Question 1

Bridget Cartier has privately invested $100,000 in Jacques and Jacqueline's Idaho Ski Resort.The business will use the money to purchase new ski lift chairs.$100,000 will be recorded on the balance sheet as part of the owners' equity account.In order to keep the accounts balanced,the balance sheet will also show:

Accepted Answer

A)  An increase of $100,000 cash.
B)  A fixed asset [ski lift chairs] = $100,000.
C)  A liability for $100,000.
D)  An increase in accounts receivable for $100,000 in her QuickBooks.E) B) and D)
F) B) and C)

Question 2

A major part of a bookkeeper's job is to interpret financial data and suggest strategies for improving the firm.

Accepted Answer

A) True 
 B)False

Question 3

A series of high-profile scandals in the early 2000s put the accounting profession under intense scrutiny.

Accepted Answer

A) True 
 B)False

Question 4

Churches,schools,and charitable organizations all hire accountants.

Accepted Answer

A) True 
 B)False

Question 5

The acid-test ratio emphasizes the ability to convert inventory quickly into cash.

Accepted Answer

A) True 
 B)False

Question 6

Accounting recognizes that assets,such as machinery and buildings,lose value over time.Accountants will record a portion of the cost of an asset as an expense each year through the use of:

Accepted Answer

A)  Asset valuation.
B)  Asset audits.
C)  Appreciation.
D)  Depreciation.E) B) and C)
F) A) and B)

Question 7

The current ratio is used to evaluate a firm's ability to pay its short-term debts.

Accepted Answer

A) True 
 B)False

Question 8

The Statement of Cash flows identifies cash receipts and disbursements that result _______________.

Accepted Answer

A)  from selling goods and/or services,exclusively.
B)  solely from a firm's investments.
C)  from a firm's operations and investment activities,but not from financing activities.
D)  from a firm's operations,investment,and financing activities.E) C) and D)
F) All of the above

Question 9

An) ___________ is an evaluation and unbiased opinion of the accuracy of a firm's financial statements.

Accepted Answer

A)  internal audit
B)  annual report
C)  independent audit
D)  certified auditE) All of the above
F) A) and B)

Question 10

The "bottom line" of an income statement shows the firm's:

Accepted Answer

A)  Retained earnings.
B)  Gross profit.
C)  Net income or net loss.
D)  Owners' equity.E) A) and D)
F) B) and C)

Question 11

If prices of inventory are unchanged throughout the year,LIFO and FIFO inventory valuation methods will produce the same reported net income.

Accepted Answer

A) True 
 B)False

Question 12

Financial accountants prepare reports for owners,creditors,suppliers,and others outside of the organization.

Accepted Answer

A) True 
 B)False

Question 13

In order to understand if the results of ratio calculations indicate a financially strong company,the results:

Accepted Answer

A)  Should be compared to other firms in the same industry.
B)  Are compared to same size firms in the same geographic region of the country.
C)  Are compared to the norms established by generally accepted accounting principles.
D)  Are compared to the largest firms in the country.E) A) and C)
F) A) and B)

Question 14

_________ is the systematic write-off of the value of a tangible asset over its useful life.

Accepted Answer

A)  Expense structuring
B)  Depreciation
C)  Capital budgeting
D)  Gross margin allocationE) C) and D)
F) All of the above

Question 15

The fact that Minnie spends most of her time measuring costs and checking to see if departments are staying within their budgets suggests that she is often involved in:

Accepted Answer

A)  Auditing.
B)  Managerial accounting.
C)  Bookkeeping.
D)  Departmental certification.E) B) and D)
F) C) and D)

Question 16

The accounting cycle usually involves the work of both the bookkeeper and the accountant.

Accepted Answer

A) True 
 B)False

Question 17

The sixth and final step in the accounting cycle involves:

Accepted Answer

A)  Performing a trial balance to verify that the accounting statements are internally consistent.
B)  Auditing the books to ensure that they were prepared according to generally accepted accounting principles.
C)  Preparing the income statement.
D)  Analyzing major accounting statements to evaluate the financial condition of the firm.E) A) and B)
F) A) and C)

Question 18

Accounting information is not relevant for nonprofit organizations.

Accepted Answer

A) True 
 B)False

Question 19

Generally,a high ___________ ratio could lead investors and creditors to view the company as being very risky.

Accepted Answer

A)  debt to owners' equity
B)  acid-test
C)  diluted earnings per share
D)  inventory turnoverE) A) and D)
F) C) and D)

Question 20

We would expect the inventory turnover ratio for a ski shop to be _______ than the turnover for a convenience store.

Accepted Answer

A)  higher
B)  more meaningful
C)  lower
D)  less helpfulE) C) and D)
F) B) and D)

Exam 17: Understanding Accounting and Financial Information

The accounting cycle usually involves the work of both the bookkeeper and the accountant.

Correct Answer
verified

An) ___________ is an evaluation and unbiased opinion of the accuracy of a firm's financial statements.

Correct Answer
verified

Financial accountants prepare reports for owners,creditors,suppliers,and others outside of the organization.

Correct Answer
verified

The Statement of Cash flows identifies cash receipts and disbursements that result _______________.

Correct Answer
verified

The sixth and final step in the accounting cycle involves:

Correct Answer
verified

Accounting information is not relevant for nonprofit organizations.

Correct Answer
verified

Churches,schools,and charitable organizations all hire accountants.

Correct Answer
verified

Correct Answer
verified

The current ratio is used to evaluate a firm's ability to pay its short-term debts.

Correct Answer
verified

The acid-test ratio emphasizes the ability to convert inventory quickly into cash.

Correct Answer
verified

_________ is the systematic write-off of the value of a tangible asset over its useful life.

Correct Answer
verified

Generally,a high ___________ ratio could lead investors and creditors to view the company as being very risky.

Correct Answer
verified

Accounting recognizes that assets,such as machinery and buildings,lose value over time.Accountants will record a portion of the cost of an asset as an expense each year through the use of:

Correct Answer
verified

The "bottom line" of an income statement shows the firm's:

Correct Answer
verified

In order to understand if the results of ratio calculations indicate a financially strong company,the results:

Correct Answer
verified

The fact that Minnie spends most of her time measuring costs and checking to see if departments are staying within their budgets suggests that she is often involved in:

Correct Answer
verified

We would expect the inventory turnover ratio for a ski shop to be _______ than the turnover for a convenience store.

Correct Answer
verified

A series of high-profile scandals in the early 2000s put the accounting profession under intense scrutiny.

Correct Answer
verified

If prices of inventory are unchanged throughout the year,LIFO and FIFO inventory valuation methods will produce the same reported net income.

Correct Answer
verified

A major part of a bookkeeper's job is to interpret financial data and suggest strategies for improving the firm.

Correct Answer
verified

Exam 17: Understanding Accounting and Financial Information

The accounting cycle usually involves the work of both the bookkeeper and the accountant.

Correct AnswerverifiedShow Answer

An) ___________ is an evaluation and unbiased opinion of the accuracy of a firm's financial statements.

Correct AnswerverifiedShow Answer

Financial accountants prepare reports for owners,creditors,suppliers,and others outside of the organization.

Correct AnswerverifiedShow Answer

The Statement of Cash flows identifies cash receipts and disbursements that result _______________.

Correct AnswerverifiedShow Answer

The sixth and final step in the accounting cycle involves:

Correct AnswerverifiedShow Answer

Accounting information is not relevant for nonprofit organizations.

Correct AnswerverifiedShow Answer

Churches,schools,and charitable organizations all hire accountants.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The current ratio is used to evaluate a firm's ability to pay its short-term debts.

Correct AnswerverifiedShow Answer

The acid-test ratio emphasizes the ability to convert inventory quickly into cash.

Correct AnswerverifiedShow Answer

_________ is the systematic write-off of the value of a tangible asset over its useful life.

Correct AnswerverifiedShow Answer

Generally,a high ___________ ratio could lead investors and creditors to view the company as being very risky.

Correct AnswerverifiedShow Answer

Accounting recognizes that assets,such as machinery and buildings,lose value over time.Accountants will record a portion of the cost of an asset as an expense each year through the use of:

Correct AnswerverifiedShow Answer

The "bottom line" of an income statement shows the firm's:

Correct AnswerverifiedShow Answer

In order to understand if the results of ratio calculations indicate a financially strong company,the results:

Correct AnswerverifiedShow Answer

The fact that Minnie spends most of her time measuring costs and checking to see if departments are staying within their budgets suggests that she is often involved in:

Correct AnswerverifiedShow Answer

We would expect the inventory turnover ratio for a ski shop to be _______ than the turnover for a convenience store.

Correct AnswerverifiedShow Answer

A series of high-profile scandals in the early 2000s put the accounting profession under intense scrutiny.

Correct AnswerverifiedShow Answer

If prices of inventory are unchanged throughout the year,LIFO and FIFO inventory valuation methods will produce the same reported net income.

Correct AnswerverifiedShow Answer

A major part of a bookkeeper's job is to interpret financial data and suggest strategies for improving the firm.

Correct AnswerverifiedShow Answer

Correct Answer
verified

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