Question 1

Which of the following would be classified as a general expense on an income statement?

Accepted Answer

A)  costs associated with an advertising campaign
B)  payments made for insurance
C)  salaries paid to salespeople
D)  dividends paid to stockholdersE) C) and D)
F) B) and C)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Liquidity refers to how fast a(n) ______can be converted to cash.

Accepted Answer

A)  asset
B)  liability
C)  equity
D)  debtE) C) and D)
F) None of the above

Question 4

A cash flow statement reports the receipts and disbursements of cash in a given time period as the result of three types of activities: operations,investments,and financing.

Accepted Answer

A) True 
 B)False

Question 5

The equipment a firm owns and the money it has in its bank account would both be considered among its assets.

Accepted Answer

A) True 
 B)False

Question 6

For firms that sometimes have difficulty selling their inventory of goods,the current ratio is likely to be a better measure of liquidity than the acid-test ratio.

Accepted Answer

A) True 
 B)False

Question 7

If you know how to keep your customers satisfied,you can successfully manage a business without knowing anything about accounting.

Accepted Answer

A) True 
 B)False

Question 8

Leondra works for a textbook publishing firm preparing budgets and reporting production costs.She works in the field of:

Accepted Answer

A)  tax accounting.
B)  financial accounting.
C)  managerial accounting.
D)  auditing.E) A) and B)
F) A) and C)

Question 9

Horst works as an accountant for a mid-sized retail store.He has just completed a trial balance that turned up no unexpected problems.Horst's next major task is likely to be:

Accepted Answer

A)  taking a well-deserved vacation,since he has just finished the last step in the accounting cycle for the current period.
B)  preparing the store's balance sheet and other major financial statements.
C)  preparing a tax return for the company.
D)  conducting the full audit.E) B) and D)
F) A) and B)

Question 10

A cash flow statement summarizes a company's cash receipts and cash payments over a period of time.

Accepted Answer

A) True 
 B)False

Question 11

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 12

What group or groups are interested in a company's financial statements?

Accepted Answer

Owners,creditors,sup...

Question 13

involves the recording of business transactions.

Accepted Answer

A)  Auditing
B)  Marketing
C)  Economics
D)  BookkeepingE) A) and B)
F) None of the above

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Net income is simply the difference between revenue and cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 16

Patents and copyrights are examples of intangible assets.

Accepted Answer

A) True 
 B)False

Question 17

To effectively run a business,it is necessary to:

Accepted Answer

A)  understand and use accounting information.
B)  use a public accounting firm.
C)  know the differences between accounting and bookkeeping.
D)  hire a full-time accountant.E) B) and D)
F) A) and B)

Question 18

The use of computers in accounting has:

Accepted Answer

A)  made it possible for most firms to operate without the expense of hiring or consulting with accountants.
B)  reduced the pressure on managers in making financial decisions.
C)  created 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.
D)  allowed firms to have continuous auditing ability so that they can continuously track financial problems and quickly spot problems like cash flow difficulties.E) A) and D)
F) None of the above

Question 19

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 20

The "bottom line" of an income statement shows the firm's:

Accepted Answer

A)  owners' equity.
B)  net income or net loss.
C)  retained earnings.
D)  gross margin.E) B) and C)
F) A) and D)

Exam 16: Understanding Accounting and Financial Information

The equipment a firm owns and the money it has in its bank account would both be considered among its assets.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A cash flow statement reports the receipts and disbursements of cash in a given time period as the result of three types of activities: operations,investments,and financing.

Correct AnswerverifiedShow Answer

Horst works as an accountant for a mid-sized retail store.He has just completed a trial balance that turned up no unexpected problems.Horst's next major task is likely to be:

Correct AnswerverifiedShow Answer

involves the recording of business transactions.

Correct AnswerverifiedShow Answer

Liquidity refers to how fast a(n) ______can be converted to cash.

Correct AnswerverifiedShow Answer

The "bottom line" of an income statement shows the firm's:

Correct AnswerverifiedShow Answer

For firms that sometimes have difficulty selling their inventory of goods,the current ratio is likely to be a better measure of liquidity than the acid-test ratio.

Correct AnswerverifiedShow Answer

Patents and copyrights are examples of intangible assets.

Correct AnswerverifiedShow Answer

To effectively run a business,it is necessary to:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A cash flow statement summarizes a company's cash receipts and cash payments over a period of time.

Correct AnswerverifiedShow Answer

The use of computers in accounting has:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What group or groups are interested in a company's financial statements?

Correct AnswerverifiedOwners,creditors,sup...View AnswerShow Answer

Which of the following would be classified as a general expense on an income statement?

Correct AnswerverifiedShow Answer

If you know how to keep your customers satisfied,you can successfully manage a business without knowing anything about accounting.

Correct AnswerverifiedShow Answer

Net income is simply the difference between revenue and cost of goods sold.

Correct AnswerverifiedShow Answer

Leondra works for a textbook publishing firm preparing budgets and reporting production costs.She works in the field of:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Owners,creditors,sup...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified