Question 1

Personalized Products is a small manufacturing firm specializing in custom-order tool and die work. A computerized accounting system would help Personalized Products by

Accepted Answer

A)   making key accounting and financial decisions.
B)   helping management identify cash flow and other financial difficulties more quickly.
C)   eliminating the need to prepare financial statements and other reports.
D)   eliminating the need to perform the three middle steps of the accounting cycle.

Question 2

While reviewing the books at his firm, Colin noticed discrepancies between how the firm recorded revenues last year and how it elected to record revenues during the recent quarter of the current year. As a recent business graduate, Colin felt confident that the changes needed clarification. To get another opinion, Colin suggested to the company's controller that the firm solicit

Accepted Answer

A)   the assistance of the Government Accounting Standards Board.
B)   the services of a certified internal auditor.
C)   the services of a senior executive at the IRS.
D)   the services of an independent auditor.

Question 3

The debt to owners' equity ratio is a common type of liquidity ratio.

Accepted Answer

A) True 
 B)False

Question 4

Barkatorium Pet Supplies recently hired an accountant to make sense of each day's transactions, and keep better financial records for the business. The accountant showed the owner that the ledger in a computerized accounting system would automatically take entries and post them to the correct accounts in the ledger, making the bookkeeping tasks much easier.

Accepted Answer

A) True 
 B)False

Question 5

Double-entry bookkeeping can help identify a recording error made by a bookkeeper.

Accepted Answer

A) True 
 B)False

Question 6

The accounting profession is divided into two main fields: bookkeeping and auditing.

Accepted Answer

A) True 
 B)False

Question 7

A ________ summarizes all the data from the account ledgers to verify that they are correct and balanced.

Accepted Answer

A)   ledger statement
B)   balance sheet
C)   trial balance
D)   statement of cash flows

Question 8

Marissa is taking her first course in accounting this semester. One of the first things she learns is that revenue and net income mean the same thing.

Accepted Answer

A) True 
 B)False

Question 9

A series of high-profile scandals in the early 2000s put the accounting profession under intense scrutiny.

Accepted Answer

A) True 
 B)False

Question 10

Although managers who work for large firms must know something about accounting, people who run small businesses only need to know the basics of bookkeeping.

Accepted Answer

A) True 
 B)False

Question 11

________ is the systematic write-off of the value of a tangible asset over its useful life.

Accepted Answer

A)   Expense structuring
B)   Depreciation
C)   Capital budgeting
D)   Gross margin allocation

Question 12

Once a trial balance has been prepared, the next step of the accounting cycle involves

Accepted Answer

A)   posting the information to the correct ledger accounts.
B)   completing a balance sheet and ratio analysis.
C)   preparing financial statements such as the balance sheet, income statement, and statement of cash flows.
D)   classifying the transactions into logical categories.

Question 13

Explain the difference between current, fixed, and intangible assets. Give two examples of each of these different types of assets.

Accepted Answer

Current assets are items that can be con...

Question 14

Accounting is NOT important for nonprofit organizations since financial data is not critical to their success.

Accepted Answer

A) True 
 B)False

Question 15

Generally, a high ________ ratio could lead investors and creditors to view the company as being very risky.

Accepted Answer

A)   debt to owners' equity
B)   acid-test
C)   diluted earnings per share
D)   inventory turnover

Question 16

The three important financial statements prepared by accountants are

Accepted Answer

A)   ledger, journal, and trial balance.
B)   cash budget, capital budget, and master budget.
C)   revenue summary, expense summary, and consolidation statement.
D)   balance sheet, income statement, and statement of cash flows.

Question 17

The acid-test ratio emphasizes the ability to convert inventory quickly into cash.

Accepted Answer

A) True 
 B)False

Question 18

The balance sheet is set up to reflect the Fundamental Accounting Equation. This equation shows

Accepted Answer

A)   Assets = Liabilities + Owners' equity.
B)   Revenues - Expenses = Gross profit.
C)   Cash inflows = Cash outflows.
D)   Current assets + Current liabilities = Owners' equity.

Question 19

Accounting information is NOT relevant for nonprofit organizations.

Accepted Answer

A) True 
 B)False

Question 20

Important provisions of the Sarbanes-Oxley Act

Accepted Answer

A)   approve corporate loans to directors of the company.
B)   encourage the destruction of financial documents.
C)   require the CEO and CFO of corporations to certify the accuracy of financial reports.
D)   encourage outside CPA firms to deliver several services to their clients, including auditing services and consulting services.

Exam 17: Understanding Accounting and Financial Information

Correct Answer
verified

Marissa is taking her first course in accounting this semester. One of the first things she learns is that revenue and net income mean the same thing.

Correct Answer
verified

Personalized Products is a small manufacturing firm specializing in custom-order tool and die work. A computerized accounting system would help Personalized Products by

Correct Answer
verified

Explain the difference between current, fixed, and intangible assets. Give two examples of each of these different types of assets.

Correct Answer
verified
Current assets are items that can be con...
View Answer

Although managers who work for large firms must know something about accounting, people who run small businesses only need to know the basics of bookkeeping.

Correct Answer
verified

The debt to owners' equity ratio is a common type of liquidity ratio.

Correct Answer
verified

Important provisions of the Sarbanes-Oxley Act

Correct Answer
verified

A ________ summarizes all the data from the account ledgers to verify that they are correct and balanced.

Correct Answer
verified

The three important financial statements prepared by accountants are

Correct Answer
verified

A series of high-profile scandals in the early 2000s put the accounting profession under intense scrutiny.

Correct Answer
verified

Accounting information is NOT relevant for nonprofit organizations.

Correct Answer
verified

The balance sheet is set up to reflect the Fundamental Accounting Equation. This equation shows

Correct Answer
verified

Generally, a high ________ ratio could lead investors and creditors to view the company as being very risky.

Correct Answer
verified

Double-entry bookkeeping can help identify a recording error made by a bookkeeper.

Correct Answer
verified

Correct Answer
verified

The acid-test ratio emphasizes the ability to convert inventory quickly into cash.

Correct Answer
verified

Once a trial balance has been prepared, the next step of the accounting cycle involves

Correct Answer
verified

The accounting profession is divided into two main fields: bookkeeping and auditing.

Correct Answer
verified

Accounting is NOT important for nonprofit organizations since financial data is not critical to their success.

Correct Answer
verified

________ is the systematic write-off of the value of a tangible asset over its useful life.

Correct Answer
verified

Exam 17: Understanding Accounting and Financial Information

Correct AnswerverifiedShow Answer

Marissa is taking her first course in accounting this semester. One of the first things she learns is that revenue and net income mean the same thing.

Correct AnswerverifiedShow Answer

Personalized Products is a small manufacturing firm specializing in custom-order tool and die work. A computerized accounting system would help Personalized Products by

Correct AnswerverifiedShow Answer

Explain the difference between current, fixed, and intangible assets. Give two examples of each of these different types of assets.

Correct AnswerverifiedCurrent assets are items that can be con...View AnswerShow Answer

Although managers who work for large firms must know something about accounting, people who run small businesses only need to know the basics of bookkeeping.

Correct AnswerverifiedShow Answer

The debt to owners' equity ratio is a common type of liquidity ratio.

Correct AnswerverifiedShow Answer

Important provisions of the Sarbanes-Oxley Act

Correct AnswerverifiedShow Answer

A ________ summarizes all the data from the account ledgers to verify that they are correct and balanced.

Correct AnswerverifiedShow Answer

The three important financial statements prepared by accountants are

Correct AnswerverifiedShow Answer

A series of high-profile scandals in the early 2000s put the accounting profession under intense scrutiny.

Correct AnswerverifiedShow Answer

Accounting information is NOT relevant for nonprofit organizations.

Correct AnswerverifiedShow Answer

The balance sheet is set up to reflect the Fundamental Accounting Equation. This equation shows

Correct AnswerverifiedShow Answer

Generally, a high ________ ratio could lead investors and creditors to view the company as being very risky.

Correct AnswerverifiedShow Answer

Double-entry bookkeeping can help identify a recording error made by a bookkeeper.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The acid-test ratio emphasizes the ability to convert inventory quickly into cash.

Correct AnswerverifiedShow Answer

Once a trial balance has been prepared, the next step of the accounting cycle involves

Correct AnswerverifiedShow Answer

The accounting profession is divided into two main fields: bookkeeping and auditing.

Correct AnswerverifiedShow Answer

Accounting is NOT important for nonprofit organizations since financial data is not critical to their success.

Correct AnswerverifiedShow Answer

________ is the systematic write-off of the value of a tangible asset over its useful life.

Correct AnswerverifiedShow Answer

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verified

Correct Answer
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Correct Answer
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Correct Answer
verified
Current assets are items that can be con...
View Answer

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verified

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verified

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Correct Answer
verified

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verified

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