Question 1

The main reason an accountant would conduct a trial balance would be to:

Accepted Answer

A)  determine whether account figures in ledgers are correct and balanced.
B)  obtain an estimate of the amount of taxes the firm owes.
C)  ensure the audit was done correctly.
D)  verify the validity of last year's balance sheet before beginning the next accounting cycle.E) A) and B)
F) A) and C)

Question 2

Although a firm may use different inventory valuation methods,generally accepted rules of accounting state that these methods must produce the same dollar value when used to determine the cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 3

The value of what stockholders own in a firm is called stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 4

ABC Communications is considering the purchase of a new satellite.The firm believes the satellite will help generate future earnings.In addition,the firm recognizes the tax benefits of a lower net income provided by the annual ________ of the asset.

Accepted Answer

A)  inventory valuation
B)  declining balance
C)  appreciation
D)  amortizationE) A) and C)
F) B) and D)

Question 5

Expenses are what the business owes to others.

Accepted Answer

A) True 
 B)False

Question 6

The key financial statements are the balance sheet,income statement,and cash flow statement.

Accepted Answer

A) True 
 B)False

Question 7

Both the current ratio and the acid-test ratio are liquidity ratios.

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)  managerial accounting.
B)  financial accounting.
C)  tax accounting.
D)  auditing.E) All of the above
F) A) and B)

Question 9

Retailers attempt to sell older merchandise before more recently acquired merchandise is sold.The assumptions made by the _______ method of inventory valuation are most consistent with this approach.

Accepted Answer

A)  FIFO (first in,first out) 
B)  LIFO (last in,first out) 
C)  average costing
D)  accelerated costingE) C) and D)
F) None of the above

Question 10

The purpose of a trial balance is to prepare a practice balance sheet.

Accepted Answer

A) True 
 B)False

Question 11

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 12

Accounting recognizes that assets,such as machinery and buildings,lose value over time.Accountants will record a portion of the cost of an asset as an expense each year through the use of:

Accepted Answer

A)  asset valuation.
B)  asset audits.
C)  appreciation.
D)  amortization.E) B) and C)
F) B) and D)

Question 13

Computers today can actually record and analyze data,in addition to printing financial reports.

Accepted Answer

A) True 
 B)False

Question 14

Brand names such as Coca-Cola and McDonald's are examples of fixed assets.

Accepted Answer

A) True 
 B)False

Question 15

During a period of rising prices,the FIFO technique of inventory valuation will result in a lower net income figure than would the LIFO technique.

Accepted Answer

A) True 
 B)False

Exam 16: Understanding Accounting and Financial Information

The purpose of a trial balance is to prepare a practice balance sheet.

Correct Answer
verified

ABC Communications is considering the purchase of a new satellite.The firm believes the satellite will help generate future earnings.In addition,the firm recognizes the tax benefits of a lower net income provided by the annual ________ of the asset.

Correct Answer
verified

Both the current ratio and the acid-test ratio are liquidity ratios.

Correct Answer
verified

The key financial statements are the balance sheet,income statement,and cash flow statement.

Correct Answer
verified

Brand names such as Coca-Cola and McDonald's are examples of fixed assets.

Correct Answer
verified

The value of what stockholders own in a firm is called stockholders' equity.

Correct Answer
verified

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

Correct Answer
verified

Accounting recognizes that assets,such as machinery and buildings,lose value over time.Accountants will record a portion of the cost of an asset as an expense each year through the use of:

Correct Answer
verified

The main reason an accountant would conduct a trial balance would be to:

Correct Answer
verified

Computers today can actually record and analyze data,in addition to printing financial reports.

Correct Answer
verified

Expenses are what the business owes to others.

Correct Answer
verified

During a period of rising prices,the FIFO technique of inventory valuation will result in a lower net income figure than would the LIFO technique.

Correct Answer
verified

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

Correct Answer
verified

Retailers attempt to sell older merchandise before more recently acquired merchandise is sold.The assumptions made by the _______ method of inventory valuation are most consistent with this approach.

Correct Answer
verified

Although a firm may use different inventory valuation methods,generally accepted rules of accounting state that these methods must produce the same dollar value when used to determine the cost of goods sold.

Correct Answer
verified

Exam 16: Understanding Accounting and Financial Information

The purpose of a trial balance is to prepare a practice balance sheet.

Correct AnswerverifiedShow Answer

ABC Communications is considering the purchase of a new satellite.The firm believes the satellite will help generate future earnings.In addition,the firm recognizes the tax benefits of a lower net income provided by the annual ________ of the asset.

Correct AnswerverifiedShow Answer

Both the current ratio and the acid-test ratio are liquidity ratios.

Correct AnswerverifiedShow Answer

The key financial statements are the balance sheet,income statement,and cash flow statement.

Correct AnswerverifiedShow Answer

Brand names such as Coca-Cola and McDonald's are examples of fixed assets.

Correct AnswerverifiedShow Answer

The value of what stockholders own in a firm is called stockholders' equity.

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

Accounting recognizes that assets,such as machinery and buildings,lose value over time.Accountants will record a portion of the cost of an asset as an expense each year through the use of:

Correct AnswerverifiedShow Answer

The main reason an accountant would conduct a trial balance would be to:

Correct AnswerverifiedShow Answer

Computers today can actually record and analyze data,in addition to printing financial reports.

Correct AnswerverifiedShow Answer

Expenses are what the business owes to others.

Correct AnswerverifiedShow Answer

During a period of rising prices,the FIFO technique of inventory valuation will result in a lower net income figure than would the LIFO technique.

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

Retailers attempt to sell older merchandise before more recently acquired merchandise is sold.The assumptions made by the _______ method of inventory valuation are most consistent with this approach.

Correct AnswerverifiedShow Answer

Although a firm may use different inventory valuation methods,generally accepted rules of accounting state that these methods must produce the same dollar value when used to determine the cost of goods sold.

Correct AnswerverifiedShow Answer

Correct Answer
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