Question 1

Which of the following calculates the cost of goods sold during the period?
Beginning inventory plus purchases minus ending inventory
Ending inventory minus beginning inventory plus purchases
Purchases minus beginning inventory plus ending inventory
Beginning inventory plus ending inventory minus purchases
(Ending inventory plus beginning inventory) divided by two

Accepted Answer

The answer of Which of the following calculates the cost...

Question 2

Leverage measures the ability of the firm to pay bills as they come due.

Accepted Answer

A) True 
 B)False

Question 3

The inventory turnover ratio is calculated by
dividing cost of goods sold by revenues.
dividing average inventory by cost of goods sold.
dividing revenues by cost of goods sold.
dividing cost of goods sold by average inventory.
dividing revenues by average inventory.

Accepted Answer

The answer of The inventory turnover ratio is calculated by
dividing...

Question 4

What is a statement of cash flows?

Accepted Answer

The answer of What is a statement of cash flows?...

Question 5

What is owners' equity?

Accepted Answer

The answer of What is owners' equity?...

Question 6

Explain how the accounting equation and double-entry accounting are used in record keeping.

Accepted Answer

The answer of Explain how the accounting equation and double-entry...

Question 7

Who manages the entire firm's accounting activities?
Venture capitalist
Private accountant
Controller
Public (not chartered) accountant
Auditor

Accepted Answer

The answer of Who manages the entire firm's accounting activities?
Venture...

Question 8

The standard rules and methods used by accountants in preparing financial reports are called generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 9

Under which condition is owners' equity negative?
Credits exceed debits.
Assets are greater than liabilities.
Assets and liabilities are equal.
Debits exceed credits.
Liabilities are greater than assets.

Accepted Answer

The answer of Under which condition is owners' equity negative?
Credits...

Question 10

David is an accountant who calls attention to problems and helps managers carry out the planning, decision making, and controlling functions. David is involved in ______ accounting.
budgeting
financial
auditing
managerial
generally accepted accounting principles

Accepted Answer

The answer of David is an accountant who calls attention...

Question 11

How do accountants define merchandise inventory?

Accepted Answer

The answer of How do accountants define merchandise inventory?...

Question 12

An asset is
the amount of money originally invested in a business by its owners.
the amount of money that owners would receive if they sold all of a firm's assets and paid all of its liabilities.
the profits earned by and reinvested in the company.
any economic resource expected to benefit a firm or an individual who owns it.
a debt owed by a firm to an outside organization or individual.

Accepted Answer

The answer of An asset is
the amount of money originally...

Question 13

Identify the profitability ratios and what they measure.

Accepted Answer

The answer of Identify the profitability ratios and what they...

Question 14

Owners' equity consists of two sources: the amount that the owners originally invested, and profits earned by and reinvested in the company.

Accepted Answer

A) True 
 B)False

Question 15

Arthur's primary responsibility as an auditor is
publishing the audit report results in The Financial Post.
preparing budgets for the forthcoming year.
ensuring the firm's accounting practices adhere to generally accepted accounting principles.
collecting taxes.
determining that the company actually has the inventory that it says it has.

Accepted Answer

The answer of Arthur's primary responsibility as an auditor is
publishing...

Question 16

What are the three major classifications of ratios that are used to analyze financial statements? What is measured by each of these types of ratios?

Accepted Answer

The answer of What are the three major classifications of...

Question 17

At Lexi Corp., sales revenue is $20 million, the cost of goods sold is $14 million, operating expenses are $3 million, and income taxes are $1 million. What are retained earnings?
$6 million
$17 million
$3 million
$2 million
It is not possible to tell with the information provided

Accepted Answer

The answer of At Lexi Corp., sales revenue is $20...

Question 18

If the following facts were known, which one would strengthen the argument that a company would be able to meet its current financial obligations?
The level of accounts payable is high.
Liabilities exceed assets.
The company currently has a negative cash flow.
The company needs to increase the number of customers it serves.
Assets exceed liabilities.

Accepted Answer

The answer of If the following facts were known, which...

Question 19

If Eric wants to know the cost of obtaining materials to make products that were sold during the year, he would look at the
income statement.
statement of cash flows.
operating expenses statement.
balance sheet.
none of these.

Accepted Answer

The answer of If Eric wants to know the cost...

Question 20

What is the purpose of an income statement? What important information is reflected in this statement?

Accepted Answer

The answer of What is the purpose of an income...

Exam 11: Understanding Accounting

Leverage measures the ability of the firm to pay bills as they come due.

The inventory turnover ratio is calculated by dividing cost of goods sold by revenues. dividing average inventory by cost of goods sold. dividing revenues by cost of goods sold. dividing cost of goods sold by average inventory. dividing revenues by average inventory.

What is a statement of cash flows?

What is owners' equity?

Explain how the accounting equation and double-entry accounting are used in record keeping.

Who manages the entire firm's accounting activities? Venture capitalist Private accountant Controller Public (not chartered) accountant Auditor

The standard rules and methods used by accountants in preparing financial reports are called generally accepted accounting principles.

Under which condition is owners' equity negative? Credits exceed debits. Assets are greater than liabilities. Assets and liabilities are equal. Debits exceed credits. Liabilities are greater than assets.

David is an accountant who calls attention to problems and helps managers carry out the planning, decision making, and controlling functions. David is involved in ______ accounting. budgeting financial auditing managerial generally accepted accounting principles

How do accountants define merchandise inventory?

Identify the profitability ratios and what they measure.

Owners' equity consists of two sources: the amount that the owners originally invested, and profits earned by and reinvested in the company.

What are the three major classifications of ratios that are used to analyze financial statements? What is measured by each of these types of ratios?

At Lexi Corp., sales revenue is $20 million, the cost of goods sold is $14 million, operating expenses are $3 million, and income taxes are $1 million. What are retained earnings? $6 million $17 million $3 million $2 million It is not possible to tell with the information provided

If Eric wants to know the cost of obtaining materials to make products that were sold during the year, he would look at the income statement. statement of cash flows. operating expenses statement. balance sheet. none of these.

What is the purpose of an income statement? What important information is reflected in this statement?