Question 1

What does the term "double-entry" accounting mean?

Accepted Answer

double-entry accounting is a system that

Question 2

One manager (Adam)says that the income statement should be strong this year because the company has achieved a high level of sales revenue.Another manager (Eve)says that even with strong sales revenue,the income statement might not look particularly good.If the following facts were known,which one would strengthen Adam's argument?

Accepted Answer

A)  Total operating expenses were high this year. 
B)  Rent expenses were 30 percent higher than last year. 
C)  Compared to gross sales,the cost of goods sold was low. 
D)  The company is smaller than its competitors. 
E)  The company has valuable fixed assets. 
A)  Total operating expenses were high this year. 
B)  Rent expenses were 30 percent higher than last year. 
C)  Compared to gross sales,the cost of goods sold was low. 
D)  The company is smaller than its competitors. 
E)  The company has valuable fixed assets.

Question 3

Prahbat is looking at a financial statement produced by Iron Corp.The statement lists the company's annual revenues,its expenses,and its profit.Prahbat is looking at a(n)

Accepted Answer

A)  cash flow statement. 
B)  revenue-expense statement. 
C)  balance sheet. 
D)  budget. 
E)  income statement. 
A)  cash flow statement. 
B)  revenue-expense statement. 
C)  balance sheet. 
D)  budget. 
E)  income statement.

Question 4

One of the purposes of accounting is to communicate financial information.

Accepted Answer

A) True 
 B)False

Question 5

The inventory turnover ratio measures the average number of times that inventory is sold and restocked during the year.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

- private accountants are hired as salar

Question 7

A balance sheet would not be able to help a manager answer which question?

Accepted Answer

A)  Is it a good time to try to grow the business? 
B)  Can the company survive if a period of low revenues happens? 
C)  Does the company have an excessive number of employees? 
D)  Is the company able to take on more debt? 
E)  What is the total value of all of the company's assets? 
A)  Is it a good time to try to grow the business? 
B)  Can the company survive if a period of low revenues happens? 
C)  Does the company have an excessive number of employees? 
D)  Is the company able to take on more debt? 
E)  What is the total value of all of the company's assets?

Question 8

If a firm has $1 000 000 in retained earnings,what does this mean?

Accepted Answer

A)  That the firm paid out $1 000 000 this year in dividends. 
B)  That the company is owed $1 000 000 by its creditors but has not yet collected the money. 
C)  That the firm has $1 000 000 in the bank. 
D)  That the company's net profits less its dividend payments equals $1 000 000. 
E)  That the company has saved $1 000 000 during the period since the last balance sheet was made up. 
A)  That the firm paid out $1 000 000 this year in dividends. 
B)  That the company is owed $1 000 000 by its creditors but has not yet collected the money. 
C)  That the firm has $1 000 000 in the bank. 
D)  That the company's net profits less its dividend payments equals $1 000 000. 
E)  That the company has saved $1 000 000 during the period since the last balance sheet was made up.

Question 9

What is a budget?

Accepted Answer

A)  The estimated number of people required to complete a manufacturing project 
B)  An estimate of costs submitted to a buyer in order to make a sale 
C)  An estimate of the cash balance for the year 
D)  A detailed estimate of receipts and expenditures for a given period of time 
E)  An estimate of research and development costs 
A)  The estimated number of people required to complete a manufacturing project 
B)  An estimate of costs submitted to a buyer in order to make a sale 
C)  An estimate of the cash balance for the year 
D)  A detailed estimate of receipts and expenditures for a given period of time 
E)  An estimate of research and development costs

Question 10

________ are debts that must be paid within one year.

Accepted Answer

A)  Long-term liabilities 
B)  Liabilities 
C)  Intermediate liabilities 
D)  Current liabilities 
E)  Short-term liabilities 
A)  Long-term liabilities 
B)  Liabilities 
C)  Intermediate liabilities 
D)  Current liabilities 
E)  Short-term liabilities

Question 11

What is a budget? Who uses a budget?

Accepted Answer

- a budget is a detailed financial plan

Question 12

What does the balance sheet show?

Accepted Answer

A)  It shows the share price of the firm during the last year and how much fluctuation there has been in the share price. 
B)  It shows short- and long-term liquidity ratios,profitability ratios,and activity ratios. 
C)  It shows a firm's financial condition on a particular date in terms of its assets,liabilities,and owners' equity. 
D)  It shows investors how much profit the firm made during the last year. 
E)  It shows a firm's sources and uses of cash. 
A)  It shows the share price of the firm during the last year and how much fluctuation there has been in the share price. 
B)  It shows short- and long-term liquidity ratios,profitability ratios,and activity ratios. 
C)  It shows a firm's financial condition on a particular date in terms of its assets,liabilities,and owners' equity. 
D)  It shows investors how much profit the firm made during the last year. 
E)  It shows a firm's sources and uses of cash.

Question 13

The revenue recognition principle says that earnings may not be reported until the earnings cycle is completed.

Accepted Answer

A) True 
 B)False

Question 14

What is the formula for determining owners' equity?

Accepted Answer

A)  Assets minus liablities 
B)  Assets plus liabilities 
C)  Assets minus goodwill 
D)  Current assets minus current liabilities 
E)  There is no formula for computing owners' equity 
A)  Assets minus liablities 
B)  Assets plus liabilities 
C)  Assets minus goodwill 
D)  Current assets minus current liabilities 
E)  There is no formula for computing owners' equity

Question 15

Rose is reviewing a company's accounting system,checking the ledgers and journals,and tracking some transactions to see how they were handled.Rose is engaged in

Accepted Answer

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

Question 16

What is the accounting equation? Provide a brief explanation of the meaning of each part of this equation.

Accepted Answer

- accounting equation: assets = liabilit

Question 17

What is the formula for the current ratio?

Accepted Answer

(current a

Question 18

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 19

If Eric wants to know the cost of obtaining materials to make products that were sold during the year,he would look at the

Accepted Answer

A)  income statement. 
B)  statement of cash flows. 
C)  operating expenses statement. 
D)  balance sheet. 
E)  none of these. 
A)  income statement. 
B)  statement of cash flows. 
C)  operating expenses statement. 
D)  balance sheet. 
E)  none of these.

Question 20

What is the accounting equation?

Accepted Answer

Assets = L

What does the term "double-entry" accounting mean?

Prahbat is looking at a financial statement produced by Iron Corp.The statement lists the company's annual revenues,its expenses,and its profit.Prahbat is looking at a(n)

One of the purposes of accounting is to communicate financial information.

The inventory turnover ratio measures the average number of times that inventory is sold and restocked during the year.

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

A balance sheet would not be able to help a manager answer which question?

If a firm has $1 000 000 in retained earnings,what does this mean?

What is a budget?

________ are debts that must be paid within one year.

What is a budget? Who uses a budget?

What does the balance sheet show?

The revenue recognition principle says that earnings may not be reported until the earnings cycle is completed.

What is the formula for determining owners' equity?

Rose is reviewing a company's accounting system,checking the ledgers and journals,and tracking some transactions to see how they were handled.Rose is engaged in

What is the accounting equation? Provide a brief explanation of the meaning of each part of this equation.

What is the formula for the current ratio?

An activity ratio measures a firm's

If Eric wants to know the cost of obtaining materials to make products that were sold during the year,he would look at the

What is the accounting equation?

Understanding the Canadian Business System

Understanding the Environments of Business

Conducting Business Ethically and Responsibly

Understanding Entrepreneurship, small Business, and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Managing Human Resources

Understanding Labourmanagement Relations

Motivating and Leading Employees

Producing Goods and Services

Increasing Productivity and Quality

Managing Information Systems and Communication Technology

Understanding Marketing Processes and Consumer Behaviour

Developing and Promoting Goods and Services

Pricing and Distributing Goods and Services

Understanding Money and Banking

Understanding Securities and Investments

Financial Decisions and Risk Management

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Exam 14: Understanding Accounting Issues

What does the term "double-entry" accounting mean?

Prahbat is looking at a financial statement produced by Iron Corp.The statement lists the company's annual revenues,its expenses,and its profit.Prahbat is looking at a(n)

One of the purposes of accounting is to communicate financial information.

The inventory turnover ratio measures the average number of times that inventory is sold and restocked during the year.

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

A balance sheet would not be able to help a manager answer which question?

If a firm has $1 000 000 in retained earnings,what does this mean?

What is a budget?

________ are debts that must be paid within one year.

What is a budget? Who uses a budget?

What does the balance sheet show?

The revenue recognition principle says that earnings may not be reported until the earnings cycle is completed.

What is the formula for determining owners' equity?

Rose is reviewing a company's accounting system,checking the ledgers and journals,and tracking some transactions to see how they were handled.Rose is engaged in

What is the accounting equation? Provide a brief explanation of the meaning of each part of this equation.

What is the formula for the current ratio?

An activity ratio measures a firm's

If Eric wants to know the cost of obtaining materials to make products that were sold during the year,he would look at the

What is the accounting equation?

Understanding the Canadian Business System

Understanding the Environments of Business

Conducting Business Ethically and Responsibly

Understanding Entrepreneurship, small Business, and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Managing Human Resources

Understanding Labourmanagement Relations

Motivating and Leading Employees

Producing Goods and Services

Increasing Productivity and Quality

Managing Information Systems and Communication Technology

Understanding Marketing Processes and Consumer Behaviour

Developing and Promoting Goods and Services

Pricing and Distributing Goods and Services

Understanding Money and Banking

Understanding Securities and Investments

Financial Decisions and Risk Management

Filters