Question 1

Another name for the statement of financial position is the

Accepted Answer

A) income statement. 
B) statement of owners' equity. 
C) earnings statement. 
D) statement of changes. 
E) balance sheet.

Question 2

A firm has $260,000 in assets and $158,000 in stockholders' equity. It owes $55,000 from a long-term loan, and this is its only long-term liability. This firm has ____ in total current liabilities.

Accepted Answer

A) $55,000 
B) $103,000 
C) $47,000 
D) $102,000 
E) $213,000

Question 3

Wallace Plumbing Company had income from operations of $110,000. It paid federal income taxes of $26,000. What was the firm's net income after taxes?

Accepted Answer

A) $144,000 
B) $98,000 
C) $84,000 
D) $22,000 
E) $12,000

Question 4

What are the three activities according to which a statement of cash flows is organized?

Accepted Answer

A) Operating, selling, and investing 
B) Financing, buying, selling 
C) Investing, financing, and expensing 
D) Processing, operating, receiving 
E) Operating, investing, financing

Question 5

Since business has been rapidly expanding, A Shot of Sugar Bakery decides to purchase a second industrial oven. The cash paid for this oven would be listed in the ____ section of the statement of cash flows.

Accepted Answer

A) operating 
B) purchasing 
C) investing 
D) financing 
E) business

Question 6

The ending cash balance reported on the statement of cash flows is the same as the net sales amount reported on the firm's income statement.

Accepted Answer

A) True 
 B)False

Question 7

Ridgley, Cooper, and Ross (RCR)
Katie is the CEO of Ridgley, Cooper, and Ross (RCR), a regional accounting firm. RCR offers services in most areas of accounting, including auditing and consulting services. The firm must follow the GAAP rules, just like any other accounting firm. If there are information gaps that are not addressed and resolved by the firm, RCR could be considered a violator of the Sarbanes-Oxley Act. Katie understands what must be done and wants every employee of the firm to understand that they have to follow all the rules and regulations. Like any other industry, accounting is a competitive industry and employees of accounting firms must be productive, progressive, and well traine
-Refer to Ridgley, Cooper, and Ross. If you applied for a job at RCR and were asked to state the accounting equation, which of these would you state?

Accepted Answer

A) Assets = liabilities − owners' equity 
B) Assets + liabilities = owners' equity 
C) Assets ÷ liabilities = owners' equity 
D) Assets = liabilities + owners' equity 
E) Assets = liabilities × owners' equity

Question 8

Without the audit function and GAAP, there would be very little oversight or supervision of corporate accounting practices.

Accepted Answer

A) True 
 B)False

Question 9

Data are always in numerical form.

Accepted Answer

A) True 
 B)False

Question 10

The cost of goods sold for McPherson Fashions is $360,000. The beginning inventory for the firm was $20,000. Twelve months later the ending inventory was $40,000. What is the firm's inventory turnover?

Accepted Answer

A) 6 times a year 
B) 9 times a year 
C) 12 times a year 
D) 18 times a year 
E) 24 times a year

Question 11

A reduction in price that is offered to customers who accept slightly damaged or soiled merchandise is referred to as

Accepted Answer

A) a sales discount. 
B) cost of goods sold. 
C) a sales allowance. 
D) an operating expense. 
E) a sales return.

Question 12

Debts owed by a business are called

Accepted Answer

A) assets. 
B) expenses. 
C) liabilities. 
D) equities. 
E) revenues.

Question 13

If the assets of Martin's Pet Store are $107,000 and the owners' equity is $75,000, which of the following is a correct statement?

Accepted Answer

A) The owners' investment equals $182,000. 
B) The current assets are worth $32,000. 
C) The new income for the period is $32,000. 
D) The long-term liabilities are $75,000. 
E) The liabilities are $32,000.

Question 14

Rick and Joe get together and start a mortgage brokerage business. They each contribute $25,000 of capital to the business. After the first year of operation, the total owners' equity is listed as $60,000. Most likely, the additional $10,000 of owners' equity is

Accepted Answer

A) common stock. 
B) long-term liabilities. 
C) current liabilities. 
D) retained earnings. 
E) a bank loan.

Question 15

Merchandise that has been sold and is returned to the firm by the customer is called

Accepted Answer

A) a sales discount. 
B) an expense. 
C) a sales allowance. 
D) cost of goods sold. 
E) a sales return.

Question 16

All of the following are classified as fixed assets except

Accepted Answer

A) factory equipment. 
B) a company car. 
C) computers held for resale. 
D) property. 
E) buildings.

Question 17

KYZ Radio pays salaries, rent, insurance, and utilities each month. These are all

Accepted Answer

A) current assets. 
B) operating expenses. 
C) cost of merchandise sold. 
D) fixed liabilities. 
E) None of these answers is correct.

Question 18

​All of the following, except _____, can provide answers to a variety of questions about a firm's ability to do business and stay in business, its profitability, and its value as an investment.

Accepted Answer

A) ​bank statements 
B) ​balance sheet 
C) ​income statement 
D) ​statement of cash flows

Question 19

When smart investors take a practical approach to evaluating a company's accounting information, they need only look at the snapshot data that a balance sheet offers as it will be the primary tool to guide potentially profitable investments.

Accepted Answer

A) True 
 B)False

Question 20

There is added protection for whistle-blowers who report violations of the Sarbanes-Oxley Act.

Accepted Answer

A) True 
 B)False

Exam 15: Using Management Information Systems and Accounting Information

Another name for the statement of financial position is the

A firm has $260,000 in assets and $158,000 in stockholders' equity. It owes $55,000 from a long-term loan, and this is its only long-term liability. This firm has ____ in total current liabilities.

Wallace Plumbing Company had income from operations of $110,000. It paid federal income taxes of $26,000. What was the firm's net income after taxes?

What are the three activities according to which a statement of cash flows is organized?

Since business has been rapidly expanding, A Shot of Sugar Bakery decides to purchase a second industrial oven. The cash paid for this oven would be listed in the ____ section of the statement of cash flows.

The ending cash balance reported on the statement of cash flows is the same as the net sales amount reported on the firm's income statement.

Without the audit function and GAAP, there would be very little oversight or supervision of corporate accounting practices.

Data are always in numerical form.

The cost of goods sold for McPherson Fashions is $360,000. The beginning inventory for the firm was $20,000. Twelve months later the ending inventory was $40,000. What is the firm's inventory turnover?

A reduction in price that is offered to customers who accept slightly damaged or soiled merchandise is referred to as

Debts owed by a business are called

If the assets of Martin's Pet Store are $107,000 and the owners' equity is $75,000, which of the following is a correct statement?

Rick and Joe get together and start a mortgage brokerage business. They each contribute $25,000 of capital to the business. After the first year of operation, the total owners' equity is listed as $60,000. Most likely, the additional $10,000 of owners' equity is

Merchandise that has been sold and is returned to the firm by the customer is called

All of the following are classified as fixed assets except

KYZ Radio pays salaries, rent, insurance, and utilities each month. These are all

​All of the following, except _____, can provide answers to a variety of questions about a firm's ability to do business and stay in business, its profitability, and its value as an investment.

When smart investors take a practical approach to evaluating a company's accounting information, they need only look at the snapshot data that a balance sheet offers as it will be the primary tool to guide potentially profitable investments.

There is added protection for whistle-blowers who report violations of the Sarbanes-Oxley Act.

All of the following, except _____, can provide answers to a variety of questions about a firm's ability to do business and stay in business, its profitability, and its value as an investment.