Question 1

Camille is an accountant who works for a firm providing auditing services to other businesses. Camille is a public accountant.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following current assets is NOT included when calculating the acid-test ratio?

Accepted Answer

A)   Inventory
B)   Marketable securities
C)   Cash
D)   Accounts receivableE) A) and D)
F) B) and D)

Question 3

MATCHING
Complete the following using the terms listed.
-An organization's overall financial performance is measured by its _____, which evaluates the ability to generate revenues in excess of operating costs and other expenses.

Accepted Answer

A)  certified public accountant
B)  International Financial Reporting Standards
C)  asset
D)  liability
E)  Owners' equityF) accounting equationG) balance sheetH) income statementI) Foreign Corruption Practices ActJ) accrual accountingK) open book managementL) budgetM) generally accepted accounting principles (GAAP) N) Financial Accounting Standards Board (FAS
B)  O) profitability ratiosP) International Accounting Standards Committee (IAS
C)  Q) Leverage ratiosrmanagement accountantR) K) and L)
S) C) and Q)

Question 4

Identify and briefly describe the four categories of financial ratios.

Accepted Answer

The four categories of ratios are liquid...

Question 5

MATCHING
Complete the following using the terms listed.
-The _____ was established to promote worldwide consistency in financial reporting practices.

Accepted Answer

A)  certified public accountant
B)  International Financial Reporting Standards
C)  asset
D)  liability
E)  Owners' equityF) accounting equationG) balance sheetH) income statementI) Foreign Corruption Practices ActJ) accrual accountingK) open book managementL) budgetM) generally accepted accounting principles (GAAP) N) Financial Accounting Standards Board (FAS
B)  O) profitability ratiosP) International Accounting Standards Committee (IAS
C)  Q) Leverage ratiosrmanagement accountantR) D) and I)
S) H) and P)

Question 6

_____ activities focus on selling goods and services.

Accepted Answer

A)   Marketing
B)   Operating
C)   Financing
D)   InvestingE) All of the above
F) A) and B)

Question 7

All of the following are profitability ratios EXCEPT _____.

Accepted Answer

A)   inventory turnover
B)   return on equity
C)   net profit margin
D)   gross profit marginE) None of the above
F) A) and B)

Question 8

Accountants play fundamental roles in not only business but also other aspects of society.

Accepted Answer

A) True 
 B)False

Question 9

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 _____.

Accepted Answer

A)   public accountant
B)   cost accountant
C)   tax accountant
D)   government accountantE) All of the above
F) B) and C)

Question 10

MATCHING
Complete the following using the terms listed.
-A(n)  _____ is a planning and controlling tool that reflects a firm's expected sales revenues, operating expenses, and cash receipts and outlays.

Accepted Answer

A)  certified public accountant
B)  International Financial Reporting Standards
C)  asset
D)  liability
E)  Owners' equityF) accounting equationG) balance sheetH) income statementI) Foreign Corruption Practices ActJ) accrual accountingK) open book managementL) budgetM) generally accepted accounting principles (GAAP) N) Financial Accounting Standards Board (FAS
B)  O) profitability ratiosP) International Accounting Standards Committee (IAS
C)  Q) Leverage ratiosrmanagement accountantR) B) and F)
S) C) and K)

Question 11

Zane Corporation sells $1,000 worth of goods on July 25 on credit. The customer sends the company a check on August 15. The customer receives the goods on September 1. Assuming the company uses accrual accounting, the sale will be recorded in _____.

Accepted Answer

A)   August
B)   July
C)   September
D)   either July, August, or SeptemberE) B) and C)
F) A) and D)

Question 12

A firm has $12 million in current assets, of which $8 million is inventory. If the company has $4 million in current liabilities, then its current ratio equals 1.0.

Accepted Answer

A) True 
 B)False

Question 13

Cash budgets include all of the following EXCEPT a(n)  _____.

Accepted Answer

A)   analysis of interest on cash earned from company profits
B)   statement of the company's cash inflows and outflows
C)   indication when the company can invest excess funds in securities
D)   tangible standard against which to compare actual cash inflows and outflowsE) A) and D)
F) C) and D)

Question 14

All of the following are assets EXCEPT _____.

Accepted Answer

A)   inventory
B)   cash
C)   patents
D)   bank loansE) A) and B)
F) All of the above

Question 15

A firm's acid-test ratio can never be higher than its current ratio.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)   FASB
B)   American Association of CPAs
C)   Federal Trade Commission
D)   Securities and Exchange CommissionE) B) and C)
F) All of the above

Question 17

Accrual accounting recognizes revenues and expenses when cash changes hands.

Accepted Answer

A) True 
 B)False

Question 18

Cash budgets are typically prepared on a weekly basis.

Accepted Answer

A) True 
 B)False

Question 19

Financing activities focus on providing valuable assets required to run a business.

Accepted Answer

A) True 
 B)False

Question 20

MATCHING
Complete the following using the terms listed.
-A(n)  _____ is anything of value owned or leased by a business.

Accepted Answer

A)  certified public accountant
B)  International Financial Reporting Standards
C)  asset
D)  liability
E)  Owners' equityF) accounting equationG) balance sheetH) income statementI) Foreign Corruption Practices ActJ) accrual accountingK) open book managementL) budgetM) generally accepted accounting principles (GAAP) N) Financial Accounting Standards Board (FAS
B)  O) profitability ratiosP) International Accounting Standards Committee (IAS
C)  Q) Leverage ratiosrmanagement accountantR) D) and Q)
S) A) and D)

Exam 15: Understanding Accounting and Financial Statements

A firm has $12 million in current assets, of which $8 million is inventory. If the company has $4 million in current liabilities, then its current ratio equals 1.0.

Correct AnswerverifiedShow Answer

Camille is an accountant who works for a firm providing auditing services to other businesses. Camille is a public accountant.

Correct AnswerverifiedShow Answer

Accountants play fundamental roles in not only business but also other aspects of society.

Correct AnswerverifiedShow Answer

MATCHING Complete the following using the terms listed. -A(n) _____ is anything of value owned or leased by a business.

Correct AnswerverifiedShow Answer

MATCHING Complete the following using the terms listed. -An organization's overall financial performance is measured by its _____, which evaluates the ability to generate revenues in excess of operating costs and other expenses.

Correct AnswerverifiedShow Answer

Accrual accounting recognizes revenues and expenses when cash changes hands.

Correct AnswerverifiedShow Answer

_____ activities focus on selling goods and services.

Correct AnswerverifiedShow Answer

Identify and briefly describe the four categories of financial ratios.

Correct AnswerverifiedThe four categories of ratios are liquid...View AnswerShow Answer

Which of the following current assets is NOT included when calculating the acid-test ratio?

Correct AnswerverifiedShow Answer

A firm's acid-test ratio can never be higher than its current ratio.

Correct AnswerverifiedShow Answer

Cash budgets are typically prepared on a weekly basis.

Correct AnswerverifiedShow Answer

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 _____.

Correct AnswerverifiedShow Answer

MATCHING Complete the following using the terms listed. -A(n) _____ is a planning and controlling tool that reflects a firm's expected sales revenues, operating expenses, and cash receipts and outlays.

Correct AnswerverifiedShow Answer

Zane Corporation sells $1,000 worth of goods on July 25 on credit. The customer sends the company a check on August 15. The customer receives the goods on September 1. Assuming the company uses accrual accounting, the sale will be recorded in _____.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

All of the following are profitability ratios EXCEPT _____.

Correct AnswerverifiedShow Answer

All of the following are assets EXCEPT _____.

Correct AnswerverifiedShow Answer

Cash budgets include all of the following EXCEPT a(n) _____.

Correct AnswerverifiedShow Answer

MATCHING Complete the following using the terms listed. -The _____ was established to promote worldwide consistency in financial reporting practices.

Correct AnswerverifiedShow Answer

Financing activities focus on providing valuable assets required to run a business.

Correct AnswerverifiedShow Answer

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The four categories of ratios are liquid...
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