Question 1

Rent,depreciation,and salaries are examples of:

Accepted Answer

A) Current assets. 
B) Current liabilities. 
C) Owners' equity. 
D) Operating expenses.

Question 2

Given that measuring a firm's financial health is important to its survival,which of the following strategies is good advice for a person just starting a business?

Accepted Answer

A) Create a method for keeping your books that makes sense to you.Outside agencies such as creditors and suppliers will not evaluate you by the way you keep books. 
B) All transactions are important.Separating transactions only serves to create a perception that some transactions are of lesser importance than others. 
C) Accounting systems used by big business are not suitable for small businesses. 
D) Select an accounting system that helps you make decisions,and helps you report information to others outside your firm.

Question 3

One of the statements prepared in the accounting cycle is the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 4

The use of computerized accounting systems _____________.

Accepted Answer

A) makes it possible for most firms to operate without the expense of hiring or consulting with accountants 
B) reduces the pressure on managers in making financial decisions 
C) allows firms to generate financial information almost instantly and whenever the organization needs it 
D) creates an environment in which accounting has become nothing more than glorified bookkeeping,as all accountants are required to do is enter data into the system and monitor the results the program generates

Question 5

A debt to owners' equity ratio of 25% indicates that a firm has more debt than equity.

Accepted Answer

A) True 
 B)False

Question 6

Identify the three key financial statements that corporations are required to prepare,and describe the type of information found on each.

Accepted Answer

The answer of Identify the three key financial statements that...

Question 7

Accounting transactions are very important to a firm's operations.Which of the following activities would affect the firm's account balances?

Accepted Answer

A) Buying and selling goods and services 
B) Interviewing prospective employees 
C) Understanding economic reports 
D) Forecasting consumer demand

Question 8

Taylor Casual,a chain of retail clothing stores,wants to assure investors and other outsiders that its financial statements are accurate.One way to do so would be to hire a public accounting firm to:

Accepted Answer

A) Produce an internal audit. 
B) Take over all of its accounting functions. 
C) Provide a "generally accepted practices" endorsement. 
D) Perform an independent audit.

Question 9

Skilled professionals who are responsible for the development of strategies to minimize taxes are called:

Accepted Answer

A) tax accountants. 
B) certified public accountants. 
C) certified management accountants. 
D) certified internal auditors.

Question 10

Once a trial balance has been prepared,the next step of the accounting cycle involves:

Accepted Answer

A) Posting the information to the correct ledger accounts. 
B) Completing a balance sheet and ratio analysis. 
C) Preparing financial statements such as the balance sheet,income statement,and statement of cash flows. 
D) Classifying the transactions into logical categories.

Question 11

Which of the following responses is the best and most comprehensive? "A company's accounting information is useful to ____________."

Accepted Answer

A) managers within the firm,exclusively 
B) marketing research firms for pricing insights 
C) primarily the IRS and other government agencies that regulate the firm 
D) managers,owners,creditors,employees,and the government

Question 12

It is always better for a firm to have a high inventory turnover ratio than a low turnover ratio.

Accepted Answer

A) True 
 B)False

Question 13

Accounting provides financial information that can be useful to owners,creditors,suppliers,employees,and competitors of an organization.

Accepted Answer

A) True 
 B)False

Question 14

Although a firm may use different inventory valuation methods,generally accepted accounting principles (GAAP)states that these methods must produce the same dollar value for the cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 15

The Barkley Company bought supplies in early January that it must pay for by the end of the month.These purchases are posted to accounts payable and listed as assets on the firm's balance sheet.

Accepted Answer

A) True 
 B)False

Question 16

Explain the difference between current,fixed,and intangible assets.Give two examples of each of these different types of assets.

Accepted Answer

The answer of Explain the difference between current,fixed,and intangible assets.Give...

Question 17

Use the fundamental accounting equation to solve the following: Assets minus liabilities equals:

Accepted Answer

A) net income. 
B) gross margin. 
C) owners' equity. 
D) cash reserves.

Question 18

A firm's balance sheet reports its financial condition on a specific date.

Accepted Answer

A) True 
 B)False

Question 19

After recording a business's transactions,bookkeepers usually classify the recorded transactions into groups with common characteristics.

Accepted Answer

A) True 
 B)False

Question 20

The three important financial statements prepared by accountants are:

Accepted Answer

A) Ledger,journal,and trial balance. 
B) Cash budget,capital budget,and master budget. 
C) Revenue summary,expense summary,and consolidation statement. 
D) Balance sheet,income statement,and statement of cash flows.

Exam 17: Understanding Accounting and Financial Information

Rent,depreciation,and salaries are examples of:

Given that measuring a firm's financial health is important to its survival,which of the following strategies is good advice for a person just starting a business?

One of the statements prepared in the accounting cycle is the statement of cash flows.

The use of computerized accounting systems _____________.

A debt to owners' equity ratio of 25% indicates that a firm has more debt than equity.

Identify the three key financial statements that corporations are required to prepare,and describe the type of information found on each.

Accounting transactions are very important to a firm's operations.Which of the following activities would affect the firm's account balances?

Taylor Casual,a chain of retail clothing stores,wants to assure investors and other outsiders that its financial statements are accurate.One way to do so would be to hire a public accounting firm to:

Skilled professionals who are responsible for the development of strategies to minimize taxes are called:

Once a trial balance has been prepared,the next step of the accounting cycle involves:

Which of the following responses is the best and most comprehensive? "A company's accounting information is useful to ____________."

It is always better for a firm to have a high inventory turnover ratio than a low turnover ratio.

Accounting provides financial information that can be useful to owners,creditors,suppliers,employees,and competitors of an organization.

Although a firm may use different inventory valuation methods,generally accepted accounting principles (GAAP)states that these methods must produce the same dollar value for the cost of goods sold.

The Barkley Company bought supplies in early January that it must pay for by the end of the month.These purchases are posted to accounts payable and listed as assets on the firm's balance sheet.

Explain the difference between current,fixed,and intangible assets.Give two examples of each of these different types of assets.

Use the fundamental accounting equation to solve the following: Assets minus liabilities equals:

A firm's balance sheet reports its financial condition on a specific date.

After recording a business's transactions,bookkeepers usually classify the recorded transactions into groups with common characteristics.

The three important financial statements prepared by accountants are: