Question 1

Why do business firms have private accountants? What do these individuals do for the company?

Accepted Answer

Private accountants are hired as salarie

Question 2

The current ratio measures a firm's ability to meet

Accepted Answer

A)  interest payments. 
B)  long-term liabilities. 
C)  short-term liabilities. 
D)  all liabilities. 
E)  dividend payments. 
A)  interest payments. 
B)  long-term liabilities. 
C)  short-term liabilities. 
D)  all liabilities. 
E)  dividend payments.

Question 3

Who manages the entire firm's accounting activities?

Accepted Answer

A)  Venture capitalist 
B)  Private accountant 
C)  Controller 
D)  Public (not chartered) accountant 
E)  Auditor 
A)  Venture capitalist 
B)  Private accountant 
C)  Controller 
D)  Public (not chartered) accountant 
E)  Auditor

Question 4

Bennequin Manufacturing was a highly profitable firm five years ago, but its net revenue has since been severely declining, even though the amount of business has held steady. Marlena has been hired as the new Chief Executive Officer to help turn things around for the company. She would like to understand what happened financially to the company in the past five years in order to start coming up with possible solutions. Which of the following documents would be most useful for her?

Accepted Answer

A)  Income statements from the past five years 
B)  Debt statements from the past five years 
C)  Statements of cash flows from the past five years 
D)  Budgets from the past five years 
E)  Balance sheets from the past five years 
A)  Income statements from the past five years 
B)  Debt statements from the past five years 
C)  Statements of cash flows from the past five years 
D)  Budgets from the past five years 
E)  Balance sheets from the past five years

Question 5

Due to a downturn in the local economy, Bob is concerned about converting his assets to cash quickly. In accounting terms, he is apprehensive about

Accepted Answer

A)  current assets. 
B)  liquidity. 
C)  turnover. 
D)  net income. 
E)  marketable securities. 
A)  current assets. 
B)  liquidity. 
C)  turnover. 
D)  net income. 
E)  marketable securities.

Question 6

The debt-to-equity ratio is calculated by dividing

Accepted Answer

A)  current liabilities by owners' equity. 
B)  total liabilities by owners' equity. 
C)  long-term liabilities by retained earnings. 
D)  total liabilities by retained earnings. 
E)  long-term liabilities by owners' equity. 
A)  current liabilities by owners' equity. 
B)  total liabilities by owners' equity. 
C)  long-term liabilities by retained earnings. 
D)  total liabilities by retained earnings. 
E)  long-term liabilities by owners' equity.

Question 7

If the following facts were known, which one would strengthen the argument that a company would be able to meet its current financial obligations?

Accepted Answer

A)  The level of accounts payable is high. 
B)  Liabilities exceed assets. 
C)  The company currently has a negative cash flow. 
D)  The company needs to increase the number of customers it serves. 
E)  Assets exceed liabilities. 
A)  The level of accounts payable is high. 
B)  Liabilities exceed assets. 
C)  The company currently has a negative cash flow. 
D)  The company needs to increase the number of customers it serves. 
E)  Assets exceed liabilities.

Question 8

Which of the following ensures that the accounting equation is always kept in balance?

Accepted Answer

A)  Credits 
B)  Debits 
C)  Double-entry accounting 
D)  Balance sheet 
E)  T-accounts 
A)  Credits 
B)  Debits 
C)  Double-entry accounting 
D)  Balance sheet 
E)  T-accounts

Question 9

A current liability is

Accepted Answer

A)  additional money, above proceeds from a stock sale, paid directly to a firm by its owners. 
B)  the process of distributing the cost of an asset over its useful life. 
C)  the amount paid for an existing business above the value of its other assets. 
D)  a debt that is not due for at least one year. 
E)  a debt that must be paid within the year. 
A)  additional money, above proceeds from a stock sale, paid directly to a firm by its owners. 
B)  the process of distributing the cost of an asset over its useful life. 
C)  the amount paid for an existing business above the value of its other assets. 
D)  a debt that is not due for at least one year. 
E)  a debt that must be paid within the year.

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 questions would a balance sheet not be able to help answer about the current state of Streeter & Sons?

Accepted Answer

A)  Is it a good time for the business to grow? 
B)  Can the company survive a season of low revenues? 
C)  Does the company have too many employees? 
D)  Can the company take on more debt? 
E)  What is the value of the company's assets? 
A)  Is it a good time for the business to grow? 
B)  Can the company survive a season of low revenues? 
C)  Does the company have too many employees? 
D)  Can the company take on more debt? 
E)  What is the value of the company's assets?

Question 11

How is the debt-to-owners'-equity ratio used?

Accepted Answer

A)  To describe the extent to which the firm is financed through borrowed money 
B)  To determine how much net income the business earns for each dollar invested 
C)  To determine how readily the firm can meet unexpected demands for cash 
D)  To indicate the percentage of revenue which will be profit 
E)  To determine the percentage of profits paid out to debtholders 
A)  To describe the extent to which the firm is financed through borrowed money 
B)  To determine how much net income the business earns for each dollar invested 
C)  To determine how readily the firm can meet unexpected demands for cash 
D)  To indicate the percentage of revenue which will be profit 
E)  To determine the percentage of profits paid out to debtholders

Question 12

The lower the inventory turnover ratio, the higher the efficiency of operations.

Accepted Answer

A) True 
 B)False

Question 13

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 strengthen the case that an income statement would show Streeter & Sons where its problems lie?

Accepted Answer

A)  The company does not have enough shareholders. 
B)  The company's expenses are too high. 
C)  The company's owners' equity is too low. 
D)  The company needs to hire more service specialists. 
E)  The company has few intangible assets. 
A)  The company does not have enough shareholders. 
B)  The company's expenses are too high. 
C)  The company's owners' equity is too low. 
D)  The company needs to hire more service specialists. 
E)  The company has few intangible assets.

Question 14

The current ratio is used to determine the percentage of sales revenue that is generated by new products, while the earnings per share ratio takes into account sales of both old and new products.

Accepted Answer

A) True 
 B)False

Question 15

________ calls attention to problems and helps managers carry out the planning, decision making, and controlling functions.

Accepted Answer

A)  Budgeting 
B)  Financial accounting 
C)  Auditing 
D)  Managerial accounting 
E)  Generally accepted accounting principles 
A)  Budgeting 
B)  Financial accounting 
C)  Auditing 
D)  Managerial accounting 
E)  Generally accepted accounting principles

Question 16

The field of accounting that serves internal users of a company's financial information is

Accepted Answer

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

Question 17

A(n) ________ is any economic resource expected to benefit a firm or the individual who owns it.

Accepted Answer

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

Question 18

The accounting equation is

Accepted Answer

A)  owners' equity - assets = liabilities. 
B)  owners' equity - liabilities = assets. 
C)  assets + liabilities = owners' equity. 
D)  assets + owners' equity = liabilities. 
E)  assets = liabilities + owners' equity. 
A)  owners' equity - assets = liabilities. 
B)  owners' equity - liabilities = assets. 
C)  assets + liabilities = owners' equity. 
D)  assets + owners' equity = liabilities. 
E)  assets = liabilities + owners' equity.

Question 19

How does a current asset differ from a fixed asset?

Accepted Answer

- A current asset is cash and other asse

Question 20

How is the return on equity ratio calculated?

Accepted Answer

A)  Operation income divided by retained earnings 
B)  Net income divided by retained earnings 
C)  Net income divided by total owners' equity 
D)  Operating income divided by total owners' equity 
E)  Net income divided by common stock 
A)  Operation income divided by retained earnings 
B)  Net income divided by retained earnings 
C)  Net income divided by total owners' equity 
D)  Operating income divided by total owners' equity 
E)  Net income divided by common stock

Why do business firms have private accountants? What do these individuals do for the company?

The current ratio measures a firm's ability to meet

Who manages the entire firm's accounting activities?

Due to a downturn in the local economy, Bob is concerned about converting his assets to cash quickly. In accounting terms, he is apprehensive about

The debt-to-equity ratio is calculated by dividing

If the following facts were known, which one would strengthen the argument that a company would be able to meet its current financial obligations?

Which of the following ensures that the accounting equation is always kept in balance?

A current liability is

How is the debt-to-owners'-equity ratio used?

The lower the inventory turnover ratio, the higher the efficiency of operations.

The current ratio is used to determine the percentage of sales revenue that is generated by new products, while the earnings per share ratio takes into account sales of both old and new products.

________ calls attention to problems and helps managers carry out the planning, decision making, and controlling functions.

The field of accounting that serves internal users of a company's financial information is

A(n) ________ is any economic resource expected to benefit a firm or the individual who owns it.

The accounting equation is

How does a current asset differ from a fixed asset?

How is the return on equity ratio calculated?

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

Why do business firms have private accountants? What do these individuals do for the company?

The current ratio measures a firm's ability to meet

Who manages the entire firm's accounting activities?

Due to a downturn in the local economy, Bob is concerned about converting his assets to cash quickly. In accounting terms, he is apprehensive about

The debt-to-equity ratio is calculated by dividing

If the following facts were known, which one would strengthen the argument that a company would be able to meet its current financial obligations?

Which of the following ensures that the accounting equation is always kept in balance?

A current liability is

How is the debt-to-owners'-equity ratio used?

The lower the inventory turnover ratio, the higher the efficiency of operations.

The current ratio is used to determine the percentage of sales revenue that is generated by new products, while the earnings per share ratio takes into account sales of both old and new products.

________ calls attention to problems and helps managers carry out the planning, decision making, and controlling functions.

The field of accounting that serves internal users of a company's financial information is

A(n) ________ is any economic resource expected to benefit a firm or the individual who owns it.

The accounting equation is

How does a current asset differ from a fixed asset?

How is the return on equity ratio calculated?

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