Question 1

Which financial statement reports the company's revenues and selling costs over a period of time?

Accepted Answer

A)  income statement 
B)  balance sheet 
C)  statement of cash flows 
D)  trial balance 
A)  income statement 
B)  balance sheet 
C)  statement of cash flows 
D)  trial balance

Question 2

The ________ is an accounting statement that reports the financial condition of a firm at a specific point in time.

Accepted Answer

A)  income statement 
B)  balance sheet 
C)  statement of cash flows 
D)  trial balance 
A)  income statement 
B)  balance sheet 
C)  statement of cash flows 
D)  trial balance

Question 3

Assets are reported on the firm's balance sheet.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

The accounting cycle usually involves the work of both the bookkeeper and the accountant.

Accepted Answer

A) True 
 B)False

Question 6

The purpose of a trial balance is to

Accepted Answer

A)  affirm whether the figures in the account ledgers are correct and balanced. 
B)  prepare a mockup of a real balance sheet. 
C)  review the income statement accounts. 
D)  meet a reporting requirement of the Securities and Exchange Commission (SE
C) . 
A)  affirm whether the figures in the account ledgers are correct and balanced. 
B)  prepare a mockup of a real balance sheet. 
C)  review the income statement accounts. 
D)  meet a reporting requirement of the Securities and Exchange Commission (SE
C) .

Question 7

The basic earnings per share and the diluted earnings per share would have quite different values for a firm that relied heavily on preferred stock and convertible debt securities to acquire funds.

Accepted Answer

A) True 
 B)False

Question 8

The cash a firm raised from issuing new debt or equity capital would be reported on a statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Abel just graduated earned a bachelor's degree in accounting. He plans to go to work for the American Red Cross as an accountant. What job will Abel hold?

Accepted Answer

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

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Chloe is categorizing journal entries in order to post to the ________.

Accepted Answer

A)  income statement. 
B)  balance sheet. 
C)  working papers. 
D)  ledger. 
A)  income statement. 
B)  balance sheet. 
C)  working papers. 
D)  ledger.

Question 13

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)  depreciation. 
A)  asset valuation. 
B)  asset audits. 
C)  appreciation. 
D)  depreciation.

Question 14

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 generates. 
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 generates.

Question 15

A loan officer at Bigbux Bank is considering a loan application from Portable Pet Care, Inc. He is concerned about the company's ability to make payments on the loan. The loan officer is likely to be interested in Portable Pet Care's statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 16

Explain the differences between managerial and financial accounting, and give examples of the types of problems and issues examined by each of these areas of accounting.

Accepted Answer

Managerial accounting is used to provide

Question 17

Calvin works in the accounting department for a textbook publishing firm preparing budgets and reporting production costs. What job does Calvin hold?

Accepted Answer

A)  managerial accountant 
B)  financial accountant 
C)  tax accountant 
D)  auditor 
A)  managerial accountant 
B)  financial accountant 
C)  tax accountant 
D)  auditor

Question 18

Alex is responsible for recording sales transactions at Perry Enterprises. Alex's company utilizes ________, to help minimize entry errors.

Accepted Answer

A)  auditing 
B)  capital budgeting 
C)  double-entry bookkeeping 
D)  revenue assessment 
A)  auditing 
B)  capital budgeting 
C)  double-entry bookkeeping 
D)  revenue assessment

Question 19

Sophie has been a bookkeeper for a small chain of boutiques for nearly four years. Six months ago, the manager retired and a new manager was brought in. The new manager routinely asks her for information and advice about how to interpret the information she records. Sophie's experience as a bookkeeper means she is qualified to provide this type of advice.

Accepted Answer

A) True 
 B)False

Question 20

The statement of cash flows identifies cash receipts and disbursements that result

Accepted Answer

A)  from selling goods and/or services, exclusively. 
B)  solely from a firm's investments. 
C)  from a firm's operations and investment activities, but not from financing activities. 
D)  from a firm's operations, investment, and financing activities. 
A)  from selling goods and/or services, exclusively. 
B)  solely from a firm's investments. 
C)  from a firm's operations and investment activities, but not from financing activities. 
D)  from a firm's operations, investment, and financing activities.

Exam 17: Understanding Accounting and Financial Information

Which financial statement reports the company's revenues and selling costs over a period of time?

The ________ is an accounting statement that reports the financial condition of a firm at a specific point in time.

Assets are reported on the firm's balance sheet.

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

The accounting cycle usually involves the work of both the bookkeeper and the accountant.

The purpose of a trial balance is to

The basic earnings per share and the diluted earnings per share would have quite different values for a firm that relied heavily on preferred stock and convertible debt securities to acquire funds.

The cash a firm raised from issuing new debt or equity capital would be reported on a statement of cash flows.

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

Abel just graduated earned a bachelor's degree in accounting. He plans to go to work for the American Red Cross as an accountant. What job will Abel hold?

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

Chloe is categorizing journal entries in order to post to the ________.

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

The use of computerized accounting systems ________.

A loan officer at Bigbux Bank is considering a loan application from Portable Pet Care, Inc. He is concerned about the company's ability to make payments on the loan. The loan officer is likely to be interested in Portable Pet Care's statement of cash flows.

Explain the differences between managerial and financial accounting, and give examples of the types of problems and issues examined by each of these areas of accounting.

Calvin works in the accounting department for a textbook publishing firm preparing budgets and reporting production costs. What job does Calvin hold?

Alex is responsible for recording sales transactions at Perry Enterprises. Alex's company utilizes ________, to help minimize entry errors.

The statement of cash flows identifies cash receipts and disbursements that result

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding Economics and How It Affects Business

Doing Business in Global Markets

Demanding Ethical and Socially Responsible Behavior

How to Form a Business

Entrepreneurship and Starting a Small Business

Management and Leadership

Structuring Organizations for Todays Challenges

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Employeemanagement Issues

Marketing: Helping Buyers Buy

Developing and Pricing Goods and Services

Distributing Products

Using Effective Promotions

Financial Management

Using Securities Markets for Financing and Investing Opportunities

Money, Financial Institutions, and the Federal Reserve

Appendix: Working Within the Legal Environment

Appendix: Using Technology to Manage Information

Appendix: Managing Risk

Appendix: Managing Personal Finances

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