Question 1

The financing provided by owners is represented on the balance sheet as which of the following

Accepted Answer

A)   revenues
B)   dividends
C)   liabilities
D)   owners' equity D

Question 2

Liabilities are resources owned by a firm.

Accepted Answer

A) True 
 B)False

Question 3

Tiny Timber Tree Farms applied to United Bank for a business loan. Which financial statements would the loan officer of the bank be most likely to request?

Accepted Answer

A)   journals, ledgers, and trial balances
B)   the prospectus, statement of retained earnings, and total liability statement
C)   total debits and total credits
D)   balance sheets, income statements, and cash flow statements

Question 4

Snow International, a ski company in Canada, has 500 shares of outstanding common stock and has not issued any preferred stock. Net income is $27,500. What would be the earnings per share calculation?

Accepted Answer

A)   $27,500 - 500 = $27,000
B)   $27,500 × 500 = $13,750,000
C)   500/$27,500 = $.018
D)   $27,500/500 = $55 D

Question 5

Mary Chiu is an employee and shareholder for the McNeely Company. Mary is considered a primary user of her firm's accounting information.

Accepted Answer

A) True 
 B)False

Question 6

The cash flows received from operations reported in the statement of cash flows should be exactly equal to the revenue the firm reports on its income statement.

Accepted Answer

A) True 
 B)False

Question 7

Assets are the tangible and intangible resources of value owned by a firm.

Accepted Answer

A) True 
 B)False  True

Question 8

Where would one find a change to the way a company funds its pension plan for its employees?

Accepted Answer

A)   income statement
B)   balance sheet
C)   notes to financial statements
D)   statement of cash flows

Question 9

When managerial accountants assign costs to the production of specific products, which of the following costs are easiest to assign?

Accepted Answer

A)   insurance premiums and depreciation expenses
B)   property taxes and income taxes
C)   direct labour and direct materials costs
D)   general maintenance expenses and direct labour

Question 10

Many of the major firms that were implicated in accounting scandals had a difficult time recovering but after making apologies to the public these firms continued successfully.

Accepted Answer

A) True 
 B)False

Question 11

Accounting systems are utilized by companies for several reasons, but they have little value when it comes to making economic decisions.

Accepted Answer

A) True 
 B)False

Question 12

The costs a firm incurs for plant maintenance, quality control, or depreciation on office equipment are usually classified as which of the following?

Accepted Answer

A)   indirect costs
B)   direct costs
C)   activity-based costs
D)   incidental costs

Question 13

At Sips and Chips, a local cybercafé, a financial manager has calculated the debt-to-equity ratio and discovered it is equal to one. What does this indicate about Sips and Chips?

Accepted Answer

A)   It is relying exclusively on debt financing to meet its long-term financing needs.
B)   It is relying on equal amounts of debt and equity financing.
C)   It has an equal amount of current assets and current liabilities.
D)   It is at risk of being unable to pay its short-term debts when they come due.

Question 14

Which type of accounting addresses the needs of external stakeholders, including shareholders, creditors, and government regulators?

Accepted Answer

A)   forensic accounting
B)   managerial accounting
C)   investigative accounting
D)   financial accounting

Question 15

Firms must disclose changes in accounting methods that could affect the comparability of the current financial statements to those of previous years.

Accepted Answer

A) True 
 B)False

Question 16

When do managerial reports get produced?

Accepted Answer

A)   quarterly
B)   annually
C)   there are specific time intervals for each managerial level
D)   upon request

Question 17

Indirect costs tend to be a result of the firm's general operation rather than the production of any specific product.

Accepted Answer

A) True 
 B)False

Question 18

A high inventory turnover ratio is bad because it indicates the firm has too much inventory.

Accepted Answer

A) True 
 B)False

Question 19

What does the statement of cash flows show about a firm?

Accepted Answer

A)   a net profit or loss
B)   the current assets and current liabilities that are likely to result in cash flows over the next accounting period
C)   sources and uses of cash that result from its operating, investing, and financing activities
D)   a schedule of payments for the debts that come due in the next year

Question 20

For what purpose would shareholders be most likely to use accounting information provided by their firm?

Accepted Answer

A)   gauging whether the firm is generating a satisfactory return on their investment
B)   determining whether the firm can repay them for their stock
C)   making capital budgeting decisions
D)   obtaining information needed to fill out their individual tax returns

Exam 7: Accounting: Decision Making by the Numbers

The financing provided by owners is represented on the balance sheet as which of the following

Correct AnswerverifiedD

Liabilities are resources owned by a firm.

Correct AnswerverifiedShow Answer

Tiny Timber Tree Farms applied to United Bank for a business loan. Which financial statements would the loan officer of the bank be most likely to request?

Correct AnswerverifiedShow Answer

Snow International, a ski company in Canada, has 500 shares of outstanding common stock and has not issued any preferred stock. Net income is $27,500. What would be the earnings per share calculation?

Correct AnswerverifiedD

Mary Chiu is an employee and shareholder for the McNeely Company. Mary is considered a primary user of her firm's accounting information.

Correct AnswerverifiedShow Answer

The cash flows received from operations reported in the statement of cash flows should be exactly equal to the revenue the firm reports on its income statement.

Correct AnswerverifiedShow Answer

Assets are the tangible and intangible resources of value owned by a firm.

Correct AnswerverifiedTrue

Where would one find a change to the way a company funds its pension plan for its employees?

Correct AnswerverifiedShow Answer

When managerial accountants assign costs to the production of specific products, which of the following costs are easiest to assign?

Correct AnswerverifiedShow Answer

Many of the major firms that were implicated in accounting scandals had a difficult time recovering but after making apologies to the public these firms continued successfully.

Correct AnswerverifiedShow Answer

Accounting systems are utilized by companies for several reasons, but they have little value when it comes to making economic decisions.

Correct AnswerverifiedShow Answer

The costs a firm incurs for plant maintenance, quality control, or depreciation on office equipment are usually classified as which of the following?

Correct AnswerverifiedShow Answer

At Sips and Chips, a local cybercafé, a financial manager has calculated the debt-to-equity ratio and discovered it is equal to one. What does this indicate about Sips and Chips?

Correct AnswerverifiedShow Answer

Which type of accounting addresses the needs of external stakeholders, including shareholders, creditors, and government regulators?

Correct AnswerverifiedShow Answer

Firms must disclose changes in accounting methods that could affect the comparability of the current financial statements to those of previous years.

Correct AnswerverifiedShow Answer

When do managerial reports get produced?

Correct AnswerverifiedShow Answer

Indirect costs tend to be a result of the firm's general operation rather than the production of any specific product.

Correct AnswerverifiedShow Answer

A high inventory turnover ratio is bad because it indicates the firm has too much inventory.

Correct AnswerverifiedShow Answer

What does the statement of cash flows show about a firm?

Correct AnswerverifiedShow Answer

For what purpose would shareholders be most likely to use accounting information provided by their firm?

Correct AnswerverifiedShow Answer

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