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Exam 17: Using Management and Accounting Information

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Question 21

True/False

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Owners' equity is the dollar value that remains after the total liabilities of a business are subtracted from its total assets.

A) True
B) False

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Question 22

Multiple Choice

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For the previous year, Sambino's Italian Restaurant had a total of $320,000 in expenses and $295,000 in revenues. Sambino's

A) had a net income of $325,000 for the year.
B) had a net loss of $25,000 for the year.
C) lost $25,000 in revenues.
D) acquired an additional $295,000 in assets.
E) increased its stockholders' equity by $25,000.

F) None of the above
G) A) and B)

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Question 23

Multiple Choice

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Emiliano Garza spent five years in an accounting educational program and successfully completed a rigorous accounting examination five years ago. Since then, he has worked for several accounting firms. Currently he is a senior partner in a huge international accounting firm. By profession, Emiliano is probably a

Once a data bank has been established, there is no need to make any additions to or changes in its contents.

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 how data is transformed into financial information and, from that point, reported on various statements. 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. -Refer to Christine's First Job. To help the owners understand how effectively the firm is transforming sales into profits, Christine should address which of the following ratios?

A price reduction to customers who pay their bills promptly is called

What type of information is reported on a corporation's statement of cash flows?

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

Write the accounting equation. Then define each term and give an example.

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?

Which of the following statements about the Sarbanes-Oxley Act is incorrect?

If you are taking a common sense approach to evaluating a firm's accounting information, which of the following would not be something that you would hope to see?

The term ____ describes assets that can be quickly converted into cash or consumed in one year or less.

Management and employees are the groups that would be most likely to evaluate the risk associated with investing in a company's stocks, bonds, or securities.

Why are current assets listed before fixed assets on the balance sheet?

When smart investors take a practical approach to evaluating a company's accounting information, they need only look at the snapshot data that a balance sheet offers as it will be the primary tool to guide potentially profitable investments.

The specific types of information that managers need depend on their area of management and on their

The ratio obtained by dividing net income after taxes by net sales is the

Jessica has worked for one week but her employer only pays its employees every two weeks. The amount of money her company owes her is classified as

Equipment and patents are known as intangible assets.