Question 1

The two main types of operating expenses are:

Accepted Answer

A)  production and general and administrative
B)  production and selling
C)  selling and general and administrative
D)  office and selling
E)  maintenance and production

Question 2

The Sarbanes-Oxley Act redefines the public corporation-auditor relationship and restricts the types of services auditors can provide to clients.

Accepted Answer

A) True 
 B)False

Question 3

In accounting, every transaction must be recorded as two entries.This system is called:

Accepted Answer

A)  accounting-cycle bookkeeping
B)  double-entry bookkeeping
C)  dual-notation bookkeeping
D)  double-decker bookkeeping
E)  tandem record keeping

Question 4

_____ deals with reporting to outsiders._____ accounting deals with the internal operations of the firm.

Accepted Answer

A)  Bookkeeping; Financial accounting
B)  Financial accounting; Auditing
C)  Auditing; Managerial accounting
D)  External accounting; Internal accounting
E)  Financial accounting; Managerial accounting

Question 5

Recent legislation has decreased the roles of the chief audit executive (CAE).

Accepted Answer

A) True 
 B)False

Question 6

The first step in the accounting cycle is to:

Accepted Answer

A)  analyze business transaction documents
B)  prepare financial statements
C)  analyze financial statements
D)  prepare trial balance
E)  post entries to ledger

Question 7

The sporting goods store sold $75,000 worth of merchandise in June.The retailer gave no discounts and had no returns.Which of the following statements accurately describes the information seen on the company's income statement?

Accepted Answer

A)  Gross sales exceed net sales.
B)  Cost of goods sold exceeds gross sales.
C)  Gross sales equal net sales.
D)  Liabilities equal assets.
E)  Net sales exceed gross sales.

Question 8

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

Accepted Answer

A)  Accountants are typically classified as private or public accountants.
B)  Accountants cannot legally offer management consulting services.
C)  Private accountants serve individuals and organizations on a fee basis.
D)  Public accountants work for local, state, and national agencies.
E)  All of the above statement about the accounting profession are true.

Question 9

A(n)  _____ is a yearly document that describes a firm's financial status and usually discusses a firm's financial activities during the past year and its prospects for the future.

Accepted Answer

A)  trial balance
B)  firm summary
C)  annual report
D)  earnings report
E)  financial analysis

Question 10

To ensure accuracy and consistency in the way financial information is reported, accountants follow rules known as:

Accepted Answer

A)  accounting rules and principles
B)  principled accounting procedures
C)  comparable accounting standards
D)  generally accepted accounting principles
E)  financial accounting standards

Question 11

_____ are temporary investments of excess cash in bonds and stocks that can readily be converted into cash.

Accepted Answer

A)  Accounts receivable
B)  Owners' net contribution margins
C)  Notes payable
D)  Marketable securities
E)  Marketable receivables

Question 12

Which of the following is the BEST example of a current asset for a university bookstore?

Accepted Answer

A)  the building in which the store is located
B)  accounting software used to control store's inventory
C)  credit card charges by book buyers
D)  money paid for rent and utilities
E)  salary paid to student employees

Question 13

The Financial Accounting Standards Board (FASB)  is currently:

Accepted Answer

A)  pushing for major changes in GAAP
B)  creating international accounting regulations
C)  calling for the repeal of Sarbanes-Oxley
D)  encouraging accountants to serve as their clients' advisors
E)  lobbying to change the format of the balance sheet so it can reflect a more ethical environment

Question 14

A kennel designed for boarding small dogs has current assets of $8,000, current liabilities of $2,000, and fixed assets of $25,000.The small company has a current ratio of:

Accepted Answer

A)  2.5
B)  4
C)  8
D)  25
E)  40

Question 15

Managerial accounting provides information that would probably be most beneficial to:

Accepted Answer

A)  the IRS
B)  financial analysts
C)  a lending officer of the bank
D)  a middle manager of the company
E)  shareholders

Question 16

How has the Sarbanes-Oxley Act affected accountants?

Accepted Answer

A)  It has made financial statements reviewable by the SEC.
B)  It has allowed companies to replace accountants with accounting software.
C)  It has made in possible for a U.S.-trained accountant to pursue his or her craft in all countries of the world.
D)  It requires accountants to conduct an environmental scan for all customers.
E)  It has eliminated many nonauditing tasks they use to provide for their customers.

Question 17

What do inventory turnover ratios measure?

Accepted Answer

the speed with which...

Question 18

Earnings per share (EPS) is the dollar amount earned by each share, not the actual amount given to stockholders in the form of dividends.

Accepted Answer

A) True 
 B)False

Question 19

In 2006, the retail industry voted the Bike Gallery as one of the top 100 bicycle retailers in the United States.It recently purchased a truckload of Thule brand bike racks from the manufacturer.Until the Bike Gallery pays the bill, the purchase will be carried on Thule's books as a(n) :

Accepted Answer

A)  account receivable
B)  intangible asset
C)  account payable
D)  current asset
E)  fixed liability

Question 20

A company that specializes in planning parties for children had $7,000 worth of inventory on January 1, 2018, and it had $5,000 worth of inventory on December 31, 2018.If its cost of goods sold for that period was $3,000, and its net profit was $9,000, what was its inventory to turnover ratio?

Accepted Answer

A)  1 time
B)  1.5 times
C)  2 times
D)  3 times
E)  9 times

Exam 14: Using Financial Information and Accounting

Which of the following is the BEST example of a current asset for a university bookstore?

Correct AnswerverifiedShow Answer

The Financial Accounting Standards Board (FASB) is currently:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

_____ deals with reporting to outsiders._____ accounting deals with the internal operations of the firm.

Correct AnswerverifiedShow Answer

How has the Sarbanes-Oxley Act affected accountants?

Correct AnswerverifiedShow Answer

In accounting, every transaction must be recorded as two entries.This system is called:

Correct AnswerverifiedShow Answer

Managerial accounting provides information that would probably be most beneficial to:

Correct AnswerverifiedShow Answer

Earnings per share (EPS) is the dollar amount earned by each share, not the actual amount given to stockholders in the form of dividends.

Correct AnswerverifiedShow Answer

In 2006, the retail industry voted the Bike Gallery as one of the top 100 bicycle retailers in the United States.It recently purchased a truckload of Thule brand bike racks from the manufacturer.Until the Bike Gallery pays the bill, the purchase will be carried on Thule's books as a(n) :

Correct AnswerverifiedShow Answer

The first step in the accounting cycle is to:

Correct AnswerverifiedShow Answer

The Sarbanes-Oxley Act redefines the public corporation-auditor relationship and restricts the types of services auditors can provide to clients.

Correct AnswerverifiedShow Answer

The two main types of operating expenses are:

Correct AnswerverifiedShow Answer

A(n) _____ is a yearly document that describes a firm's financial status and usually discusses a firm's financial activities during the past year and its prospects for the future.

Correct AnswerverifiedShow Answer

What do inventory turnover ratios measure?

Correct Answerverifiedthe speed with which...View AnswerShow Answer

Recent legislation has decreased the roles of the chief audit executive (CAE).

Correct AnswerverifiedShow Answer

A company that specializes in planning parties for children had $7,000 worth of inventory on January 1, 2018, and it had $5,000 worth of inventory on December 31, 2018.If its cost of goods sold for that period was $3,000, and its net profit was $9,000, what was its inventory to turnover ratio?

Correct AnswerverifiedShow Answer

_____ are temporary investments of excess cash in bonds and stocks that can readily be converted into cash.

Correct AnswerverifiedShow Answer

The sporting goods store sold $75,000 worth of merchandise in June.The retailer gave no discounts and had no returns.Which of the following statements accurately describes the information seen on the company's income statement?

Correct AnswerverifiedShow Answer

To ensure accuracy and consistency in the way financial information is reported, accountants follow rules known as:

Correct AnswerverifiedShow Answer

A kennel designed for boarding small dogs has current assets of $8,000, current liabilities of $2,000, and fixed assets of $25,000.The small company has a current ratio of:

Correct AnswerverifiedShow Answer

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_ deals with reporting to outsiders._ accounting deals with the internal operations of the firm.

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the speed with which...
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