Question 1

If assets of Martin's Pet Store are $107,000 and owners' equity is $75,000, which of the following statements is correct?

Accepted Answer

A)   The current assets are worth $32,000.
B)   The new income for the period is $32,000.
C)   The long-term liabilities are $75,000.
D)   The liabilities are $32,000.E) None of the above
F) A) and C)

Question 2

On an income statement, revenue less cost of goods sold (COGS)  equals which of the following?

Accepted Answer

A)   net income or loss
B)   gross profit
C)   operating expenses
D)   net profitE) B) and D)
F) All of the above

Question 3

Looking back at previous income statements shows similar trends for each company. Which company do you choose to invest in and why?

Accepted Answer

A)   SweetFeet, because analyzing both the balance sheet and income statement show that it has a healthier financial position than SportsAde.
B)   SportsAde, because the balance sheet shows that its assets are higher than SweetFeet's assets.
C)   SweetFeet, because the income statement shows that it has a higher profit than SportsAde.
D)   SportsAde, because analyzing both the balance sheet and income statement show that it has a healthier financial position than SweetFeet.E) B) and C)
F) A) and D)

Question 4

Chase starts a new auto detailing business. He obtains a loan for $10,000 and uses the funds to build a small workshop in his backyard and to buy tools and supplies. At this point, his assets are _____, liabilities are _____, and owners' equity is _____.

Accepted Answer

A)   $10,000; $5000; $15,000
B)   $10,000; $10,000; $0
C)   $5000; $0; $5000
D)   $10,000; $5000; $5000E) C) and D)
F) B) and C)

Question 5

If Reebok wanted to know how quickly it could convert its assets to cash in order to pay off short-term debts, which ratio would it use?

Accepted Answer

A)   current assets ÷ current liabilities
B)   total liabilities ÷ total owner's equity
C)   net revenue after taxes ÷ revenue
D)   sales ÷ total assetsE) A) and D)
F) All of the above

Question 6

What is another name for the statement of financial position?

Accepted Answer

A)   income statement
B)   statement of owners' equity
C)   earnings statement
D)   balance sheetE) C) and D)
F) B) and C)

Question 7

Raymond works for a manufacturing company in the accounting department. He is primarily responsible for the preparation of financial statements and reports that will be used by bankers, investors, creditors, and the government. Raymond is which type of accountant?

Accepted Answer

A)   investment
B)   managerial
C)   financial
D)   costE) B) and C)
F) All of the above

Question 8

According to the accountant for Virunder's Floral Supply, the firm's assets are $124,000 and its liabilities are $31,000. Which of the following statements is correct?

Accepted Answer

A)   The owners' equity is $93,000.
B)   The firm's current assets are $62,000.
C)   The firm's current liabilities are $24,000.
D)   The firm's accounting equation won't balance.E) All of the above
F) B) and C)

Question 9

Whirlpool purchases land to build a new factory. How is this listed on the statement of cash flows?

Accepted Answer

A)   cash flows from operating activities
B)   a liability
C)   cash flows from investing activities
D)   operating expensesE) B) and C)
F) B) and D)

Question 10

Which of the following is the profitability ratio that is calculated by dividing net income after taxes by revenue?

Accepted Answer

A)   debt-to-equity ratio
B)   current ratio
C)   return on sales
D)   net profit margin ratioE) A) and D)
F) None of the above

Question 11

Jennifer is hired by Ruby Tuesday to help with budgeting, determining the costs of the firm's meal services, and recording transactions and creating financial statements for use by its restaurant managers. Which type of accountant is Jennifer?

Accepted Answer

A)   managerial
B)   financial
C)   public
D)   taxE) None of the above
F) All of the above

Question 12

Which of the following describes assets that can be quickly converted into cash or consumed in one year or less?

Accepted Answer

A)   overhead costs
B)   current assets
C)   acid-test assets
D)   fixed assetsE) All of the above
F) A) and B)

Question 13

Buster's Hot Dogs bought supplies on credit from a supplier. Which of the following is the amount the firm owes to the supplier?

Accepted Answer

A)   long-term liabilities
B)   loans payable
C)   accounts receivable
D)   accounts payableE) A) and D)
F) A) and C)

Question 14

Which financial statement provides information about a firm's operating, investing, and financing activities during an accounting period?

Accepted Answer

A)   balance sheet
B)   income statement
C)   cash flow statement
D)   financial analysis statementE) C) and D)
F) B) and C)

Question 15

How would trademarks and copyrights be listed on a company's balance sheet?

Accepted Answer

A)   fixed assets
B)   intangible assets
C)   owners' equity
D)   short-term investmentsE) B) and C)
F) C) and D)

Question 16

Which of the following best describes the organization of a statement of cash flows?

Accepted Answer

A)   assets = liabilities + shareholders' equity
B)   operating, investing, and financing cash flows
C)   cash in, cash out
D)   payments - receipts = cashE) None of the above
F) A) and D)

Question 17

Chopra Industries is preparing for its annual shareholders meeting. What will Chopra's managers use to provide shareholders with information about how fast the company is growing, how much it is worth, and how they are performing compared to others in the industry?

Accepted Answer

A)   formulas
B)   bank statements
C)   financials
D)   inventory statementsE) A) and C)
F) A) and B)

Question 18

Which of the following is a summary of a firm's revenues and expenses during a specified accounting period, such as a year?

Accepted Answer

A)   income statement
B)   balance sheet
C)   statement of financial position
D)   statement of owners' equityE) A) and B)
F) A) and C)

Question 19

When Nathaniel Products applied for a loan to expand its sailboat business, the bank requested several financial reports so that it could assess the company's ability to repay the loan. Which category of accounting would be responsible for the preparation of these financial reports?

Accepted Answer

A)   managerial accounting
B)   financial accounting
C)   forensic accounting
D)   cost accountingE) None of the above
F) A) and B)

Question 20

When Betty Tran prepared a personal income statement, she subtracted her expenses from her income. What is the remainder or residual value called?

Accepted Answer

A)   total assets
B)   total revenues
C)   retained earnings
D)   cash surplusE) B) and C)
F) None of the above

Exam 17: Using Accounting and Financial Information

When Betty Tran prepared a personal income statement, she subtracted her expenses from her income. What is the remainder or residual value called?

Correct AnswerverifiedShow Answer

On an income statement, revenue less cost of goods sold (COGS) equals which of the following?

Correct AnswerverifiedShow Answer

If Reebok wanted to know how quickly it could convert its assets to cash in order to pay off short-term debts, which ratio would it use?

Correct AnswerverifiedShow Answer

Jennifer is hired by Ruby Tuesday to help with budgeting, determining the costs of the firm's meal services, and recording transactions and creating financial statements for use by its restaurant managers. Which type of accountant is Jennifer?

Correct AnswerverifiedShow Answer

Whirlpool purchases land to build a new factory. How is this listed on the statement of cash flows?

Correct AnswerverifiedShow Answer

Chopra Industries is preparing for its annual shareholders meeting. What will Chopra's managers use to provide shareholders with information about how fast the company is growing, how much it is worth, and how they are performing compared to others in the industry?

Correct AnswerverifiedShow Answer

Which of the following best describes the organization of a statement of cash flows?

Correct AnswerverifiedShow Answer

If assets of Martin's Pet Store are $107,000 and owners' equity is $75,000, which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of the following is the profitability ratio that is calculated by dividing net income after taxes by revenue?

Correct AnswerverifiedShow Answer

Which of the following describes assets that can be quickly converted into cash or consumed in one year or less?

Correct AnswerverifiedShow Answer

Looking back at previous income statements shows similar trends for each company. Which company do you choose to invest in and why?

Correct AnswerverifiedShow Answer

Which financial statement provides information about a firm's operating, investing, and financing activities during an accounting period?

Correct AnswerverifiedShow Answer

According to the accountant for Virunder's Floral Supply, the firm's assets are $124,000 and its liabilities are $31,000. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Chase starts a new auto detailing business. He obtains a loan for $10,000 and uses the funds to build a small workshop in his backyard and to buy tools and supplies. At this point, his assets are _____, liabilities are _____, and owners' equity is _____.

Correct AnswerverifiedShow Answer

Raymond works for a manufacturing company in the accounting department. He is primarily responsible for the preparation of financial statements and reports that will be used by bankers, investors, creditors, and the government. Raymond is which type of accountant?

Correct AnswerverifiedShow Answer

How would trademarks and copyrights be listed on a company's balance sheet?

Correct AnswerverifiedShow Answer

When Nathaniel Products applied for a loan to expand its sailboat business, the bank requested several financial reports so that it could assess the company's ability to repay the loan. Which category of accounting would be responsible for the preparation of these financial reports?

Correct AnswerverifiedShow Answer

Which of the following is a summary of a firm's revenues and expenses during a specified accounting period, such as a year?

Correct AnswerverifiedShow Answer

Buster's Hot Dogs bought supplies on credit from a supplier. Which of the following is the amount the firm owes to the supplier?

Correct AnswerverifiedShow Answer

What is another name for the statement of financial position?

Correct AnswerverifiedShow Answer

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Chase starts a new auto detailing business. He obtains a loan for $10,000 and uses the funds to build a small workshop in his backyard and to buy tools and supplies. At this point, his assets are ___, liabilities are _, and owners' equity is ___.

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