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A local bakery is suddenly inundated with many more orders for wedding cakes than it has the physical capacity to make. Rather than turn away customers, the owner decides to rent another kitchen across town to fulfill all of the orders. But she needs to borrow money to pay for the rent and additional workers, the additional cost of which will be paid by the profits from the additional cakes. Which of the following ratios will be most affected by this decision?


A) the bakery's short-term solvency ratio
B) the bakery's long-term solvency ratio
C) the bakery's profitability ratio
D) the bakery's activity ratio
E) the bakery's equity ratio

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Which of the following points out a flaw in Kershner's reasoning?


A) Kershner is not accounting for all of the possible sources of revenue for the company.
B) Kershner is not including owners' equity as part of sales revenue.
C) Income statements are not as important as balance sheets in determining a company's fiscal health.
D) Many employees are not happy with the direction the company is headed.
E) Kershner is not accounting for the contribution that expenses will make to the income statement.

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Which of the following statements is True?


A) Forensic accounting is mostly used as a tool for government regulation and investigation.
B) Forensic accounting is mostly used as a tool for intracompany investigations.
C) Forensic accounting is rarely used to investigate the misuse of government funds.
D) Forensic accounting is often used to investigate the misuse of government funds.
E) Forensic accounting is mostly used as a tool for local police enforcement.

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A firm's financial accounting system is only concerned with external users of information.

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With fixed assets of $4 billion and current assets of $1.7 billion, Realm Company has long-term liabilities of $2 billion and current liabilities of $0.34 billion. What is Realm's current ratio?


A) 0.85
B) 2
C) 2 .44
D) 5
E) 11.76

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Which of the following, if True, would NOT strengthen the case for Aardvark's closely monitoring its cash flow?


A) The company needs to make sure it is not spending too much.
B) The company needs to make sure it is generating enough revenue.
C) The company needs to make sure its employees perform well.
D) The company needs to make sure it can always pay its bills.
E) The company needs to make sure it can make capital expenditures.

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Unethical accounting methods fortunately have only affected public confidence in the company found to have committed accounting violations.

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Which of the following areas of the Certified Fraud Examiner (CFE) exam includes theories of fraud prevention?


A) criminology and ethics
B) financial transactions
C) fraud investigation
D) fraud litigation
E) legal elements of fraud

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Which of the following statements is True?


A) As common practice, a sales representative for a firm receives information from the firm's financial accounting system.
B) As common practice, a sales representative for a firm receives information from the firm's managerial accounting system.
C) As common practice, a sales representative for a firm receives information from both the firm's managerial accounting system and its financial accounting system.
D) As common practice, a sales representative for a firm receives information from the firm's revenue accounting system.
E) As common practice, a sales representative for a firm does not receive any information from the firm's accounting system.

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Rolanda suggests that Mary Ann may benefit from the services of a noncertified public accountant. What types of services could be provided?

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Noncertified public accountants assist w...

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Which of the following bodies enforces accounting and auditing rules and procedures?


A) Accounting Disclosure Board
B) Financial Accounting Standards Board
C) Association of Certified Fraud Examiners
D) Securities and Exchange Commission
E) American Institute of Certified Public Accountants

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In order to increase the quality of current accountants, the CPA Vision Project has re-asserted the ability to use and calculate large amounts of numerical data as a primary competency for accountants.

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The accountant to a local bakery would classify the buying of a new oven as "Cash flows from investing" on her statement of cash flows.

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A company brings in $3.25 million in revenue and has a revenue cost of $1 million. Which of the following statements is True?


A) In order to have a net income of more than $1.5 million, the operating expenses and income taxes need to be less than $0.25 million.
B) In order to have a net income of more than $1.5 million, the operating expenses and income taxes need to be less than $0.75 million.
C) In order to have a net income of more than $1.5 million, the operating expenses and income taxes need to be less than $1.75 million.
D) In order to have a net income of more than $1.5 million, the operating expenses and income taxes need to be less than $2.25 million.
E) In order to have a net income of more than $1.5 million, the operating expenses and income taxes need to be less than $2.75.

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Which of the following questions would a balance sheet NOT be able to help answer about the current state of Streeter & Sons?


A) Is it a good time for the business to grow?
B) Can the company survive a season of low revenues?
C) Does the company have too many employees?
D) Can the company take on more debt?
E) What is the value of the company's assets?

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Revenue from the earnings of a particular transaction is able to be reported as soon as the product or service is delivered.

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Santos needs to assess its debt situation with respect to the value of the company. Which of the following, if True, would most strengthen the case that Santos's debt is manageable?


A) Santos has a high profitability ratio.
B) Santos has a high inventory turnover ratio.
C) Santos has a low inventory turnover ratio.
D) Santos has a high debt to owners' equity ratio.
E) Santos has a low debt to owners' equity ratio.

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Which are the two major fields of accounting?


A) managerial and forensic
B) financial and managerial
C) bookkeeping and advisory
D) corporate and individual
E) public and private

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Which of the following are the three categories on a company's cash flow statement?


A) operating activities, purchase activities, taxes
B) profit inflow, debt outflow, taxes
C) profitable activities, deficit activities, taxes
D) operating activities, investing activities, taxes
E) operating activities, investing activities, financing activities

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What two sources of capital make up owners' equity?

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Owners' equity includes the amount that ...

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