Question 1

Accountants play a role in all three business activities: financing, investing, and operating.

Accepted Answer

A) True 
 B)False

Question 2

An international firm's consolidated financial statements must reflect any gains or losses due to changes in exchange rates during specific periods of time.

Accepted Answer

A) True 
 B)False

Question 3

Not-for-profit organizations use only public accountants.

Accepted Answer

A) True 
 B)False

Question 4

MATCHING
Complete the following using the terms listed.
-_____ represents the owners' initial investment in the business plus profits that were not paid out to owners over time in the form of cash dividends.

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 5

Return on equity is a profitability ratio.

Accepted Answer

A) True 
 B)False

Question 6

What is the purpose of the balance sheet? Explain how it is organized.

Accepted Answer

The answer of What is the purpose of the balance...

Question 7

A public accounting firm is prohibited from providing both consulting services and audit services to the same firm.

Accepted Answer

A) True 
 B)False

Question 8

A firm has total assets of $50 million and owner's equity of $40 million. What is the firm's debt ratio?

Accepted Answer

A)  70 percent 
B)  50 percent 
C)  30 percent 
D)  20 percent

Question 9

Most companies refuse to share any financial information with employees.

Accepted Answer

A) True 
 B)False

Question 10

Deborah Inc., an online retail store, recorded an inventory of $3,000 as of December 31, 2012. Its inventory stood at $3,500 on December 31, 2013. The cost of goods sold for the corresponding year was $15,000. Which of the following indicates the inventory turnover ratio of Deborah Inc.?

Accepted Answer

A)  5 
B)  4.28 
C)  4.61 
D)  5.22

Question 11

All of the following are tangible assets EXCEPT _____.

Accepted Answer

A)  cash 
B)  patents 
C)  building 
D)  inventory

Question 12

What is the primary role of a government accountant?

Accepted Answer

A)  Preparing the organization's tax return statement 
B)  Determining how much money the organization is taking in 
C)  Determining the cost of goods and services provided by the organization 
D)  Determining how efficiently the organization accomplishes its objectives

Question 13

The Federal Bureau of Investigation is an example of a governmental agency that hires accountants.

Accepted Answer

A) True 
 B)False

Question 14

Jayce Products buys a $500,000 machine by taking out a bank loan. The company's assets will _____ by $500,000 while its liabilities will _?____?? by $500,000.

Accepted Answer

A)  rise; rise 
B)  fall; fall 
C)  rise; fall 
D)  fall; rise

Question 15

Assets can include intangible possessions such as patents and trademarks.

Accepted Answer

A) True 
 B)False

Question 16

What is accounting? Provide examples of tasks that accountants perform.

Accepted Answer

The answer of What is accounting? Provide examples of tasks...

Exam 15: Understanding Accounting and Financial Statements

Accountants play a role in all three business activities: financing, investing, and operating.

An international firm's consolidated financial statements must reflect any gains or losses due to changes in exchange rates during specific periods of time.

Not-for-profit organizations use only public accountants.

MATCHING Complete the following using the terms listed. -_____ represents the owners' initial investment in the business plus profits that were not paid out to owners over time in the form of cash dividends.

Return on equity is a profitability ratio.

What is the purpose of the balance sheet? Explain how it is organized.

A public accounting firm is prohibited from providing both consulting services and audit services to the same firm.

A firm has total assets of $50 million and owner's equity of $40 million. What is the firm's debt ratio?

Most companies refuse to share any financial information with employees.

Deborah Inc., an online retail store, recorded an inventory of $3,000 as of December 31, 2012. Its inventory stood at $3,500 on December 31, 2013. The cost of goods sold for the corresponding year was $15,000. Which of the following indicates the inventory turnover ratio of Deborah Inc.?

All of the following are tangible assets EXCEPT _____.

What is the primary role of a government accountant?

The Federal Bureau of Investigation is an example of a governmental agency that hires accountants.

Jayce Products buys a $500,000 machine by taking out a bank loan. The company's assets will _____ by $500,000 while its liabilities will _?____?? by $500,000.

Assets can include intangible possessions such as patents and trademarks.

What is accounting? Provide examples of tasks that accountants perform.