Question 1

If the goal of a business is to pay lower taxes on its income during an inflationary period,it is likely to use the FIFO inventory costing method.

Accepted Answer

A) True 
 B)False

Question 2

Accountants do most of the work involved in recording financial events and transactions,but the actual classifying and interpreting of this data is left to financial managers.

Accepted Answer

A) True 
 B)False

Question 3

You have just computed the basic earnings per share (basic EPS) for a company in which you hold some stock.You then find out that the company recently issued preferred stock and has included additional stock options in the compensation package for top executives that you were unaware of when you computed the basic EPS.This additional knowledge:

Accepted Answer

A)  means that the basic EPS you calculated is incorrect,and the true ratio will be higher once the impact of preferred shares and stock options is included.
B)  means that the basic EPS you calculated is incorrect,and the true ratio will be lower once the impact of preferred shares and stock options is included.
C)  would have no impact on the value of the basic EPS calculation.
D)  means that the basic EPS you calculated is incorrect,but the true value of the ratio could be either higher or lower because the use of preferred stock and the use of stock options affect the basic EPS in opposite directions.E) A) and C)
F) B) and C)

Question 4

During a period of rising prices,if a firm desired to report a low net income figure in hopes of reducing their income tax liability,the firm would use the ________ inventory valuation method.

Accepted Answer

A)  FIFO (first in,first out) 
B)  LIFO (last in,first out) 
C)  sliding scale
D)  average costE) C) and D)
F) B) and D)

Question 5

A(n) _________ is a yearly statement of the financial condition,progress and expectations of an organization.

Accepted Answer

A)  balance sheet
B)  independent audit
C)  mission statement
D)  annual reportE) C) and D)
F) None of the above

Question 6

The value of things you own minus the amount of money you owe others is called equity.

Accepted Answer

A) True 
 B)False

Question 7

Salaries of salespeople and advertising costs are common examples of general expenses.

Accepted Answer

A) True 
 B)False

Question 8

The __________ is an accounting statement that reports the financial condition of a firm at a specific point in time.

Accepted Answer

A)  income statement
B)  balance sheet
C)  cash flow statement
D)  trial balanceE) A) and B)
F) B) and D)

Question 9

Careful consideration of the use of computers in accounting indicates that computers:

Accepted Answer

A)  will soon eliminate all of the accounting functions.
B)  are tools to help the accountant perform his or her job.
C)  cannot handle the increasing data demands of accounting.
D)  have a very limited use in accounting due to inadequate privacy controls.E) A) and B)
F) A) and C)

Question 10

Citizens and special interest groups often have interest in the information generated by government accounting.

Accepted Answer

A) True 
 B)False

Question 11

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) B) and C)
F) B) and D)

Question 12

The three key financial statements of a business are the

Accepted Answer

A)  ledger,journal,and trial balance.
B)  cash budget,capital budget,and master budget.
C)  revenue summary,expense summary,and consolidation statement.
D)  balance sheet,income statement,and cash flow statement.E) All of the above
F) B) and C)

Question 13

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 14

Which of the following is NOT an area of importance in accounting?

Accepted Answer

A)  recording information about financial transactions.
B)  summarizing information about financial transactions.
C)  analyzing financial information.
D)  setting prices for goods and services sold by the organization.E) A) and B)
F) None of the above

Question 15

As an accountant,Joe Billings would be most likely to be involved in:

Accepted Answer

A)  developing plans to help his company establish a supply chain.
B)  setting prices for specific goods.
C)  summarizing and interpreting financial information needed by his firm's managers.
D)  developing a fringe benefit program that improves employee morale.E) A) and C)
F) All of the above

Question 16

The balance sheet reflects the fact that assets equal the sum of liabilities and owners' equity.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would be classified as a general expense on an income statement?

Accepted Answer

A)  salaries paid to salespeople
B)  dividends paid to stockholders
C)  payments made for insurance
D)  costs associated with an advertising campaignE) None of the above
F) B) and D)

Question 18

The accounting system happens once a year.

Accepted Answer

A) True 
 B)False

Question 19

Perry is responsible for recording all sales transactions that take place at Turncoat Enterprises.He must be careful that his recording is both accurate and thorough.Perry's work involves tasks associated with:

Accepted Answer

A)  auditing.
B)  capital budgeting.
C)  bookkeeping.
D)  revenue assessment.E) A) and B)
F) A) and C)

Question 20

One of the major financial statements prepared in the fifth step of the accounting cycle is the:

Accepted Answer

A)  general journal.
B)  cash flow statement.
C)  asset summary.
D)  social audit.E) A) and B)
F) A) and C)

Exam 16: Understanding Accounting and Financial Information

The value of things you own minus the amount of money you owe others is called equity.

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

A(n) _________ is a yearly statement of the financial condition,progress and expectations of an organization.

Correct Answer
verified

Careful consideration of the use of computers in accounting indicates that computers:

Correct Answer
verified

During a period of rising prices,if a firm desired to report a low net income figure in hopes of reducing their income tax liability,the firm would use the ________ inventory valuation method.

Correct Answer
verified

Accountants do most of the work involved in recording financial events and transactions,but the actual classifying and interpreting of this data is left to financial managers.

Correct Answer
verified

The __________ is an accounting statement that reports the financial condition of a firm at a specific point in time.

Correct Answer
verified

Perry is responsible for recording all sales transactions that take place at Turncoat Enterprises.He must be careful that his recording is both accurate and thorough.Perry's work involves tasks associated with:

Correct Answer
verified

The balance sheet reflects the fact that assets equal the sum of liabilities and owners' equity.

Correct Answer
verified

Which of the following is NOT an area of importance in accounting?

Correct Answer
verified

As an accountant,Joe Billings would be most likely to be involved in:

Correct Answer
verified

Salaries of salespeople and advertising costs are common examples of general expenses.

Correct Answer
verified

Which of the following would be classified as a general expense on an income statement?

Correct Answer
verified

The accounting system happens once a year.

Correct Answer
verified

Correct Answer
verified

Citizens and special interest groups often have interest in the information generated by government accounting.

Correct Answer
verified

The three key financial statements of a business are the

Correct Answer
verified

One of the major financial statements prepared in the fifth step of the accounting cycle is the:

Correct Answer
verified

If the goal of a business is to pay lower taxes on its income during an inflationary period,it is likely to use the FIFO inventory costing method.

Correct Answer
verified

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

Correct Answer
verified

Exam 16: Understanding Accounting and Financial Information

The value of things you own minus the amount of money you owe others is called equity.

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

A(n) _________ is a yearly statement of the financial condition,progress and expectations of an organization.

Correct AnswerverifiedShow Answer

Careful consideration of the use of computers in accounting indicates that computers:

Correct AnswerverifiedShow Answer

During a period of rising prices,if a firm desired to report a low net income figure in hopes of reducing their income tax liability,the firm would use the ________ inventory valuation method.

Correct AnswerverifiedShow Answer

Accountants do most of the work involved in recording financial events and transactions,but the actual classifying and interpreting of this data is left to financial managers.

Correct AnswerverifiedShow Answer

The __________ is an accounting statement that reports the financial condition of a firm at a specific point in time.

Correct AnswerverifiedShow Answer

Perry is responsible for recording all sales transactions that take place at Turncoat Enterprises.He must be careful that his recording is both accurate and thorough.Perry's work involves tasks associated with:

Correct AnswerverifiedShow Answer

The balance sheet reflects the fact that assets equal the sum of liabilities and owners' equity.

Correct AnswerverifiedShow Answer

Which of the following is NOT an area of importance in accounting?

Correct AnswerverifiedShow Answer

As an accountant,Joe Billings would be most likely to be involved in:

Correct AnswerverifiedShow Answer

Salaries of salespeople and advertising costs are common examples of general expenses.

Correct AnswerverifiedShow Answer

Which of the following would be classified as a general expense on an income statement?

Correct AnswerverifiedShow Answer

The accounting system happens once a year.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Citizens and special interest groups often have interest in the information generated by government accounting.

Correct AnswerverifiedShow Answer

The three key financial statements of a business are the

Correct AnswerverifiedShow Answer

One of the major financial statements prepared in the fifth step of the accounting cycle is the:

Correct AnswerverifiedShow Answer

If the goal of a business is to pay lower taxes on its income during an inflationary period,it is likely to use the FIFO inventory costing method.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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