Question 1

The steps in the accounting cycle do not need to be followed in the order stated.Monthly financial statements can be prepared with a good amount of accuracy,prior to posting in the ledger or preparing the trail balance.

Accepted Answer

A) True 
 B)False

Question 2

Revenue,minus cost of goods sold =____________.

Accepted Answer

A)  retained earnings
B)  fundamental accounting equation
C)  gross profit
D)  net incomeE) None of the above
F) C) and D)

Question 3

The "bottom line" of the Barkley Company's income statement is equal to the net worth of the firm.

Accepted Answer

A) True 
 B)False

Question 4

Citywide Insurance Corporation's internal accountants can prepare an audit for the company.

Accepted Answer

A) True 
 B)False

Question 5

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.E) A) and C)
F) C) and D)

Question 6

Double Entry Door's suppliers maintained very stable prices for many years,but Minnie has noticed that the cost of doors has been rising steadily for the past few years.She is concerned that,given the company's current accounting methods of basing its cost on the most recent doors purchased,this will result in a much lower net income than in the past.The most likely reason for her concern is that Double Entry has apparently been using:

Accepted Answer

A)  The FIFO inventory valuation method to determine its cost of goods sold.
B)  A great deal of equity financing to purchase the doors.
C)  The LIFO inventory valuation method to determine its cost of goods sold.
D)  A depreciation method based on the average value of inventory.E) All of the above
F) A) and C)

Question 7

A basic difference between managerial accounting and financial accounting is that managerial accounting:

Accepted Answer

A)  adheres to rules set by the GASB,while financial accounting uses a different group of rules set by the FASB.
B)  involves the preparation of the balance sheet and income statement while financial accounting involves the preparation of the statement of cash flows.
C)  handles recording and classifying information about transactions that have no direct financial impact on the firm,while financial accounting handles the recording and classifying of information about transactions that do have a financial impact.
D)  provides information primarily intended for managers and others inside the company,while financial accounting provides information primarily intended for people outside the organization.E) None of the above
F) A) and B)

Question 8

The financial ratios that measure a firm's ability to pay its short-term debts are called:

Accepted Answer

A)  leverage ratios.
B)  liquidity ratios.
C)  equity ratios.
D)  profitability ratios.E) A) and C)
F) A) and B)

Question 9

________ measures the amount of profit earned by a company for each share of outstanding common stock.

Accepted Answer

A)  Basic earnings per share basic EPS) 
B)  Diluted earnings per share diluted EPS) 
C)  Simple earnings per share simple EPS) 
D)  Return on shares outstanding RSO) E) A) and D)
F) B) and D)

Question 10

One important source of financing for most small businesses is the owners savings.If the owner contributes money to the business from his/her personal savings,it will be recorded in the Owner's Equity account on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 11

As Hector was packing to return to State University after his summer vacation,he realized that he owned many valuable things such as a laptop computer,a stereo system,and a DVD player.An accountant would list all of these as Hector's:

Accepted Answer

A)  assets.
B)  liabilities.
C)  owners' equity.
D)  intangibles.E) All of the above
F) C) and D)

Question 12

Kelley's Kloset,LLC has applied for a business loan.Her prospective banker has requested information concerning the financial condition of her business.Which accounting discipline is responsible for providing accounting information to outside stakeholders?

Accepted Answer

A)  Management accounting.
B)  Financial accounting.
C)  Tax accounting.
D)  Certified bookkeeping.E) B) and D)
F) A) and B)

Question 13

A __________ is a specialized accounting book,where transactions are categorized according to type.For example,all utility transactions are recorded in the same category.

Accepted Answer

A)  journal
B)  trial balance
C)  ledger
D)  balance sheetE) B) and C)
F) A) and B)

Question 14

Budget preparation is one aspect of managerial accounting.

Accepted Answer

A) True 
 B)False

Question 15

The purpose of the current ratio is to evaluate the firm's ability to:

Accepted Answer

A)  Generate sales with a given level of current assets.
B)  Utilize current assets profitably.
C)  Pay its bills in the short run.
D)  Effectively use borrowed funds.E) B) and C)
F) B) and D)

Question 16

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 17

________ measures the speed of inventory moving through the firm and its conversion into sales.

Accepted Answer

A)  Asset turnover ratio
B)  Inventory turnover ratio
C)  Sales turnover ratio
D)  Cost of goods sold turnover ratioE) All of the above
F) None of the above

Question 18

Benjamin works in the accounting department for a textbook publishing firm preparing budgets and reporting production costs.He is a:

Accepted Answer

A)  Managerial accountant.
B)  Financial accountant.
C)  Tax accountant
D)  Auditor.E) A) and D)
F) None of the above

Question 19

During periods of rising prices,firms that want to report more attractive profits would tend to favor the FIFO technique of inventory valuation.

Accepted Answer

A) True 
 B)False

Question 20

Costas Calendar Company's Statement of Cash Flows showed the following activities for the year ended December 31,2010:  The year end cash balance for this firm is:

Accepted Answer

A)  $7,000.00
B)  $53,000.00
C)  $23,000.00
D)  $30,000.00E) All of the above
F) A) and B)

Exam 17: Understanding Accounting and Financial Information

The "bottom line" of the Barkley Company's income statement is equal to the net worth of the firm.

Correct Answer
verified

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

Correct Answer
verified

During periods of rising prices,firms that want to report more attractive profits would tend to favor the FIFO technique of inventory valuation.

Correct Answer
verified

A __________ is a specialized accounting book,where transactions are categorized according to type.For example,all utility transactions are recorded in the same category.

Correct Answer
verified

The financial ratios that measure a firm's ability to pay its short-term debts are called:

Correct Answer
verified

Kelley's Kloset,LLC has applied for a business loan.Her prospective banker has requested information concerning the financial condition of her business.Which accounting discipline is responsible for providing accounting information to outside stakeholders?

Correct Answer
verified

Benjamin works in the accounting department for a textbook publishing firm preparing budgets and reporting production costs.He is a:

Correct Answer
verified

Correct Answer
verified

Costas Calendar Company's Statement of Cash Flows showed the following activities for the year ended December 31,2010: The year end cash balance for this firm is:

Correct Answer
verified

Citywide Insurance Corporation's internal accountants can prepare an audit for the company.

Correct Answer
verified

________ measures the amount of profit earned by a company for each share of outstanding common stock.

Correct Answer
verified

As Hector was packing to return to State University after his summer vacation,he realized that he owned many valuable things such as a laptop computer,a stereo system,and a DVD player.An accountant would list all of these as Hector's:

Correct Answer
verified

Revenue,minus cost of goods sold =____________.

Correct Answer
verified

One important source of financing for most small businesses is the owners savings.If the owner contributes money to the business from his/her personal savings,it will be recorded in the Owner's Equity account on the balance sheet.

Correct Answer
verified

________ measures the speed of inventory moving through the firm and its conversion into sales.

Correct Answer
verified

A basic difference between managerial accounting and financial accounting is that managerial accounting:

Correct Answer
verified

The steps in the accounting cycle do not need to be followed in the order stated.Monthly financial statements can be prepared with a good amount of accuracy,prior to posting in the ledger or preparing the trail balance.

Correct Answer
verified

Budget preparation is one aspect of managerial accounting.

Correct Answer
verified

The use of computerized accounting systems ______________.

Correct Answer
verified

The purpose of the current ratio is to evaluate the firm's ability to:

Correct Answer
verified

Exam 17: Understanding Accounting and Financial Information

The "bottom line" of the Barkley Company's income statement is equal to the net worth of the firm.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

During periods of rising prices,firms that want to report more attractive profits would tend to favor the FIFO technique of inventory valuation.

Correct AnswerverifiedShow Answer

A __________ is a specialized accounting book,where transactions are categorized according to type.For example,all utility transactions are recorded in the same category.

Correct AnswerverifiedShow Answer

The financial ratios that measure a firm's ability to pay its short-term debts are called:

Correct AnswerverifiedShow Answer

Kelley's Kloset,LLC has applied for a business loan.Her prospective banker has requested information concerning the financial condition of her business.Which accounting discipline is responsible for providing accounting information to outside stakeholders?

Correct AnswerverifiedShow Answer

Benjamin works in the accounting department for a textbook publishing firm preparing budgets and reporting production costs.He is a:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Costas Calendar Company's Statement of Cash Flows showed the following activities for the year ended December 31,2010: The year end cash balance for this firm is:

Correct AnswerverifiedShow Answer

Citywide Insurance Corporation's internal accountants can prepare an audit for the company.

Correct AnswerverifiedShow Answer

________ measures the amount of profit earned by a company for each share of outstanding common stock.

Correct AnswerverifiedShow Answer

As Hector was packing to return to State University after his summer vacation,he realized that he owned many valuable things such as a laptop computer,a stereo system,and a DVD player.An accountant would list all of these as Hector's:

Correct AnswerverifiedShow Answer

Revenue,minus cost of goods sold =____________.

Correct AnswerverifiedShow Answer

One important source of financing for most small businesses is the owners savings.If the owner contributes money to the business from his/her personal savings,it will be recorded in the Owner's Equity account on the balance sheet.

Correct AnswerverifiedShow Answer

________ measures the speed of inventory moving through the firm and its conversion into sales.

Correct AnswerverifiedShow Answer

A basic difference between managerial accounting and financial accounting is that managerial accounting:

Correct AnswerverifiedShow Answer

The steps in the accounting cycle do not need to be followed in the order stated.Monthly financial statements can be prepared with a good amount of accuracy,prior to posting in the ledger or preparing the trail balance.

Correct AnswerverifiedShow Answer

Budget preparation is one aspect of managerial accounting.

Correct AnswerverifiedShow Answer

The use of computerized accounting systems ______________.

Correct AnswerverifiedShow Answer

The purpose of the current ratio is to evaluate the firm's ability to:

Correct AnswerverifiedShow Answer

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