Question 1

A(n)  _____ is a summary of the money flowing into and out of a firm.

Accepted Answer

A)  balance sheet
B)  short-term budget
C)  income statement
D)  statement of cash flows
E)  annual stockholders' report

Question 2

Accountants employed within organizations are called:

Accepted Answer

A)  public accountants
B)  public auditors
C)  private auditors
D)  private accountants
E)  tax consultants

Question 3

Net sales:

Accepted Answer

A)  is determined by adding total sales for the accounting period
B)  is calculated once profit after all expenses are paid
C)  is determined once profit after cost of goods sold is deducted
D)  deducts sales discount and returns and allowances from gross sales deducting sales discount and returns and allowances from gross sales
E)  is calculated by deducting revenues from gross sales

Question 4

Which of the following statements about the accounting profession is true?

Accepted Answer

A)  Most CPAs first work for public accounting firms and later become private accountants or financial managers.
B)  Managerial accountants become a certified management accountant when they meet the requirements of the professional certification program.
C)  Public accountants serve individuals and organizations on a fee basis.
D)  Private accountants are also called corporate accountants.
E)  All of the above statement about the accounting profession are true.

Question 5

_____ are bills that have accumulated and must be paid at a specified future date within the year although no bill has been received by the firm.

Accepted Answer

A)  Accounts payable
B)  Marketable securities
C)  Notes receivable
D)  Accounts receivable
E)  Accrued expenses

Question 6

In a statement of cash flow, the cash flow from investment activities would include special promotions used to sell extra inventory.

Accepted Answer

A) True 
 B)False

Question 7

An accounting system should generate both internal and external reports.

Accepted Answer

A) True 
 B)False

Question 8

On a statement of cash flows for a manufacturer of digital thermometers, the cash flows from operating activities would include:

Accepted Answer

A)  the money borrowed from the bank to start the company
B)  the sale of land adjacent to the manufacturer's administrative office building
C)  repayment of long-term loan by a wholesaler of weather-related items
D)  purchase of new $25,000 copying machine
E)  increases in the manufacturer's inventory

Question 9

The Art Institute, a school for training artists to be financially self-sufficient, has a debt-to-equity ratio of 120 percent.This means the school has:

Accepted Answer

A)  excessive liquidity
B)  more debt than equity
C)  surplus retained earnings
D)  high accrued expenses
E)  more equity than debt

Question 10

The $350 charged to the homeowner for electrical work performed one month ago is an example of a note receivable.

Accepted Answer

A) True 
 B)False

Question 11

_____ are items on the balance sheet that can be converted into cash within the next twelve months.

Accepted Answer

The answer of _____ are items on the balance sheet...

Question 12

What does it mean when a small business owner has low liquidity?

Accepted Answer

the business's asset...

Question 13

Accounting is the process of collecting, recording, classifying, summarizing, reporting, and analyzing the financial condition of an organization.

Accepted Answer

A) True 
 B)False

Question 14

On an income statement, operating expenses that cannot be linked to cost of goods sold or to sales are called _____ expenses.

Accepted Answer

A)  functional
B)  revenue-producing
C)  miscellaneous
D)  incidental
E)  general and administrative

Question 15

What is another name for the ratio of net profit to net sales?

Accepted Answer

the net pr...

Question 16

A current asset is one that can or will be converted into cash within one year.

Accepted Answer

A) True 
 B)False

Question 17

_____ accounting focuses on preparing the financial reports used by managers and outsiders to track the firm's performance and compare it with other firms.

Accepted Answer

The answer of _____ accounting focuses on preparing the financial...

Question 18

What do debt ratios measure?

Accepted Answer

the degree and effec...

Question 19

Computers can enhance accounting by:

Accepted Answer

A)  preparing tax returns
B)  handling general ledger functions
C)  controlling purchase orders
D)  providing a means to control inventory
E)  doing all of these

Question 20

An example of an intangible asset is accounts receivable because the firm does not see or feel it until it is paid in full.

Accepted Answer

A) True 
 B)False

Exam 14: Using Financial Information and Accounting

Which of the following statements about the accounting profession is true?

Correct AnswerverifiedShow Answer

On an income statement, operating expenses that cannot be linked to cost of goods sold or to sales are called _____ expenses.

Correct AnswerverifiedShow Answer

What do debt ratios measure?

Correct Answerverifiedthe degree and effec...View AnswerShow Answer

What does it mean when a small business owner has low liquidity?

Correct Answerverifiedthe business's asset...View AnswerShow Answer

What is another name for the ratio of net profit to net sales?

Correct Answerverifiedthe net pr...View AnswerShow Answer

Accounting is the process of collecting, recording, classifying, summarizing, reporting, and analyzing the financial condition of an organization.

Correct AnswerverifiedShow Answer

The Art Institute, a school for training artists to be financially self-sufficient, has a debt-to-equity ratio of 120 percent.This means the school has:

Correct AnswerverifiedShow Answer

A current asset is one that can or will be converted into cash within one year.

Correct AnswerverifiedShow Answer

A(n) _____ is a summary of the money flowing into and out of a firm.

Correct AnswerverifiedShow Answer

The $350 charged to the homeowner for electrical work performed one month ago is an example of a note receivable.

Correct AnswerverifiedShow Answer

On a statement of cash flows for a manufacturer of digital thermometers, the cash flows from operating activities would include:

Correct AnswerverifiedShow Answer

_____ are bills that have accumulated and must be paid at a specified future date within the year although no bill has been received by the firm.

Correct AnswerverifiedShow Answer

Accountants employed within organizations are called:

Correct AnswerverifiedShow Answer

An example of an intangible asset is accounts receivable because the firm does not see or feel it until it is paid in full.

Correct AnswerverifiedShow Answer

Computers can enhance accounting by:

Correct AnswerverifiedShow Answer

In a statement of cash flow, the cash flow from investment activities would include special promotions used to sell extra inventory.

Correct AnswerverifiedShow Answer

_____ are items on the balance sheet that can be converted into cash within the next twelve months.

Correct AnswerverifiedShow Answer

An accounting system should generate both internal and external reports.

Correct AnswerverifiedShow Answer

_____ accounting focuses on preparing the financial reports used by managers and outsiders to track the firm's performance and compare it with other firms.

Correct AnswerverifiedShow Answer

Net sales:

Correct AnswerverifiedShow Answer

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the degree and effec...
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the business's asset...
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the net pr...
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