Question 1

Skilled professionals who are responsible for the development of strategies to minimize taxes are called:

Accepted Answer

A)  tax accountants.
B)  certified public accountants.
C)  certified management accountants.
D)  certified internal auditors.E) None of the above
F) All of the above

Question 2

A debt to owners' equity ratio of 25% indicates that a firm has more debt than equity.

Accepted Answer

A) True 
 B)False

Question 3

Use the fundamental accounting equation to solve the following: Assets minus liabilities equals:

Accepted Answer

A)  net income.
B)  gross margin.
C)  owners' equity.
D)  cash reserves.E) A) and B)
F) A) and C)

Question 4

Accounting transactions are very important to a firm's operations.Which of the following activities would affect the firm's account balances?

Accepted Answer

A)  Buying and selling goods and services
B)  Interviewing prospective employees
C)  Understanding economic reports
D)  Forecasting consumer demandE) None of the above
F) A) and B)

Question 5

Which of the following responses is the best and most comprehensive? "A company's accounting information is useful to ____________."

Accepted Answer

A)  managers within the firm,exclusively
B)  marketing research firms for pricing insights
C)  primarily the IRS and other government agencies that regulate the firm
D)  managers,owners,creditors,employees,and the governmentE) A) and C)
F) All of the above

Question 6

A firm's balance sheet reports its financial condition on a specific date.

Accepted Answer

A) True 
 B)False

Question 7

Taylor Casual,a chain of retail clothing stores,wants to assure investors and other outsiders that its financial statements are accurate.One way to do so would be to hire a public accounting firm to:

Accepted Answer

A)  Produce an internal audit.
B)  Take over all of its accounting functions.
C)  Provide a "generally accepted practices" endorsement.
D)  Perform an independent audit.E) A) and D)
F) B) and D)

Question 8

The Barkley Company bought supplies in early January that it must pay for by the end of the month.These purchases are posted to accounts payable and listed as assets on the firm's balance sheet.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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 11

Once a trial balance has been prepared,the next step of the accounting cycle involves:

Accepted Answer

A)  Posting the information to the correct ledger accounts.
B)  Completing a balance sheet and ratio analysis.
C)  Preparing financial statements such as the balance sheet,income statement,and statement of cash flows.
D)  Classifying the transactions into logical categories.E) All of the above
F) A) and C)

Question 12

Although a firm may use different inventory valuation methods,generally accepted accounting principles (GAAP)states that these methods must produce the same dollar value for the cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 13

Rent,depreciation,and salaries are examples of:

Accepted Answer

A)  Current assets.
B)  Current liabilities.
C)  Owners' equity.
D)  Operating expenses.E) B) and D)
F) All of the above

Question 14

Explain the difference between current,fixed,and intangible assets.Give two examples of each of these different types of assets.

Accepted Answer

Current assets are items that can be con...

Question 15

Given that measuring a firm's financial health is important to its survival,which of the following strategies is good advice for a person just starting a business?

Accepted Answer

A)  Create a method for keeping your books that makes sense to you.Outside agencies such as creditors and suppliers will not evaluate you by the way you keep books.
B)  All transactions are important.Separating transactions only serves to create a perception that some transactions are of lesser importance than others.
C)  Accounting systems used by big business are not suitable for small businesses.
D)  Select an accounting system that helps you make decisions,and helps you report information to others outside your firm.E) All of the above
F) A) and B)

Question 16

The three important financial statements prepared by accountants are:

Accepted Answer

A)  Ledger,journal,and trial balance.
B)  Cash budget,capital budget,and master budget.
C)  Revenue summary,expense summary,and consolidation statement.
D)  Balance sheet,income statement,and statement of cash flows.E) A) and C)
F) B) and D)

Question 17

Identify the three key financial statements that corporations are required to prepare,and describe the type of information found on each.

Accepted Answer

Balance sheet - reports the firm's finan...

Question 18

One of the statements prepared in the accounting cycle is the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 19

The use of computerized accounting systems _____________.

Accepted Answer

A)  makes it possible for most firms to operate without the expense of hiring or consulting with accountants
B)  reduces the pressure on managers in making financial decisions
C)  allows firms to generate financial information almost instantly and whenever the organization needs it
D)  creates 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 generatesE) B) and C)
F) B) and D)

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 17: Understanding Accounting and Financial Information

The use of computerized accounting systems _____________.

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

Although a firm may use different inventory valuation methods,generally accepted accounting principles (GAAP)states that these methods must produce the same dollar value for the cost of goods sold.

Correct AnswerverifiedShow Answer

The Barkley Company bought supplies in early January that it must pay for by the end of the month.These purchases are posted to accounts payable and listed as assets on the firm's balance sheet.

Correct AnswerverifiedShow Answer

One of the statements prepared in the accounting cycle is the statement of cash flows.

Correct AnswerverifiedShow Answer

Explain the difference between current,fixed,and intangible assets.Give two examples of each of these different types of assets.

Correct AnswerverifiedCurrent assets are items that can be con...View AnswerShow Answer

Skilled professionals who are responsible for the development of strategies to minimize taxes are called:

Correct AnswerverifiedShow Answer

Taylor Casual,a chain of retail clothing stores,wants to assure investors and other outsiders that its financial statements are accurate.One way to do so would be to hire a public accounting firm to:

Correct AnswerverifiedShow Answer

Accounting transactions are very important to a firm's operations.Which of the following activities would affect the firm's account balances?

Correct AnswerverifiedShow Answer

A debt to owners' equity ratio of 25% indicates that a firm has more debt than equity.

Correct AnswerverifiedShow Answer

Which of the following responses is the best and most comprehensive? "A company's accounting information is useful to ____________."

Correct AnswerverifiedShow Answer

Given that measuring a firm's financial health is important to its survival,which of the following strategies is good advice for a person just starting a business?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Rent,depreciation,and salaries are examples of:

Correct AnswerverifiedShow Answer

Once a trial balance has been prepared,the next step of the accounting cycle involves:

Correct AnswerverifiedShow Answer

A firm's balance sheet reports its financial condition on a specific date.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The three important financial statements prepared by accountants are:

Correct AnswerverifiedShow Answer

Use the fundamental accounting equation to solve the following: Assets minus liabilities equals:

Correct AnswerverifiedShow Answer

Identify the three key financial statements that corporations are required to prepare,and describe the type of information found on each.

Correct AnswerverifiedBalance sheet - reports the firm's finan...View AnswerShow Answer

Correct Answer
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Current assets are items that can be con...
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Balance sheet - reports the firm's finan...
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