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Exam 17: Using Management and Accounting Information

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Question 51

True/False

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GAAP is an abbreviation that stands for generally accepted accounting principles.

A) True
B) False

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Question 52

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In order for The Gift Market, a local specialty store, to purchase Christmas merchandise for selling in its store, it had to borrow money from a local bank. This debt owed to the bank is a(n)

A) liability.
B) expense.
C) owners' equity.
D) asset.
E) credit.

F) A) and B)
G) A) and C)

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Question 53

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The value of a firm's reputation, location, earning capacity, and other intangibles that make the business profitable is called its

The ___ created the IFRS, accounting standards used in more than 100 countries.

Describe the first step, collecting data, of developing a management information system. Define internal and external data sources with several examples of each.

If a company has $50,000 of assets, which of the following could be true?

Schluster Hardware, Inc., had a gross profit of $380,000, operating expenses of $210,000, and income taxes of $48,000. What is Schluster's net income after taxes?

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

Which of the following statements is false?

Managers often compare financial and accounting data for previous accounting periods and for competing firms.

For John Deere, a tractor and farm equipment manufacturer, spark plugs to be installed in its equipment would be classified on the balance sheet as

Jack Stanley graduated from college and obtained a full-time job in accounting. At the end of his first year of employment, his assets totaled $9,000. His liabilities totaled $3,000. His ____ was $6,000.

Managerial accounting generates financial statements and reports for interested people outside an organization.

A public accountant works on a fee basis for clients.

What is inventory turnover? How is it calculated? Why is it important for a manager to track this ratio?

Chase invests $5,000 of his own money in his new auto detailing business. He then obtains a loan and builds a small workshop in his backyard for $10,000. At this point assets are ____, liabilities are ____, and owners' equity is ____.

What types of accounts might be listed on a firm's income statement? What would be the term for the dollar amount left at the bottom of the income statement?

The debts of a business are called its liabilities.

Because of the Sarbanes-Oxley Act, accountants must maintain financial documents and audit work for

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. When Christine explained the asset side of a balance sheet, she included which of the following?