Question 1

Accounting is an easy subject for people to understand because almost everyone is exposed to basic accounting concepts in their everyday life.

Accepted Answer

A) True 
 B)False

Question 2

Accounting software for small businesses has become so sophisticated that most small business owners will never need to consult with an actual accountant or understand accounting information themselves.

Accepted Answer

A) True 
 B)False

Question 3

Independent audits are prepared by accountants within the organization to ensure that proper accounting procedures are followed.

Accepted Answer

A) True 
 B)False

Question 4

Thoroughly describe each of six parts of the accounting cycle.

Accepted Answer

The answer of Thoroughly describe each of six parts of...

Question 5

The accounting book or computer program where each day's transactions are first recorded is called a:

Accepted Answer

A) posting workbook. 
B) general ledger. 
C) balance sheet. 
D) journal.

Question 6

As a bank loan officer,you are considering a loan application by Peak Performance Sporting Goods.The company has provided you with the following information from its Balance Sheet: Peak Performance's current ratio is:

Accepted Answer

A) 1.0. 
B) 1.5. 
C) 2.5. 
D) 3.0.

Question 7

A tax accountant is responsible for preparing tax returns and developing tax strategies.

Accepted Answer

A) True 
 B)False

Question 8

Sales receipts,purchase orders,and payroll records are all examples of accounting transactions that would be recorded by a(n):

Accepted Answer

A) Auditor. 
B) Forensic accountant. 
C) Bookkeeper. 
D) Purchasing agent.

Question 9

Net income before taxes is found by deducting total operating expenses from gross profit.

Accepted Answer

A) True 
 B)False

Question 10

The __________ sets accounting standards used in government accounting.

Accepted Answer

A) Federal Accounting Review Board 
B) Governmental Accounting Standards Board 
C) Academy of Public Sector Accountants 
D) Federal Reserve Board

Question 11

The higher the risk of a particular investment,the greater the expected rate of return required by investors.

Accepted Answer

A) True 
 B)False

Question 12

Liquidity ratios are of particular importance to stockholders,but have little relevance for creditors.

Accepted Answer

A) True 
 B)False

Question 13

Carole Grand and Bonnie Lamore run a shuttle service from Western Illinois to the busy Chicago O'Hare airport.Last month,they recorded the following: Carole and Bonnie's gross profit for the past month was:

Accepted Answer

A) $682.00 
B) Carole: $341.00;Bonnie: $341.00 
C) $1250.00 
D) $2750.00

Question 14

The accounting cycle is a six-step procedure that results in the preparation and analysis of major financial statements.

Accepted Answer

A) True 
 B)False

Question 15

Jim works in the accounting department at the Kansas Sunflower Corporation,where it is his job to record all transactions into journals.After completing this task,the next step in the accounting process is to:

Accepted Answer

A) Prepare the firm's financial statements. 
B) Post the information to the ledger. 
C) Determine the tax liability of the firm. 
D) Balance the difference between assets and liabilities.

Question 16

The statement of cash flows calculates cash flows from operations,investing activities,and financing activities.

Accepted Answer

A) True 
 B)False

Question 17

A major part of a bookkeeper's job is to interpret financial data and suggest strategies for improving the firm.

Accepted Answer

A) True 
 B)False

Question 18

The work of a certified management accountant is intended to enable people outside of the organization to make investment decisions.

Accepted Answer

A) True 
 B)False

Question 19

The books where accounting data are first entered are called ledgers.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is a key step in the accounting cycle?

Accepted Answer

A) Recording information into journals 
B) Collecting data from customers 
C) Forecasting expenses and revenues 
D) Preparing the advertising message

Exam 17: Understanding Accounting and Financial Information

Accounting is an easy subject for people to understand because almost everyone is exposed to basic accounting concepts in their everyday life.

Accounting software for small businesses has become so sophisticated that most small business owners will never need to consult with an actual accountant or understand accounting information themselves.

Independent audits are prepared by accountants within the organization to ensure that proper accounting procedures are followed.

Thoroughly describe each of six parts of the accounting cycle.

The accounting book or computer program where each day's transactions are first recorded is called a:

As a bank loan officer,you are considering a loan application by Peak Performance Sporting Goods.The company has provided you with the following information from its Balance Sheet: Peak Performance's current ratio is:

A tax accountant is responsible for preparing tax returns and developing tax strategies.

Sales receipts,purchase orders,and payroll records are all examples of accounting transactions that would be recorded by a(n) :

Net income before taxes is found by deducting total operating expenses from gross profit.

The __________ sets accounting standards used in government accounting.

The higher the risk of a particular investment,the greater the expected rate of return required by investors.

Liquidity ratios are of particular importance to stockholders,but have little relevance for creditors.

Carole Grand and Bonnie Lamore run a shuttle service from Western Illinois to the busy Chicago O'Hare airport.Last month,they recorded the following: Carole and Bonnie's gross profit for the past month was:

The accounting cycle is a six-step procedure that results in the preparation and analysis of major financial statements.

Jim works in the accounting department at the Kansas Sunflower Corporation,where it is his job to record all transactions into journals.After completing this task,the next step in the accounting process is to:

The statement of cash flows calculates cash flows from operations,investing activities,and financing activities.

A major part of a bookkeeper's job is to interpret financial data and suggest strategies for improving the firm.

The work of a certified management accountant is intended to enable people outside of the organization to make investment decisions.

The books where accounting data are first entered are called ledgers.

Which of the following is a key step in the accounting cycle?