Exam 17: Financial Information and Accounting Concepts

According to generally accepted accounting principles (GAAP),earnings before interest,taxes,depreciation,and amortization (EBITDA)is the preferred measure of profitability.

What is a balance sheet? Why is it called a balance sheet?

AccBiz is a tool used commonly by small businesses.It is a simple application that records financial transactions.It records such transactions as sales,purchases,income,receipts,and payments.However,the software cannot be used for financial analyses or higher-level applications.The functions that AccBiz performs can be referred to as ________.

Jacob is the CEO of Drabo Associates,a firm that offers financial consulting to firms in the U.S.Drabo Associates gives Jacob an unguaranteed personal loan of $500,000.Which of the following legislations has outlawed such a transaction?

What is GAAP?

Intellectual property and goodwill are considered liabilities in accounting.

A reduction in a manufacturer's inventory turnover ratio is likely to indicate that the ________.

Cash basis is an accounting method in which revenue is recorded when a sale is made.

Which of the following is an example of a current asset?

________ is an accounting method in which revenue is recorded when payment is received and expense is recorded when money is paid.

________ refers to combining accounting and investigating skills to assist in legal and criminal matters.

The profit earned or loss incurred by a firm,determined by subtracting expenses from revenues,is referred to as the ________.

Leverage ratios indicate ________.

Rambo Footwear is a Chinese shoe manufacturing company.The company spends a large amount to buy machinery for a new plant that it has set up.Instead of adding this in the current year's expense the company's accounting spreads the cost over a period of fifteen years.This accounting practice of spreading costs is called ________.

Which of the following statements is TRUE of the order in which assets are listed in the balance sheet?

Which of the following is classified as a general expense?

According to the double-entry bookkeeping method,the accounting equation must be in balance.

Total liabilities divided by total assets will yield the ________ ratio.

Which of the following is generated through management accounting rather than financial accounting?

Activity ratios analyze ________.