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Exam 15: Understanding Accounting and Financial Statements

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Question 71

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The natural progression of a business begins with _____.

A) operating
B) investing
C) financing
D) selling

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Question 72

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Complete the following using the terms listed. -The _____ are regulations and interpretations adopted by the International Accounting Standards Board.

A) certified public accountant
B) International Financial Reporting Standards
C) asset
D) liability
E) Owners' equity
F) accounting equation
G) balance sheet
H) income statement
I) Sarbanes-Oxley Act (SOX)
J) accrual accounting
K) open book management
L) budget
M) generally accepted accounting principles (GAAP)
N) Financial Accounting Standards Board (FASB)
O) profitability ratios
P) International Accounting Standards Committee (IASC)
Q) Leverage ratios
R) management accountant

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Question 73

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What is accounting? Provide examples of tasks that accountants perform.

Accrual accounting recognizes revenues and expenses when cash changes hands.

A firm has total assets of $50 million and owner's equity of $40 million.What is the firm's debt ratio?

Preston performs professional services similar to those of a management accountant while working for the city of Portland.Preston can best be described as a _____.

Roger has been hired to collect and record financial transactions and prepare financial statements for a Christian organization affiliated to a church,which makes him a _____.

The current ratio is a leverage ratio.

Identify and briefly describe the four categories of financial ratios.

_____ ratios are designed to evaluate a firm's ability to generate revenues in excess of operating costs and other expenses.

_____ activities focus on providing valuable assets to a business.

The three principal financial statements are the balance sheet,income statement,and the statement of retained earnings.

Campbell Inc. ,a construction company,recorded a gross profit of $12,000.Its operating expenses stood at $2,000.The amount of depreciation was calculated to be $3,000.Campbell paid out $2,500 in income taxes.Which of the following figures captures Campbell's bottom line?

Who appoints the members of the Public Company Accounting Oversight Board?

Deborah Inc. ,an online retail store,recorded an inventory of $3,000 as of December 31,2012.Its inventory stood at $3,500 on December 31,2013.The cost of goods sold for the corresponding year was $15,000.Which of the following indicates the inventory turnover ratio of Deborah Inc.?