Question 1

Double-entry accounting is used by private-sector firms, but cannnot be used by public-sector organizations.

Accepted Answer

A) True 
 B)False

Question 2

Describe how computing financial ratios can help users get more information from financial statements to determine the financial strengths of a business.

Accepted Answer

Financial statements provide data that c

Question 3

How do accountants define merchandise inventory?

Accepted Answer

Merchandise inventory is the c

Question 4

________ allows financial statement users to see how much net gain results from the assets that had to be given up in order to generate revenues during a given period.

Accepted Answer

A)  Materiality 
B)  Revenue recognition 
C)  Compliance 
D)  Full disclosure 
E)  Matching 
A)  Materiality 
B)  Revenue recognition 
C)  Compliance 
D)  Full disclosure 
E)  Matching

Question 5

________ is the formal recording and reporting of revenues in financial statements.

Accepted Answer

A)  Compliance 
B)  Materiality 
C)  Full disclosure 
D)  Matching 
E)  Revenue recognition 
A)  Compliance 
B)  Materiality 
C)  Full disclosure 
D)  Matching 
E)  Revenue recognition

Question 6

ABC Company has net income of $5 million, $40 million of assets, and $10 million of liabilities. The number of outstanding shares of stock is 3 870 000 shares. What are earnings per share?

Accepted Answer

A)  $1.29 
B)  $0.77 
C)  $2.35 
D)  $7.75 
E)  Earnings per share cannot be computed with the information provided. 
A)  $1.29 
B)  $0.77 
C)  $2.35 
D)  $7.75 
E)  Earnings per share cannot be computed with the information provided.

Question 7

________ are amounts due from customers who have purchased goods on credit.

Accepted Answer

A)  Accounts owed 
B)  Accounts receivable 
C)  Accounts forwarded 
D)  Accounts payable 
E)  Account balances 
A)  Accounts owed 
B)  Accounts receivable 
C)  Accounts forwarded 
D)  Accounts payable 
E)  Account balances

Question 8

Stephen is looking at a financial statement that shows detailed information about the accounting equation factors. He is looking at the company's

Accepted Answer

A)  T-accounts. 
B)  income statement. 
C)  balance sheet. 
D)  double-entry accounting system. 
E)  profit-and-loss statement. 
A)  T-accounts. 
B)  income statement. 
C)  balance sheet. 
D)  double-entry accounting system. 
E)  profit-and-loss statement.

Question 9

What is the difference between current and long-term liabilities?

Accepted Answer

Current liabilities are debts

Question 10

Which financial statement shows the cost of obtaining materials to make products that were sold during the year?

Accepted Answer

A)  Income statement 
B)  Balance sheet 
C)  Statement of cash flows 
D)  Operating expenses statement 
E)  Statement of retained earnings 
A)  Income statement 
B)  Balance sheet 
C)  Statement of cash flows 
D)  Operating expenses statement 
E)  Statement of retained earnings

Question 11

If you wanted to see how much Mega Computer owed your company, where would be the best place to look?

Accepted Answer

A)  Income statement 
B)  Balance sheet 
C)  Cash flow statement 
D)  Budget 
E)  Net income statement 
A)  Income statement 
B)  Balance sheet 
C)  Cash flow statement 
D)  Budget 
E)  Net income statement

Question 12

________ is the amount of money owners would theoretically receive if they sold all of a firm's assets and paid all of its liabilities.

Accepted Answer

A)  Asset 
B)  Debit 
C)  Credit 
D)  Liability 
E)  Owners' equity 
A)  Asset 
B)  Debit 
C)  Credit 
D)  Liability 
E)  Owners' equity

Question 13

What is earnings per share? How do investors use this information?

Accepted Answer

Earnings per share is defined as net inc

Question 14

Which of the following describes assets such as patents and trademarks?

Accepted Answer

A)  Liquid assets 
B)  Fixed assets 
C)  Intangible assets 
D)  Current assets 
E)  Limited assets 
A)  Liquid assets 
B)  Fixed assets 
C)  Intangible assets 
D)  Current assets 
E)  Limited assets

Question 15

What is the primary thing the inventory turnover ratio says about a business?

Accepted Answer

A)  How profitable it is 
B)  How risky it is 
C)  How much inventory it has 
D)  How much average inventory it has 
E)  How often new merchandise replaces old merchandise 
A)  How profitable it is 
B)  How risky it is 
C)  How much inventory it has 
D)  How much average inventory it has 
E)  How often new merchandise replaces old merchandise

Question 16

Explain the importance and use of generally accepted accounting principles (GAAP).

Accepted Answer

GAAP are the guidelines that auditors fo

Question 17

Firm A enjoys a better activity ratio than Firm B. What might this mean?

Accepted Answer

A)  Firm A likely generates greater profits or sales. 
B)  Firm A uses its resources more efficiently than Firm B. 
C)  Firm A has more customers than Firm B. 
D)  Firm A generates greater profits on sales and uses its resources more efficiently than B. 
E)  It might not mean anything. 
A)  Firm A likely generates greater profits or sales. 
B)  Firm A uses its resources more efficiently than Firm B. 
C)  Firm A has more customers than Firm B. 
D)  Firm A generates greater profits on sales and uses its resources more efficiently than B. 
E)  It might not mean anything.

Question 18

The equity that a homeowner has in a house is the amount of money that could be made by selling the house and paying off the mortgage. This idea is similar to the idea of owners' equity in a business.

Accepted Answer

A) True 
 B)False

Question 19

An activity ratio measures a firm's

Accepted Answer

A)  sales per employee. 
B)  frequency of purchases. 
C)  level of inventory. 
D)  efficiency in using its assets. 
E)  sales per selling expense dollar. 
A)  sales per employee. 
B)  frequency of purchases. 
C)  level of inventory. 
D)  efficiency in using its assets. 
E)  sales per selling expense dollar.

Question 20

Executives at Belize Inc. want to see the company's short-term solvency ratios. What question do they most likely want to have answered?

Accepted Answer

A)  Can immediate debts be paid without obtaining more loans? 
B)  Is there enough inventory to fulfill sales demands? 
C)  How much inventory does the company have on hand? 
D)  How much debt is the company carrying? 
E)  Are the company's products priced correctly to maximize revenue? 
A)  Can immediate debts be paid without obtaining more loans? 
B)  Is there enough inventory to fulfill sales demands? 
C)  How much inventory does the company have on hand? 
D)  How much debt is the company carrying? 
E)  Are the company's products priced correctly to maximize revenue?

Double-entry accounting is used by private-sector firms, but cannnot be used by public-sector organizations.

Describe how computing financial ratios can help users get more information from financial statements to determine the financial strengths of a business.

How do accountants define merchandise inventory?

________ allows financial statement users to see how much net gain results from the assets that had to be given up in order to generate revenues during a given period.

________ is the formal recording and reporting of revenues in financial statements.

ABC Company has net income of $5 million, $40 million of assets, and $10 million of liabilities. The number of outstanding shares of stock is 3 870 000 shares. What are earnings per share?

________ are amounts due from customers who have purchased goods on credit.

Stephen is looking at a financial statement that shows detailed information about the accounting equation factors. He is looking at the company's

What is the difference between current and long-term liabilities?

Which financial statement shows the cost of obtaining materials to make products that were sold during the year?

If you wanted to see how much Mega Computer owed your company, where would be the best place to look?

________ is the amount of money owners would theoretically receive if they sold all of a firm's assets and paid all of its liabilities.

What is earnings per share? How do investors use this information?

Which of the following describes assets such as patents and trademarks?

What is the primary thing the inventory turnover ratio says about a business?

Explain the importance and use of generally accepted accounting principles (GAAP).

Firm A enjoys a better activity ratio than Firm B. What might this mean?

The equity that a homeowner has in a house is the amount of money that could be made by selling the house and paying off the mortgage. This idea is similar to the idea of owners' equity in a business.

An activity ratio measures a firm's

Executives at Belize Inc. want to see the company's short-term solvency ratios. What question do they most likely want to have answered?

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

Double-entry accounting is used by private-sector firms, but cannnot be used by public-sector organizations.

Describe how computing financial ratios can help users get more information from financial statements to determine the financial strengths of a business.

How do accountants define merchandise inventory?

________ allows financial statement users to see how much net gain results from the assets that had to be given up in order to generate revenues during a given period.

________ is the formal recording and reporting of revenues in financial statements.

ABC Company has net income of $5 million, $40 million of assets, and $10 million of liabilities. The number of outstanding shares of stock is 3 870 000 shares. What are earnings per share?

________ are amounts due from customers who have purchased goods on credit.

Stephen is looking at a financial statement that shows detailed information about the accounting equation factors. He is looking at the company's

What is the difference between current and long-term liabilities?

Which financial statement shows the cost of obtaining materials to make products that were sold during the year?

If you wanted to see how much Mega Computer owed your company, where would be the best place to look?

________ is the amount of money owners would theoretically receive if they sold all of a firm's assets and paid all of its liabilities.

What is earnings per share? How do investors use this information?

Which of the following describes assets such as patents and trademarks?

What is the primary thing the inventory turnover ratio says about a business?

Explain the importance and use of generally accepted accounting principles (GAAP).

Firm A enjoys a better activity ratio than Firm B. What might this mean?

The equity that a homeowner has in a house is the amount of money that could be made by selling the house and paying off the mortgage. This idea is similar to the idea of owners' equity in a business.

An activity ratio measures a firm's

Executives at Belize Inc. want to see the company's short-term solvency ratios. What question do they most likely want to have answered?

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