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Exam 16: Understanding Accounting and Financial Information

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Question 141

True/False

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Accounting has been called the language of business.

A) True
B) False

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Question 142

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During a period of rising prices,FIFO (first in,first out) inventory valuation method will result in ________ net income figures than would LIFO (last in,first out) .

A) higher
B) lower
C) the same
D) less accurate

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

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Question 143

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A bookkeeper's first task is to record the firm's transactions in a journal.

The Sarbanes-Oxley Act applies to all U.S.companies.

Calgary Chemicals plans to utilize its computers to provide continuous auditing of their financial statements.One obvious benefit of this technology would be:

The two major classes of operating expenses are current expenses and long-term expenses.

Cash provided by the sale of new cars at Joseph's Car Sales would be listed as a cash inflow from operations on Joseph's statement of cash flows.

Double-entry bookkeeping can help identify a recording error made by a bookkeeper.

A firm that takes on too much debt could experience problems repaying its lenders or meeting promises made to stockholders.

In reviewing the financial results for the past month,the president of the company is surprised at how low the sales amount is.She is wondering if all sales for the month have been properly recorded.When asked to investigate this issue,the accountant would refer to the

The best way for a firm to avoid serious cash flow problems is to sustain a rapid growth in sales.

Financial ratios are used to analyze a firm's financial condition and performance.

When a firm sells merchandise from its inventory,the cost of goods sold it reports will depend on which inventory valuation method it uses.

Profitability ratios are often used to measure management's performance.

Although a firm may choose from a variety of different amortization and inventory valuation methods,it is expected to provide readers of its financial statements with information about the methods it uses.

Identify and explain the differences between LIFO and FIFO inventory valuation methods.How might a firm use these accounting techniques to affect its accounting information?

The sole purpose of accounting is to help managers evaluate the financial condition of the firm so that they may make better decisions.

As Canadian firms focus on cutting costs in order to stay competitive with producers in low-wage countries,________ will gain importance.

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

The __________ ratio is a commonly used leverage ratio.