Question 1

The value of resources the firm owns,minus the amount of money the firm owes to others = ___________.

Accepted Answer

A)  liabilities
B)  liquidity
C)  leverage
D)  owners' equityE) A) and C)
F) B) and C)

Question 2

Resources that a firm owns are called:

Accepted Answer

A)  Revenues.
B)  Assets.
C)  Equities.
D)  Credits.E) B) and D)
F) C) and D)

Question 3

The acid-test ratio emphasizes the ability to convert inventory quickly into cash.

Accepted Answer

A) True 
 B)False

Question 4

The Barkley Company balance sheet shows the following items: Accounts payable totaling $50,000;salaries payable totaling $65,000,and notes payable totaling $100,000.These are liabilities,or money that the firm owes others.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A)  Determine whether account figures in the ledger 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 6

Carol has worked as a bookkeeper for a small clothing store for almost three years.Her old boss recently retired and a new manager took over.The new manager frequently asks her for information and advice about how to interpret the information she records.Carol's experience as a bookkeeper means she is qualified to provide this type of advice.

Accepted Answer

A) True 
 B)False

Question 7

Ralph owns a small business.Some friends have suggested that he should switch from his current manual accounting system to one that is computerized.Ralph is not certain he wants to use computers in his small firm's accounting system.He is concerned about the time it would take to learn the system,and wonders whether the benefits will justify the costs of setting up the system.As a small business owner,Ralph would probably find that:

Accepted Answer

A)  Computer software tends to be very helpful to small business owners who lack strong accounting support within their companies.
B)  Today's accounting software tends to be very complex,so only people with extensive accounting experience can understand its features and use it effectively.
C)  Even though it is not yet cost effective,he should go ahead and adopt a computerized system,because government regulations will require most business functions to be computerized in the near future.
D)  Such systems actually reduce costs,because they eliminate the need to consult with an accountant.E) A) and B)
F) A) and C) A

Question 8

Becky Hunter is an accountant employed by FAF Enterprises.Recently she has spent much of her time working on defining measures of costs for the production department and checking to ensure that various departments are staying within their budgets.Becky is a:

Accepted Answer

A)  Public accountant whose work is mainly concerned with auditing.
B)  Public accountant whose work is mainly concerned with financial accounting.
C)  Private accountant whose work is mainly concerned with managerial accounting.
D)  Private accountant whose work is mainly concerned with financial accounting.E) A) and B)
F) A) and C)

Question 9

When it comes to the treatment of depreciation and valuation of inventory,generally accepted accounting principles ____________________.

Accepted Answer

A)  provide almost no guidance to accountants
B)  allow accountants to choose among different methods for depreciation and for the valuation of inventory
C)  require accountants to use only one specific method of depreciation,but permit several methods of inventory valuation
D)  require accountants to use one specific method for valuing inventory,but permit several methods for depreciating fixed assetsE) None of the above
F) A) and B)

Question 10

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

Accepted Answer

A) True 
 B)False  False

Question 11

Generally the higher the risk involved in an activity,the ________ the rate of return expected by investors.

Accepted Answer

A)  higher
B)  lower
C)  more stable
D)  less frequentE) C) and D)
F) B) and D)

Question 12

Johnson Products is a small manufacturing firm specializing in custom-order tool and die work.A computerized accounting system would help Johnson Products by:

Accepted Answer

A)  Making key accounting and financial decisions.
B)  Helping management identify cash flow and other financial difficulties more quickly.
C)  Eliminating the need to prepare financial statements and other reports.
D)  Eliminating the need to perform the three middle steps of the accounting cycle.E) All of the above
F) B) and D)

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

The U.S.government is a user of a firm's accounting information.

Accepted Answer

A) True 
 B)False

Question 15

What is the difference between a journal and a ledger? How are journals and ledgers incorporated into the accounting cycle?

Accepted Answer

A journal is a record book or computer p...

Question 16

Peak Performance Sporting Goods Company has collected the following information about itself and its competitors: Which of the following statements explains the importance of this information?

Accepted Answer

A)  Return on Sales is an indication of how well Peak Performance is competing with others in the industry in generating income from sales.
B)  Although this information is important to Peak Performance,it is an internal calculation.Investors will not compare Peak Performance's return on sales with others.There are too many other variables such as higher expenses,which may prevent Peak Performance from maintaining the lowest measure.
C)  Unlike other measurements,a firm hopes that its Return on Sales is the lowest in the industry,thus,Peak Performance is neither doing the best nor doing the worst in its industry.
D)  As a profitability measurement,return on sales is not as important to the CFO as earnings per share,because this calculation does not show a dilution of ownership.E) B) and C)
F) A) and D)

Question 17

The fundamental accounting equation is as follows: Assets = Liabilities + Owners' equity.

Accepted Answer

A) True 
 B)False

Question 18

Nebraska 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)  depreciationE) B) and C)
F) B) and D)

Question 19

Accountants record,classify,and ____________ the results of the financial information they gather.

Accepted Answer

A)  interpret
B)  sell
C)  buy
D)  changeE) None of the above
F) B) and C) A

Question 20

Financial accountants prepare reports for owners,creditors,suppliers,and others outside of the organization.

Accepted Answer

A) True 
 B)False

Exam 17: Understanding Accounting and Financial Information

The value of resources the firm owns,minus the amount of money the firm owes to others = ___________.

Correct Answer
verified

Resources that a firm owns are called:

Correct Answer
verified

The acid-test ratio emphasizes the ability to convert inventory quickly into cash.

Correct Answer
verified

The Barkley Company balance sheet shows the following items: Accounts payable totaling $50,000;salaries payable totaling $65,000,and notes payable totaling $100,000.These are liabilities,or money that the firm owes others.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Becky Hunter is an accountant employed by FAF Enterprises.Recently she has spent much of her time working on defining measures of costs for the production department and checking to ensure that various departments are staying within their budgets.Becky is a:

Correct Answer
verified

When it comes to the treatment of depreciation and valuation of inventory,generally accepted accounting principles ____________________.

Correct Answer
verified

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

Correct Answer
verified
False

Generally the higher the risk involved in an activity,the ________ the rate of return expected by investors.

Correct Answer
verified

Johnson Products is a small manufacturing firm specializing in custom-order tool and die work.A computerized accounting system would help Johnson Products by:

Correct Answer
verified

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

Correct Answer
verified

The U.S.government is a user of a firm's accounting information.

Correct Answer
verified

What is the difference between a journal and a ledger? How are journals and ledgers incorporated into the accounting cycle?

Correct Answer
verified
A journal is a record book or computer p...
View Answer

Peak Performance Sporting Goods Company has collected the following information about itself and its competitors: Which of the following statements explains the importance of this information?

Correct Answer
verified

The fundamental accounting equation is as follows: Assets = Liabilities + Owners' equity.

Correct Answer
verified

Nebraska 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

Accountants record,classify,and ____________ the results of the financial information they gather.

Correct Answer
verified
A

Financial accountants prepare reports for owners,creditors,suppliers,and others outside of the organization.

Correct Answer
verified

Exam 17: Understanding Accounting and Financial Information

The value of resources the firm owns,minus the amount of money the firm owes to others = ___________.

Correct AnswerverifiedShow Answer

Resources that a firm owns are called:

Correct AnswerverifiedShow Answer

The acid-test ratio emphasizes the ability to convert inventory quickly into cash.

Correct AnswerverifiedShow Answer

The Barkley Company balance sheet shows the following items: Accounts payable totaling $50,000;salaries payable totaling $65,000,and notes payable totaling $100,000.These are liabilities,or money that the firm owes others.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA

Becky Hunter is an accountant employed by FAF Enterprises.Recently she has spent much of her time working on defining measures of costs for the production department and checking to ensure that various departments are staying within their budgets.Becky is a:

Correct AnswerverifiedShow Answer

When it comes to the treatment of depreciation and valuation of inventory,generally accepted accounting principles ____________________.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedFalse

Generally the higher the risk involved in an activity,the ________ the rate of return expected by investors.

Correct AnswerverifiedShow Answer

Johnson Products is a small manufacturing firm specializing in custom-order tool and die work.A computerized accounting system would help Johnson Products by:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The U.S.government is a user of a firm's accounting information.

Correct AnswerverifiedShow Answer

What is the difference between a journal and a ledger? How are journals and ledgers incorporated into the accounting cycle?

Correct AnswerverifiedA journal is a record book or computer p...View AnswerShow Answer

Peak Performance Sporting Goods Company has collected the following information about itself and its competitors: Which of the following statements explains the importance of this information?

Correct AnswerverifiedShow Answer

The fundamental accounting equation is as follows: Assets = Liabilities + Owners' equity.

Correct AnswerverifiedShow Answer

Nebraska 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

Accountants record,classify,and ____________ the results of the financial information they gather.

Correct AnswerverifiedA

Financial accountants prepare reports for owners,creditors,suppliers,and others outside of the organization.

Correct AnswerverifiedShow Answer

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A

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False

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verified
A journal is a record book or computer p...
View Answer

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A

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