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Exam 15: Using Accounting Information

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Question 1

True/False

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The process of apportioning the cost of a fixed asset over the period during which it will be used is known as depreciation.

A) True
B) False

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Question 2

Multiple Choice

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Which of the following presents assets in the correct balance sheet order?

A) cash, land, accounts receivable, equipment
B) marketable securities, equipment, prepaid insurance, inventory
C) cash, inventory, equipment
D) accounts receivable, buildings, inventory, land
E) buildings, prepaid expenses, inventory, equipment

F) A) and D)
G) C) and E)

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Question 3

Multiple Choice

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Debts that need not be repaid for at least one year are referred to as _____.

A private accountant is an accountant whose services may be hired on a fee basis by individuals or business firms.

Lutex Corporation began its accounting period with a merchandise inventory (beginning inventory) that cost $10,000.During the period, it purchased for resale merchandise with a retail value of $100,000.With purchase discounts, it paid only $80,000 for this merchandise.Thus, during this period, Lutex had ____ in goods available for sale.

If total liabilities were subtracted from total assets, the residual value would be _____.

A public accountant works on a fee basis for clients.

What does it mean to post a transaction? Would this part of the accounting cycle be done before or after preparing a trial balance?

Mirror Emporium's sole owner, Fred Martin, is happy about his $100,000 profit.However, while he knows that the firm is profitable, he wants to know how effectively his investment is being used.What computation would you recommend?

The return on sales ratio indicates how effectively a firm is transforming its sales into profits.

Ridgley, Cooper, and Ross (RCR) Katie is the CEO of Ridgley, Cooper, and Ross (RCR) , a regional accounting firm.RCR offers services in most areas of accounting, including auditing and consulting services.The firm must follow the GAAP rules, just like any other accounting firm.If there are information gaps that are not addressed and resolved by the firm, RCR could be considered a violator of the Sarbanes-Oxley Act.Katie understands what must be done and wants every employee of the firm to understand that they have to follow all the rules and regulations.Like any other industry, accounting is a competitive industry and employees of accounting firms must be productive, progressive, and well trained. -Refer to Ridgley, Cooper, and Ross.One of RCR's clients is ABC Electronics.RCR develops ABC Electronics' statements and reports for ABC's stockholders, financial analysts, and bankers.These services can be classified as which of the following?

A firm has $260,000 in assets and $158,000 in stockholders' equity.It owes $55,000 from a long-term loan, and this is its only long-term liability.This firm has ____ in total current liabilities.

According to the accounting equation, cash, inventory, equipment, and real estate are classified as owners' equity.

The accounts receivable turnover estimates the number of times a firm sells and replaces its inventory each year.

Most of a firm's proprietary accounting information is reported to the general public in the firm's annual report.

During the year Comer, Inc., had $200,000 in goods available for sale.At the end of the accounting period it had an ending inventory of $40,000.This reveals that it had sold all but ____ worth of the available goods.

People who purchased stock in Morgan Oil Exploration are most interested in its ____ reports.

The three primary financial reports are the income statement, the balance sheet, and the statement of cash flows.

Today corporations are required to send their stockholders an annual report.Assume that you are a prospective investor trying to decide if you should invest in a specific corporation.What type of information is contained in an annual report that would help you decide if this is the right investment for you?

Since furniture and store equipment for Rosalind's Boutique will be held or used for a period longer than one year, they are considered _____.