Question 1

What is the difference between a private accountant and a public accountant?

Accepted Answer

A public accountant provides s...

Question 2

The individuals in a firm that are responsible for the development of strategies to minimize taxes are called:

Accepted Answer

A)  tax accountants.
B)  certified public accountants.
C)  certified management accountants.
D)  certified internal auditors.E) None of the above
F) B) and D)

Question 3

If a firm has a debt to owners' equity ratio of 54 (or 54%) we can conclude that:

Accepted Answer

A)  it has relied more on debt than equity to finance its operations.
B)  the firm is likely to have trouble paying its short term debts when they come due.
C)  its total liabilities are less than its owners' equity.
D)  the firm has expenses that are exactly 54% of its gross margin.E) A) and D)
F) A) and B)

Question 4

Jose just graduated from college with a bachelor's degree in accounting.He plans to go to work for the Canadian Cancer Society as an accountant.Jose will be a(n) :

Accepted Answer

A)  private accountant.
B)  public accountant.
C)  forensic accountant.
D)  independent accountant.E) A) and D)
F) C) and D)

Question 5

The specialized accounting book in which information from journals is accumulated into specific categories is called a:

Accepted Answer

A)  journal.
B)  trial balance.
C)  ledger.
D)  balance sheet.E) B) and C)
F) A) and B)

Question 6

If prices of inventory are unchanged throughout the year,LIFO and FIFO inventory valuation methods will produce the same reported net income.

Accepted Answer

A) True 
 B)False

Question 7

The higher the risk of a particular investment,the greater the expected rate of return required by investors.

Accepted Answer

A) True 
 B)False

Question 8

To accurately evaluate a firm's financial ratios you should compare the ratios to:

Accepted Answer

A)  other firms in the same industry.
B)  firms in the same geographic region of the country.
C)  the norms established by generally accepted accounting principles.
D)  to the largest firms in the country.E) B) and D)
F) All of the above

Question 9

If a firm has $100,000 in assets and liabilities of $62,000,then the owner's equity is equal to $162,000.

Accepted Answer

A) True 
 B)False

Question 10

The cost of goods sold includes all the costs of buying and keeping merchandise available for sale.

Accepted Answer

A) True 
 B)False

Question 11

The preparation of financial statements for people outside the firm (creditors,unions,suppliers,and others) is the goal of:

Accepted Answer

A)  auditing.
B)  financial accounting.
C)  managerial accounting.
D)  cost accounting.E) A) and D)
F) A) and C)

Question 12

The owners' equity in a firm is listed as an asset on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 13

Double-entry bookkeeping requires that every transaction be recorded in two places.

Accepted Answer

A) True 
 B)False

Question 14

The cash flow statement shows a firm's revenues,costs of goods sold,expenses,and net income.

Accepted Answer

A) True 
 B)False

Question 15

A cash flow statement reports the receipts and disbursements of cash in a given time period as the result of three types of activities: operations,investments,and financing.

Accepted Answer

A) True 
 B)False

Question 16

When it comes to the treatment of amortization and valuation of inventory,generally accepted accounting principles:

Accepted Answer

A)  provide almost no guidance to accountants.
B)  allow accountants to choose among different methods both for amortization and the valuation of inventory.
C)  require accountants to use only one specific method of amortization,but permit several methods of inventory valuation.
D)  require accountants to use one specific method for valuing inventory,but permit several methods for depreciating fixed assets.E) A) and B)
F) B) and D)

Question 17

A cash flow statement summarizes a company's cash receipts and cash payments over a period of time.

Accepted Answer

A) True 
 B)False

Question 18

Independent audits are prepared by accountants within the organization to ensure that proper accounting procedures are followed.

Accepted Answer

A) True 
 B)False

Question 19

Name two purposes of accounting.

Accepted Answer

One purpose is to help managers evaluate...

Question 20

Accounting and bookkeeping are terms used for essentially the same activity in an organization.

Accepted Answer

A) True 
 B)False

Exam 16: Understanding Accounting and Financial Information

Double-entry bookkeeping requires that every transaction be recorded in two places.

Correct AnswerverifiedShow Answer

Name two purposes of accounting.

Correct AnswerverifiedOne purpose is to help managers evaluate...View AnswerShow Answer

The individuals in a firm that are responsible for the development of strategies to minimize taxes are called:

Correct AnswerverifiedShow Answer

The higher the risk of a particular investment,the greater the expected rate of return required by investors.

Correct AnswerverifiedShow Answer

If a firm has $100,000 in assets and liabilities of $62,000,then the owner's equity is equal to $162,000.

Correct AnswerverifiedShow Answer

Accounting and bookkeeping are terms used for essentially the same activity in an organization.

Correct AnswerverifiedShow Answer

The specialized accounting book in which information from journals is accumulated into specific categories is called a:

Correct AnswerverifiedShow Answer

If a firm has a debt to owners' equity ratio of 54 (or 54%) we can conclude that:

Correct AnswerverifiedShow Answer

To accurately evaluate a firm's financial ratios you should compare the ratios to:

Correct AnswerverifiedShow Answer

A cash flow statement reports the receipts and disbursements of cash in a given time period as the result of three types of activities: operations,investments,and financing.

Correct AnswerverifiedShow Answer

A cash flow statement summarizes a company's cash receipts and cash payments over a period of time.

Correct AnswerverifiedShow Answer

The cash flow statement shows a firm's revenues,costs of goods sold,expenses,and net income.

Correct AnswerverifiedShow Answer

The owners' equity in a firm is listed as an asset on the balance sheet.

Correct AnswerverifiedShow Answer

If prices of inventory are unchanged throughout the year,LIFO and FIFO inventory valuation methods will produce the same reported net income.

Correct AnswerverifiedShow Answer

What is the difference between a private accountant and a public accountant?

Correct AnswerverifiedA public accountant provides s...View AnswerShow Answer

The cost of goods sold includes all the costs of buying and keeping merchandise available for sale.

Correct AnswerverifiedShow Answer

Independent audits are prepared by accountants within the organization to ensure that proper accounting procedures are followed.

Correct AnswerverifiedShow Answer

When it comes to the treatment of amortization and valuation of inventory,generally accepted accounting principles:

Correct AnswerverifiedShow Answer

Jose just graduated from college with a bachelor's degree in accounting.He plans to go to work for the Canadian Cancer Society as an accountant.Jose will be a(n) :

Correct AnswerverifiedShow Answer

The preparation of financial statements for people outside the firm (creditors,unions,suppliers,and others) is the goal of:

Correct AnswerverifiedShow Answer

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One purpose is to help managers evaluate...
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A public accountant provides s...
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