Question 1

The matching principle states that

Accepted Answer

A)  expenses will be matched with revenues to determine net income for an accounting period. 
B)  the costs of goods sold must match the total expenses of the firm. 
C)  the firm needs to match the assets and liabilities in order to record the transaction in its journal. 
D)  revenue recognition occurs before the earnings cycle is completed. 
E)  the total receipts must match the expenditures for a given period of time. 
A)  expenses will be matched with revenues to determine net income for an accounting period. 
B)  the costs of goods sold must match the total expenses of the firm. 
C)  the firm needs to match the assets and liabilities in order to record the transaction in its journal. 
D)  revenue recognition occurs before the earnings cycle is completed. 
E)  the total receipts must match the expenditures for a given period of time.

Question 2

Operating income is determined by subtracting from gross sales revenue the cost of goods sold,operating expenses,and income taxes.

Accepted Answer

A) True 
 B)False

Question 3

The debt-to-owners' equity ratio measures a firm's ability to meet

Accepted Answer

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

Question 4

A chartered accountant receives an operating license from the federal government that is good for a three-year period.

Accepted Answer

A) True 
 B)False

Question 5

The ______________ ratio is calculated by dividing the cost of goods sold by average inventory.

Accepted Answer

A)  inventory turnover 
B)  earnings per share 
C)  current 
D)  debt-to-equity 
E)  none of these 
A)  inventory turnover 
B)  earnings per share 
C)  current 
D)  debt-to-equity 
E)  none of these

Question 6

Depreciation is used to recognize the cost of an asset in the year in which it is purchased.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is an intangible asset?

Accepted Answer

A)  An inventory level of 1000 copies of a book 
B)  The copyright for a textbook 
C)  A printing press used in the publication of a book 
D)  A $1000 Canada Savings Bond 
E)  The building in which a book was printed 
A)  An inventory level of 1000 copies of a book 
B)  The copyright for a textbook 
C)  A printing press used in the publication of a book 
D)  A $1000 Canada Savings Bond 
E)  The building in which a book was printed

Question 8

Explain the importance and use of GAAP.

Accepted Answer

- GAAP are the guidelines that auditors

Question 9

Activity ratios are used to determine the amount of sales for the year.

Accepted Answer

A) True 
 B)False

Question 10

If the following facts were known,which one would strengthen the argument that a company is profitable?

Accepted Answer

A)  The company's sales revenue is low relative to its cost of goods sold. 
B)  The company's cost of goods sold is low relative to its sales revenue. 
C)  The number of customers has remained stable for some time. 
D)  The company has had the same owners over its lifetime. 
E)  The company's selling expenses are high compared to its administrative expenses. 
A)  The company's sales revenue is low relative to its cost of goods sold. 
B)  The company's cost of goods sold is low relative to its sales revenue. 
C)  The number of customers has remained stable for some time. 
D)  The company has had the same owners over its lifetime. 
E)  The company's selling expenses are high compared to its administrative expenses.

Question 11

Explain the three basic financial statements and show how they reflect the activity and financial condition of a business.

Accepted Answer

Accounting summarizes the results of a f

Question 12

Financial accounting is primarily for people outside the firm while managerial accounting is primarily for people inside the firm.

Accepted Answer

A) True 
 B)False

Question 13

An asset is anything of economic value owned by the business firm.

Accepted Answer

A) True 
 B)False

Question 14

________ requires that expenses will be matched with revenues to determine net income for the accounting period.

Accepted Answer

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

Question 15

The primary purpose of balance sheets is to show how various accounts like assets and liabilities change over time.

Accepted Answer

A) True 
 B)False

Question 16

The current ratio measures a company's ability to meet current obligations out of current assets.

Accepted Answer

A) True 
 B)False

Question 17

What is bookkeeping?

Accepted Answer

A)  The same as accounting 
B)  The recording of accounting transactions 
C)  The financial statements of a company 
D)  A system for measuring business performance 
E)  Internal procedures that alert managers to problems 
A)  The same as accounting 
B)  The recording of accounting transactions 
C)  The financial statements of a company 
D)  A system for measuring business performance 
E)  Internal procedures that alert managers to problems

Question 18

Janice is a bookkeeper.Her primary function would be to

Accepted Answer

A)  generate financial statements. 
B)  measure business performance. 
C)  record accounting transactions. 
D)  complete the same tasks as accountants do. 
E)  determine the value of the firm to investors. 
A)  generate financial statements. 
B)  measure business performance. 
C)  record accounting transactions. 
D)  complete the same tasks as accountants do. 
E)  determine the value of the firm to investors.

Question 19

________ ratios give investors an idea of what returns they can expect on their investment; dividing ________ by total owners' equity is one such ratio.

Accepted Answer

A)  Profitability; earnings per share 
B)  Long-term liquidity; net income 
C)  Activity; average inventory 
D)  Short-term liquidity; earnings per share 
E)  Profitability; net income 
A)  Profitability; earnings per share 
B)  Long-term liquidity; net income 
C)  Activity; average inventory 
D)  Short-term liquidity; earnings per share 
E)  Profitability; net income

Question 20

Manhattan Corporation has total assets of $700 000,total liabilities of $200 000,and owners' equity of $500 000.What is Manhattan Corporation's debt-to-equity ratio?

Accepted Answer

$200 000/$

The matching principle states that

Operating income is determined by subtracting from gross sales revenue the cost of goods sold,operating expenses,and income taxes.

The debt-to-owners' equity ratio measures a firm's ability to meet

A chartered accountant receives an operating license from the federal government that is good for a three-year period.

The ______________ ratio is calculated by dividing the cost of goods sold by average inventory.

Depreciation is used to recognize the cost of an asset in the year in which it is purchased.

Which of the following is an intangible asset?

Explain the importance and use of GAAP.

Activity ratios are used to determine the amount of sales for the year.

If the following facts were known,which one would strengthen the argument that a company is profitable?

Explain the three basic financial statements and show how they reflect the activity and financial condition of a business.

Financial accounting is primarily for people outside the firm while managerial accounting is primarily for people inside the firm.

An asset is anything of economic value owned by the business firm.

________ requires that expenses will be matched with revenues to determine net income for the accounting period.

The primary purpose of balance sheets is to show how various accounts like assets and liabilities change over time.

The current ratio measures a company's ability to meet current obligations out of current assets.

What is bookkeeping?

Janice is a bookkeeper.Her primary function would be to

ratios give investors an idea of what returns they can expect on their investment; dividing by total owners' equity is one such ratio.

Manhattan Corporation has total assets of $700 000,total liabilities of $200 000,and owners' equity of $500 000.What is Manhattan Corporation's debt-to-equity ratio?

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

Exam 14: Understanding Accounting Issues

The matching principle states that

Operating income is determined by subtracting from gross sales revenue the cost of goods sold,operating expenses,and income taxes.

The debt-to-owners' equity ratio measures a firm's ability to meet

A chartered accountant receives an operating license from the federal government that is good for a three-year period.

The ______________ ratio is calculated by dividing the cost of goods sold by average inventory.

Depreciation is used to recognize the cost of an asset in the year in which it is purchased.

Which of the following is an intangible asset?

Explain the importance and use of GAAP.

Activity ratios are used to determine the amount of sales for the year.

If the following facts were known,which one would strengthen the argument that a company is profitable?

Explain the three basic financial statements and show how they reflect the activity and financial condition of a business.

Financial accounting is primarily for people outside the firm while managerial accounting is primarily for people inside the firm.

An asset is anything of economic value owned by the business firm.

________ requires that expenses will be matched with revenues to determine net income for the accounting period.

The primary purpose of balance sheets is to show how various accounts like assets and liabilities change over time.

The current ratio measures a company's ability to meet current obligations out of current assets.

What is bookkeeping?

Janice is a bookkeeper.Her primary function would be to

________ ratios give investors an idea of what returns they can expect on their investment; dividing ________ by total owners' equity is one such ratio.

Manhattan Corporation has total assets of $700 000,total liabilities of $200 000,and owners' equity of $500 000.What is Manhattan Corporation's debt-to-equity ratio?

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

ratios give investors an idea of what returns they can expect on their investment; dividing by total owners' equity is one such ratio.