Question 1

What is a budget? Who uses a budget?

Accepted Answer

A budget is a detailed financial plan fo

Question 2

If the following facts were known, which one would strengthen the argument that a company is profitable?

Accepted Answer

A)  The company's sales revenue is low relative to its cost of goods sold. 
B)  The company's cost of goods sold is low relative to its sales revenue. 
C)  The number of customers has remained stable for some time. 
D)  The company has had the same owners over its lifetime. 
E)  The company's selling expenses are high compared to its administrative expenses. 
A)  The company's sales revenue is low relative to its cost of goods sold. 
B)  The company's cost of goods sold is low relative to its sales revenue. 
C)  The number of customers has remained stable for some time. 
D)  The company has had the same owners over its lifetime. 
E)  The company's selling expenses are high compared to its administrative expenses.

Question 3

Kershner says: "Our income statement should be looking good this year. We've been doing excellent business this year, so we have a lot of gross sales. The company should be in good shape." Michaels replies: "It remains to be seen how our income statement will look overall. In spite of strong sales revenue, the overall income statement might not be as good as we might hope."
Which of the following, if true, would strengthen Michaels's argument?

Accepted Answer

A)  The company's gross sales went up from the previous year. 
B)  Total operating expenses were high in the current year. 
C)  The company has only one part-time accountant. 
D)  There were few sales returns in the current year. 
E)  Offshoring allowed the company to trim administrative salaries by 25 percent. 
A)  The company's gross sales went up from the previous year. 
B)  Total operating expenses were high in the current year. 
C)  The company has only one part-time accountant. 
D)  There were few sales returns in the current year. 
E)  Offshoring allowed the company to trim administrative salaries by 25 percent.

Question 4

Which of the following is correct with respect to accounting ethics?

Accepted Answer

A)  It is difficult for one person to make a difference; rather, what is required is organization-wide action to ensure ethical accounting behaviour. 
B)  The ultimate purpose of strong ethical standards in accounting is to maintain public confidence in business institutions and financial markets. 
C)  The U.S. CPA Code of Ethics does not address the conflict of interest problem. 
D)  To date, there has been no legislation passed in either the United States or Canada which is designed to ensure that the general public has confidence in the work of accountants. 
E)  All of these are correct. 
A)  It is difficult for one person to make a difference; rather, what is required is organization-wide action to ensure ethical accounting behaviour. 
B)  The ultimate purpose of strong ethical standards in accounting is to maintain public confidence in business institutions and financial markets. 
C)  The U.S. CPA Code of Ethics does not address the conflict of interest problem. 
D)  To date, there has been no legislation passed in either the United States or Canada which is designed to ensure that the general public has confidence in the work of accountants. 
E)  All of these are correct.

Question 5

________ are rules and procedures governing the content and form of financial reports.

Accepted Answer

A)  Accounting society rules 
B)  Generally accepted accounting principles (GAAP) 
C)  National guidelines 
D)  The Auditor's Bible 
E)  The Rules of the Road 
A)  Accounting society rules 
B)  Generally accepted accounting principles (GAAP) 
C)  National guidelines 
D)  The Auditor's Bible 
E)  The Rules of the Road

Question 6

All firms are legally required to issue a statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 7

Rent for the period to come is included in which account on the balance sheet?

Accepted Answer

A)  Inventory 
B)  Cost of goods sold 
C)  Merchandise inventory 
D)  Accounts payable 
E)  Prepaid expenses 
A)  Inventory 
B)  Cost of goods sold 
C)  Merchandise inventory 
D)  Accounts payable 
E)  Prepaid expenses

Question 8

What is the difference between operating income and net income?

Accepted Answer

Operating income is income bef

Question 9

Owners' equity is meaningful information for investors, but not for lenders.

Accepted Answer

A) True 
 B)False

Question 10

Identify an activity ratio and what it measures.

Accepted Answer

Activity ratios measure management's eff

Question 11

How is gross profit calculated?

Accepted Answer

Revenues m

Question 12

With fixed assets of $4 billion and current assets of $1.7 billion, Realm Company has long-term liabilities of $2 billion and current liabilities of $0.34 billion. What is Realm's current ratio?

Accepted Answer

A)  2 
B)  5 
C)  5.88 
D)  5.1 
E)  6.33 
A)  2 
B)  5 
C)  5.88 
D)  5.1 
E)  6.33

Question 13

Owners' equity equals assets plus liabilities.

Accepted Answer

A) True 
 B)False

Question 14

Discuss the accounting principles of revenue recognition and matching.

Accepted Answer

Revenue recognition:
- The formal record

Question 15

Kershner says: "Our income statement should be looking good this year. We've been doing excellent business this year, so we have a lot of gross sales. The company should be in good shape." Michaels replies: "It remains to be seen how our income statement will look overall. In spite of strong sales revenue, the overall income statement might not be as good as we might hope."
Which of the following points out a flaw in Kershner's reasoning?

Accepted Answer

A)  Kershner is not accounting for all of the possible sources of revenue for the company. 
B)  Kershner is not including owners' equity as part of sales revenue. 
C)  Income statements are not as important as balance sheets in determining a company's fiscal health. 
D)  Many employees are not happy with the direction the company is headed. 
E)  Kershner is not accounting for the contribution that expenses will make to the income statement. 
A)  Kershner is not accounting for all of the possible sources of revenue for the company. 
B)  Kershner is not including owners' equity as part of sales revenue. 
C)  Income statements are not as important as balance sheets in determining a company's fiscal health. 
D)  Many employees are not happy with the direction the company is headed. 
E)  Kershner is not accounting for the contribution that expenses will make to the income statement.

Question 16

Which of the following is correct with respect to generally accepted accounting principles?

Accepted Answer

A)  Public and private businesses can no longer use generally accepted accounting principles. 
B)  They are used in many foreign countries but not in Canada. 
C)  Public companies in Canada have moved away from using generally accepted accounting principles and have adopted adopted International Financial Reporting Standards (IFRS). 
D)  Private companies must use the new International Financial Reporting Standards (IFRS). 
E)  None of these statements is correct. 
A)  Public and private businesses can no longer use generally accepted accounting principles. 
B)  They are used in many foreign countries but not in Canada. 
C)  Public companies in Canada have moved away from using generally accepted accounting principles and have adopted adopted International Financial Reporting Standards (IFRS). 
D)  Private companies must use the new International Financial Reporting Standards (IFRS). 
E)  None of these statements is correct.

Question 17

Intangible assets include patents, trademarks, and copyrights.

Accepted Answer

A) True 
 B)False

Question 18

Owners' equity consists of two sources of capital. They are

Accepted Answer

A)  the amount that the owners originally invested and profits earned by and reinvested in the company. 
B)  bank loans and money received from factoring accounts receivable. 
C)  bank loans and proceeds from the sale of stock. 
D)  trade credit and bank loans. 
E)  dividends received by investors and bank loans. 
A)  the amount that the owners originally invested and profits earned by and reinvested in the company. 
B)  bank loans and money received from factoring accounts receivable. 
C)  bank loans and proceeds from the sale of stock. 
D)  trade credit and bank loans. 
E)  dividends received by investors and bank loans.

Question 19

Based on the revenue recognition principle, earnings may not be reported until the earnings cycle is completed.

Accepted Answer

A) True 
 B)False

Question 20

Government agencies would be most interested in the output of ________ accountants, while company salespeople would be most interested in the output of ________ accountants.

Accepted Answer

A)  public; private 
B)  private; public 
C)  managerial; financial 
D)  financial; managerial 
E)  financial; financial 
A)  public; private 
B)  private; public 
C)  managerial; financial 
D)  financial; managerial 
E)  financial; financial

What is a budget? Who uses a budget?

If the following facts were known, which one would strengthen the argument that a company is profitable?

Which of the following is correct with respect to accounting ethics?

________ are rules and procedures governing the content and form of financial reports.

All firms are legally required to issue a statement of cash flows.

Rent for the period to come is included in which account on the balance sheet?

What is the difference between operating income and net income?

Owners' equity is meaningful information for investors, but not for lenders.

Identify an activity ratio and what it measures.

How is gross profit calculated?

With fixed assets of $4 billion and current assets of $1.7 billion, Realm Company has long-term liabilities of $2 billion and current liabilities of $0.34 billion. What is Realm's current ratio?

Owners' equity equals assets plus liabilities.

Discuss the accounting principles of revenue recognition and matching.

Which of the following is correct with respect to generally accepted accounting principles?

Intangible assets include patents, trademarks, and copyrights.

Owners' equity consists of two sources of capital. They are

Based on the revenue recognition principle, earnings may not be reported until the earnings cycle is completed.

Government agencies would be most interested in the output of accountants, while company salespeople would be most interested in the output of accountants.

Understanding the Canadian Business System

The Environment of Business

Conducting Business Ethically and Responsibly

Entrepreneurship, Small Business, and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Organizing the Business Enterprise

Managing Human Resources and Labour Relations

Motivating, Satisfying, and Leading Employees

Operations Management, Productivity, and Quality

Understanding Marketing Principles and Developing Products

Pricing, Promotion, and Distributing Products

Money and Banking

Finacial Decisions and Risk Management

Filters

Exam 11: Understanding Accounting

What is a budget? Who uses a budget?

If the following facts were known, which one would strengthen the argument that a company is profitable?

Which of the following is correct with respect to accounting ethics?

________ are rules and procedures governing the content and form of financial reports.

All firms are legally required to issue a statement of cash flows.

Rent for the period to come is included in which account on the balance sheet?

What is the difference between operating income and net income?

Owners' equity is meaningful information for investors, but not for lenders.

Identify an activity ratio and what it measures.

How is gross profit calculated?

With fixed assets of $4 billion and current assets of $1.7 billion, Realm Company has long-term liabilities of $2 billion and current liabilities of $0.34 billion. What is Realm's current ratio?

Owners' equity equals assets plus liabilities.

Discuss the accounting principles of revenue recognition and matching.

Which of the following is correct with respect to generally accepted accounting principles?

Intangible assets include patents, trademarks, and copyrights.

Owners' equity consists of two sources of capital. They are

Based on the revenue recognition principle, earnings may not be reported until the earnings cycle is completed.

Government agencies would be most interested in the output of ________ accountants, while company salespeople would be most interested in the output of ________ accountants.

Understanding the Canadian Business System

The Environment of Business

Conducting Business Ethically and Responsibly

Entrepreneurship, Small Business, and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Organizing the Business Enterprise

Managing Human Resources and Labour Relations

Motivating, Satisfying, and Leading Employees

Operations Management, Productivity, and Quality

Understanding Marketing Principles and Developing Products

Pricing, Promotion, and Distributing Products

Money and Banking

Finacial Decisions and Risk Management

Filters

Government agencies would be most interested in the output of accountants, while company salespeople would be most interested in the output of accountants.