Question 1

An accountant employed by a business other than an accounting firm is called a management accountant.

Accepted Answer

A) True 
 B)False

Question 2

If a U.S. company has substantial operations in Europe and the value of the euro falls relative to the U.S. dollar, the company's profits, stated in U.S. dollars, will also fall.

Accepted Answer

A) True 
 B)False

Question 3

Professionals who are responsible for gathering, recording, reporting, and interpreting the financial information of an organization are known as _____.

Accepted Answer

A)  statisticians 
B)  accountants 
C)  IRS agents 
D)  IRS agents' managers

Question 4

Rivera owns a business and is reviewing her company's current financial statements. As a user of accounting information, Rivera is most interested in using this information to _____.

Accepted Answer

A)  evaluate credit risk 
B)  approve new issues of stocks and bonds 
C)  plan and control activities 
D)  evaluate tax liabilities

Question 5

Mitchell works for a travel agency. Her job involves preparing financial reports and interpreting those reports to provide information for decision making. Which title is appropriate for Mitchell's job?

Accepted Answer

A)  Market researcher 
B)  Systems analyst 
C)  Investor 
D)  Accountant

Question 6

Since publicly traded companies are required to report their financial information, anyone can find out their respective sales and revenue figures during the previous year or quarter.

Accepted Answer

A) True 
 B)False

Question 7

Double-entry bookkeeping refers to the process by which accounting transactions are recorded.

Accepted Answer

A) True 
 B)False

Question 8

MATCHING
Complete the following using the terms listed.
-A(n) _____ is employed by a business other than a public accounting firm.

Accepted Answer

A) certified public accountant 
B) International Financial Reporting Standards 
C) asset 
D) liability 
E) Owners' equity
F)accounting equation
G)balance sheet
H)income statement
I)Foreign Corruption Practices Act
J)accrual accounting
K)open book management
L)budget
M)generally accepted accounting principles (GAAP)
N)Financial Accounting Standards Board (FAS
B) 
O)profitability ratios
P)International Accounting Standards Committee (IAS
C) 
Q)Leverage ratios
R)management accountant

Question 9

Maxwell is not an employee of the Edith Corporation, but he was hired as a management consultant to provide unbiased advice about Edith Corporation's financial condition. Maxwell is a(n) _____.

Accepted Answer

A)  public accountant 
B)  government accountant 
C)  internal auditor 
D)  management accountant

Question 10

The three principal financial statements are the balance sheet, income statement, and the statement of retained earnings.

Accepted Answer

A) True 
 B)False

Question 11

Haley is a corporate certified public accountant (CPA) working on a new budget. When she lists the company's liabilities, which of the following will she include?

Accepted Answer

A)  Computer software 
B)  Owners' equity 
C)  Marketable securities 
D)  Employees' wages and salaries

Question 12

The Securities and Exchange Commission is the chief federal regulator of financial markets and the accounting industry.

Accepted Answer

A) True 
 B)False

Question 13

The budget establishes the standards with which actual performance may be compared.

Accepted Answer

A) True 
 B)False

Question 14

Elena works for a mid-sized manufacturing company. Her responsibility is to examine the firm's financial practices to ensure that records include accurate data and that the firm's operations are in compliance with federal, state, and local laws and regulations. Elena is a(n) _____.

Accepted Answer

A)  government accountant 
B)  cost accountant 
C)  tax accountant 
D)  internal auditor

Question 15

If a company has an acid test ratio of 1.00, $5 million in inventory, and $10 million in current liabilities, what are its total current assets?

Accepted Answer

A)  $5 million 
B)  $10 million 
C)  $15 million 
D)  $20 million

Question 16

MATCHING
Complete the following using the terms listed.
-A(n) _____ demonstrates his or her accounting knowledge by meeting state requirements for education and experience, as well as successfully completing a number of rigorous tests in accounting theory and practice, auditing, law, and taxes.

Accepted Answer

A) certified public accountant 
B) International Financial Reporting Standards 
C) asset 
D) liability 
E) Owners' equity
F)accounting equation
G)balance sheet
H)income statement
I)Foreign Corruption Practices Act
J)accrual accounting
K)open book management
L)budget
M)generally accepted accounting principles (GAAP)
N)Financial Accounting Standards Board (FAS
B) 
O)profitability ratios
P)International Accounting Standards Committee (IAS
C) 
Q)Leverage ratios
r
management accountant

Question 17

Public accountants are typically employees of the firm for which they are providing services.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following financial statements shows a firm's financial position on a particular date?

Accepted Answer

A)  Statement of changes in retained earnings 
B)  Income statement 
C)  Statement of cash flows 
D)  Balance sheet

Question 19

Milwaukee Fabrication has $80 million in assets and $50 million in owners' equity. How much does the firm have in liabilities?

Accepted Answer

A)  $80 million 
B)  $50 million 
C)  $30 million 
D)  $20 million

Question 20

A(n) _____ is a financial statement that is directly based on the accounting equation.

Accepted Answer

A)  balance sheet 
B)  income statement 
C)  statement of cash flows 
D)  statement of changes in retained earnings

Exam 15: Understanding Accounting and Financial Statements

An accountant employed by a business other than an accounting firm is called a management accountant.

If a U.S. company has substantial operations in Europe and the value of the euro falls relative to the U.S. dollar, the company's profits, stated in U.S. dollars, will also fall.

Professionals who are responsible for gathering, recording, reporting, and interpreting the financial information of an organization are known as _____.

Rivera owns a business and is reviewing her company's current financial statements. As a user of accounting information, Rivera is most interested in using this information to _____.

Mitchell works for a travel agency. Her job involves preparing financial reports and interpreting those reports to provide information for decision making. Which title is appropriate for Mitchell's job?

Since publicly traded companies are required to report their financial information, anyone can find out their respective sales and revenue figures during the previous year or quarter.

Double-entry bookkeeping refers to the process by which accounting transactions are recorded.

MATCHING Complete the following using the terms listed. -A(n) _____ is employed by a business other than a public accounting firm.

Maxwell is not an employee of the Edith Corporation, but he was hired as a management consultant to provide unbiased advice about Edith Corporation's financial condition. Maxwell is a(n) _____.

The three principal financial statements are the balance sheet, income statement, and the statement of retained earnings.

Haley is a corporate certified public accountant (CPA) working on a new budget. When she lists the company's liabilities, which of the following will she include?

The Securities and Exchange Commission is the chief federal regulator of financial markets and the accounting industry.

The budget establishes the standards with which actual performance may be compared.

Elena works for a mid-sized manufacturing company. Her responsibility is to examine the firm's financial practices to ensure that records include accurate data and that the firm's operations are in compliance with federal, state, and local laws and regulations. Elena is a(n) _____.

If a company has an acid test ratio of 1.00, $5 million in inventory, and $10 million in current liabilities, what are its total current assets?

MATCHING Complete the following using the terms listed. -A(n) _____ demonstrates his or her accounting knowledge by meeting state requirements for education and experience, as well as successfully completing a number of rigorous tests in accounting theory and practice, auditing, law, and taxes.

Public accountants are typically employees of the firm for which they are providing services.

Which of the following financial statements shows a firm's financial position on a particular date?

Milwaukee Fabrication has $80 million in assets and $50 million in owners' equity. How much does the firm have in liabilities?

A(n) _____ is a financial statement that is directly based on the accounting equation.