheet as