Question 1

Financial accounting is

Accepted Answer

A)  the field of accounting concerned with external users of a company's financial information. 
B)  the rules and procedures governing the content and form of financial reports. 
C)  a systematic examination of a company's accounting system to determine whether its financial reports fairly represent its operations. 
D)  a bookkeeping system that balances the accounting equation by recording the dual effects of every financial transaction. 
E)  a field of accounting that serves internal users of a company's financial information. 
A)  the field of accounting concerned with external users of a company's financial information. 
B)  the rules and procedures governing the content and form of financial reports. 
C)  a systematic examination of a company's accounting system to determine whether its financial reports fairly represent its operations. 
D)  a bookkeeping system that balances the accounting equation by recording the dual effects of every financial transaction. 
E)  a field of accounting that serves internal users of a company's financial information.

Question 2

The inventory turnover ratio is calculated by

Accepted Answer

A)  dividing cost of goods sold by revenues. 
B)  dividing average inventory by cost of goods sold. 
C)  dividing revenues by cost of goods sold. 
D)  dividing cost of goods sold by average inventory. 
E)  dividing revenues by average inventory. 
A)  dividing cost of goods sold by revenues. 
B)  dividing average inventory by cost of goods sold. 
C)  dividing revenues by cost of goods sold. 
D)  dividing cost of goods sold by average inventory. 
E)  dividing revenues by average inventory.

Question 3

Which of the following best illustrates cash flow from operations?

Accepted Answer

A)  The revenue from selling bread at a local bakery 
B)  The revenue from selling stocks by an insurance company 
C)  The revenue from new investors in a software start-up 
D)  The revenue from selling obsolescent trucks by a delivery company 
E)  The revenue from issuing stock by a financial management firm 
A)  The revenue from selling bread at a local bakery 
B)  The revenue from selling stocks by an insurance company 
C)  The revenue from new investors in a software start-up 
D)  The revenue from selling obsolescent trucks by a delivery company 
E)  The revenue from issuing stock by a financial management firm

Question 4

At Ex-Pro, operating income is $80,000 and the number of common shares outstanding is 40 000. This means that earnings per share is $2.00.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following best describes depreciation?

Accepted Answer

A)  The process of increasing the value of fixed assets over time 
B)  The process of deducting operating expenses from the value of fixed assets 
C)  The process of reducing the value of fixed assets over time 
D)  The process of distributing the cost of liabilities over time 
E)  The process of distributing the cost of intangible assets over time 
A)  The process of increasing the value of fixed assets over time 
B)  The process of deducting operating expenses from the value of fixed assets 
C)  The process of reducing the value of fixed assets over time 
D)  The process of distributing the cost of liabilities over time 
E)  The process of distributing the cost of intangible assets over time

Question 6

________ are purchased as short-term investments and are only slightly less liquid than cash.

Accepted Answer

A)  Prepaid expenses 
B)  Patents 
C)  Accounts receivable 
D)  Marketable securities 
E)  Futures 
A)  Prepaid expenses 
B)  Patents 
C)  Accounts receivable 
D)  Marketable securities 
E)  Futures

Question 7

Mary Ann is considering buying an existing catering business that is up for sale. An auditor has found annual budgets for the catering business from the past few years. How can Mary Ann benefit from these?

Accepted Answer

Mary Ann can evaluate the actual monthly

Question 8

A budget is a detailed financial plan of estimated receipts and expenditures for the future.

Accepted Answer

A) True 
 B)False

Question 9

As buildings and equipment wear out or become obsolete, their value decreases. To reflect decreasing value, accountants use

Accepted Answer

A)  prepaid expenses. 
B)  licensing. 
C)  subtracting methods. 
D)  depreciation. 
E)  all of these. 
A)  prepaid expenses. 
B)  licensing. 
C)  subtracting methods. 
D)  depreciation. 
E)  all of these.

Question 10

Streeter & Sons is a regional service company that has been in business for a few years, but has not employed a controller or anyone else full-time to keep track of its financial state. The company needs to take a good look at its financial state to determine whether it needs to make any changes in its practices, in order to prevent possible financial meltdown. Which of the following, if true, would weaken the case that more than one type of financial statement should be examined in order to determine a company's financial health?

Accepted Answer

A)  Nowadays, many companies burnish their balance sheet by claiming inflated figures for goodwill. 
B)  An income statement from one year may be radically different from the one for the previous year. 
C)  It can be difficult for auditors to independently verify certain figures in income statements. 
D)  The management by data trend has led companies to consider detailed and accurate financial statements imperative. 
E)  In times of recession, companies often reduce their accounting and financial management staffs. 
A)  Nowadays, many companies burnish their balance sheet by claiming inflated figures for goodwill. 
B)  An income statement from one year may be radically different from the one for the previous year. 
C)  It can be difficult for auditors to independently verify certain figures in income statements. 
D)  The management by data trend has led companies to consider detailed and accurate financial statements imperative. 
E)  In times of recession, companies often reduce their accounting and financial management staffs.

Question 11

What are the three types of assets that will typically be found on a balance sheet?

Accepted Answer

A)  Local, national, and international 
B)  Positive, negative, and neutral 
C)  Land, buildings, and equipment 
D)  Current, fixed, and intangible 
E)  Short term, long term, and medium term 
A)  Local, national, and international 
B)  Positive, negative, and neutral 
C)  Land, buildings, and equipment 
D)  Current, fixed, and intangible 
E)  Short term, long term, and medium term

Question 12

The field of accounting that is concerned with external users of a company's financial information is called

Accepted Answer

A)  managerial accounting. 
B)  bookkeeping. 
C)  public accounting. 
D)  financial accounting. 
E)  auditing. 
A)  managerial accounting. 
B)  bookkeeping. 
C)  public accounting. 
D)  financial accounting. 
E)  auditing.

Question 13

How are international accounting standards relevant for Canadian companies and Canadian accounting activities?

Accepted Answer

The International Accounting Standards B

Question 14

Financial and managerial accounting are differentiated on the basis of the different users they serve.

Accepted Answer

A) True 
 B)False

Question 15

Gem Corp. has $100 million in assets and $50 million in liabilities. Last year, the company earned $10 million in net profit and paid out $5 million in dividends to shareholders. What are the retained earnings for the company?

Accepted Answer

A)  $50 million 
B)  $5 million 
C)  $45 million 
D)  $90 million 
E)  $95 million 
A)  $50 million 
B)  $5 million 
C)  $45 million 
D)  $90 million 
E)  $95 million

Question 16

Explain the role of accountants and distinguish between the kinds of work done by public accountants, private accountants, management accountants, and forensic accountants.

Accepted Answer

The role of accountants is to maintain a

Question 17

A(n) ________ is a debt owed by a firm to an outside organization or individual.

Accepted Answer

A)  liability 
B)  owners' equity 
C)  debit 
D)  asset 
E)  credit 
A)  liability 
B)  owners' equity 
C)  debit 
D)  asset 
E)  credit

Question 18

What is the purpose of computing profitability ratios?

Accepted Answer

A)  To determine liquidity 
B)  To determine the most efficient use of resources 
C)  To determine the liquidity of the firm 
D)  To determine the potential risk of business activity 
E)  To determine the potential returns investors can expect 
A)  To determine liquidity 
B)  To determine the most efficient use of resources 
C)  To determine the liquidity of the firm 
D)  To determine the potential risk of business activity 
E)  To determine the potential returns investors can expect

Question 19

Corporation L has debt of $20 million and equity of $100 million. Its debt-to-equity ratio is therefore 5.00.

Accepted Answer

A) True 
 B)False

Question 20

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 does Michaels assume?

Accepted Answer

A)  Revenues this year were not as high as last year's. 
B)  Revenues are not as high as Kershner thinks they are. 
C)  Selling expenses exceeded administrative expenses this year. 
D)  Other factors must be taken into account to arrive at an income statement. 
E)  Income taxes will be high this year. 
A)  Revenues this year were not as high as last year's. 
B)  Revenues are not as high as Kershner thinks they are. 
C)  Selling expenses exceeded administrative expenses this year. 
D)  Other factors must be taken into account to arrive at an income statement. 
E)  Income taxes will be high this year.

Financial accounting is

The inventory turnover ratio is calculated by

Which of the following best illustrates cash flow from operations?

At Ex-Pro, operating income is $80,000 and the number of common shares outstanding is 40 000. This means that earnings per share is $2.00.

Which of the following best describes depreciation?

________ are purchased as short-term investments and are only slightly less liquid than cash.

Mary Ann is considering buying an existing catering business that is up for sale. An auditor has found annual budgets for the catering business from the past few years. How can Mary Ann benefit from these?

A budget is a detailed financial plan of estimated receipts and expenditures for the future.

As buildings and equipment wear out or become obsolete, their value decreases. To reflect decreasing value, accountants use

What are the three types of assets that will typically be found on a balance sheet?

The field of accounting that is concerned with external users of a company's financial information is called

How are international accounting standards relevant for Canadian companies and Canadian accounting activities?

Financial and managerial accounting are differentiated on the basis of the different users they serve.

Gem Corp. has $100 million in assets and $50 million in liabilities. Last year, the company earned $10 million in net profit and paid out $5 million in dividends to shareholders. What are the retained earnings for the company?

Explain the role of accountants and distinguish between the kinds of work done by public accountants, private accountants, management accountants, and forensic accountants.

A(n) ________ is a debt owed by a firm to an outside organization or individual.

What is the purpose of computing profitability ratios?

Corporation L has debt of $20 million and equity of $100 million. Its debt-to-equity ratio is therefore 5.00.

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

Financial accounting is

The inventory turnover ratio is calculated by

Which of the following best illustrates cash flow from operations?

At Ex-Pro, operating income is $80,000 and the number of common shares outstanding is 40 000. This means that earnings per share is $2.00.

Which of the following best describes depreciation?

________ are purchased as short-term investments and are only slightly less liquid than cash.

Mary Ann is considering buying an existing catering business that is up for sale. An auditor has found annual budgets for the catering business from the past few years. How can Mary Ann benefit from these?

A budget is a detailed financial plan of estimated receipts and expenditures for the future.

As buildings and equipment wear out or become obsolete, their value decreases. To reflect decreasing value, accountants use

What are the three types of assets that will typically be found on a balance sheet?

The field of accounting that is concerned with external users of a company's financial information is called

How are international accounting standards relevant for Canadian companies and Canadian accounting activities?

Financial and managerial accounting are differentiated on the basis of the different users they serve.

Gem Corp. has $100 million in assets and $50 million in liabilities. Last year, the company earned $10 million in net profit and paid out $5 million in dividends to shareholders. What are the retained earnings for the company?

Explain the role of accountants and distinguish between the kinds of work done by public accountants, private accountants, management accountants, and forensic accountants.

A(n) ________ is a debt owed by a firm to an outside organization or individual.

What is the purpose of computing profitability ratios?

Corporation L has debt of $20 million and equity of $100 million. Its debt-to-equity ratio is therefore 5.00.

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