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Patents and copyrights are examples of intangible assets.

A) True
B) False

Correct Answer

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During a period of rising prices,if a firm desires to report a low gross profit figure in hopes of reducing their income tax liability,the firm will use the __________ inventory valuation method.


A) FIFO (first in,first out)
B) LIFO (last in,first out)
C) sliding scale
D) average cost

E) B) and D)
F) C) and D)

Correct Answer

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In an effort to maintain a competitive advantage,firms do not share accounting information with people outside of the firm.

A) True
B) False

Correct Answer

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The Balance Sheet for Renuvation LLC shows assets totaling $107,000 and liabilities totaling $75,000.Which of the following statements is correct?


A) Owner's Equity equals $182,000.
B) Current Assets are worth $32,000.
C) Net Income for the period is $32,000.
D) Owner's Equity equals $32,000.

E) A) and C)
F) B) and C)

Correct Answer

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

A) True
B) False

Correct Answer

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As a certified public accountant (CPA),Kay might become involved in helping clients select appropriate accounting computer software for their firm.

A) True
B) False

Correct Answer

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Accounting software has proven to be especially helpful for small business owners.

A) True
B) False

Correct Answer

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If the economy began experiencing a prolonged period of deflation in which the prices of most goods are falling,many firms would find that the LIFO method of inventory valuation would result in higher reported profits.

A) True
B) False

Correct Answer

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An accountant who works for a single business or government agency is referred to as a:


A) Public accountant.
B) Private accountant.
C) Certified accountant.
D) Commission accountant.

E) A) and D)
F) All of the above

Correct Answer

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


A) Asset turnover ratio
B) Inventory turnover ratio
C) Sales turnover ratio
D) Cost of goods sold turnover ratio

E) C) and D)
F) B) and C)

Correct Answer

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Depreciation is a systematic write-off of the cost of a tangible asset that is listed on __________.


A) The Statement of Cash Flows
B) The Balance Sheet
C) The Income Statement
D) The Statement of Retained Earnings

E) A) and B)
F) None of the above

Correct Answer

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Gross profit represents profit after the deduction of cost of goods sold,and before the deduction of all other selling expenses,general expenses,and tax expense.

A) True
B) False

Correct Answer

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Jose just graduated from college with a bachelor's degree in accounting.He plans to go to work for the American Cancer Society as an accountant.Jose will be a(n) :


A) private accountant.
B) public accountant.
C) forensic accountant.
D) independent accountant.

E) A) and B)
F) B) and D)

Correct Answer

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

A) True
B) False

Correct Answer

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A business manager who keeps his/her customers satisfied can be successful without having a great deal of knowledge about accounting practices.

A) True
B) False

Correct Answer

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Heather works in the accounting department of Colorado Manufacturing.Today she will use the firm's ledger to summarize information that was posted over the most recent time period.Her goal is to determine if the accounts are balanced as required by the double-entry method of bookkeeping.To be sure they are correct,Heather will prepare a(n) :


A) Account analysis.
B) Statement of cash flows.
C) Balance sheet.
D) Trial balance.

E) None of the above
F) A) and D)

Correct Answer

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Preferred Pet Care,Inc.successfully took out a loan for $130,000 from Southwest Bank.It used $80,000 of this loan to pay-off an existing loan that had a higher interest rate,and purchased X-ray equipment with the remaining funds.These events were noted as financing and investing activities on its balance sheet.

A) True
B) False

Correct Answer

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The balance sheet reports revenues and selling costs for a period of time.

A) True
B) False

Correct Answer

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In order to calculate the current ratio for your firm,you divide the total value of current assets by:


A) Earnings per share.
B) The total value of current liabilities.
C) The total owners' equity.
D) The total cost of goods solD.

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

Correct Answer

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FIFO and LIFO are two common:


A) depreciation strategies.
B) ways to structure a balance sheet.
C) inventory valuation methods.
D) current ratios.

E) A) and D)
F) B) and D)

Correct Answer

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