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Exam 15: Using Accounting Information

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Question 101

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Winshare Art Company has issued only common stock.Currently it has 10,000 shares outstanding.The value of the stock is shown as $20 per share.In addition, $100,000 of Winshare's earnings have been reinvested in the business since it was founded.What is Winshare's total owners' equity?

A) $300,000
B) $200,000
C) $100,000
D) $2,000,000
E) $100,020

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Question 102

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The cash that Coca-Cola receives from providing customers with Coke and other soft drinks and juices would appear in the ____ section of the statement of cash flows.

A) financing
B) business
C) receiving
D) operating
E) investing

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Question 103

Multiple Choice

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Commonly used in accounting analysis, a ____ shows a relationship between two elements of a firm's financial statements.

The ratio calculated by dividing total liabilities by owners' equity is the _____.

All of the following are sections of the income statement for a business except:

How would it be easier to determine if a firm made or lost money last year-by looking at the balance sheet or by looking at the income statement? Support your answer by explaining in general terms what accounts a balance sheet lists and what accounts an income statement lists.

The cost of goods sold divided by the average inventory equals the _____.

Debts that will be repaid in one year or less are known as current liabilities.

Equipment and patents are known as intangible assets.

The J.Book Company wants to indicate to its shareholders how successful it has been.To do this, it uses the ____ as an indicator of its success.

Another name for the statement of financial position is the _____.

Christine's First Job Christine has just earned her undergraduate degree in accounting and has successfully completed the CPA exam.She recently interviewed with a relatively small and new company and was offered a job.The offer sounded very promising; the job had opportunities to grow with the company and provided diverse challenges.Christine accepted the job. Once Christine started working, she realized that the owners and employees did not have a general understanding of accounting.She had to teach them the steps in an accounting cycle so they would be able to understand how she was going to create reports.When she talked about the statement of financial position, they had no idea what she was talking about.She was the qualified individual responsible for accounting.No one else working with her had much knowledge.They did not even know the different financial ratios that someone could use to understand the financial standing of a company.Christine knows it will be a challenge to keep everyone on the same page when it comes to numbers and reports. -From an executive's viewpoint, which of the following statements does not describe an executive's motivation to "cook" a firm's books?

The cost of goods sold for McPherson Fashions is $360,000.The beginning inventory for the firm was $20,000.Twelve months later the ending inventory was $40,000.What is the firm's inventory turnover?

For small firms, the major difference between the current ratio and the acid-test ratio is that inventory is subtracted from current assets in order to calculate the acid-test ratio.

Resources that a firm owns are classified as assets.

A low inventory turnover can be improved by ordering merchandise in smaller quantities at more frequent intervals.

A prepaid expense would be classified as _____.

When Joan Newport attended the orientation for new employees in the accounting department at Madison Oil and Energy Exploration, she was told that the primary users of accounting information are _____.

Since business has been rapidly expanding, Sugar Bakery decides to purchase a second industrial oven.The cash paid for this oven would be listed in the ____ section of the statement of cash flows.

The financial statement that provides information about a firm's operating, investing, and financing activities during an accounting period is the _____.