Question 1

The calculation revenue minus cost of goods sold will give the firm its:

Accepted Answer

A)  gross margin.
B)  net income.
C)  fundamental accounting equation.
D)  retained earnings.E) B) and D)
F) A) and B)

Question 2

Because each business is unique,the accounting profession recognizes that the accounting principles followed by one company may need to be completely different from the accounting principles followed by another firm.

Accepted Answer

A) True 
 B)False

Question 3

General expenses would include office salaries,rent,and insurance.

Accepted Answer

A) True 
 B)False

Question 4

Financial accounting and managerial accounting are similar in that they both provide information intended primarily for people inside the organization.

Accepted Answer

A) True 
 B)False

Question 5

Accountant Alan Wingspan has just finished working on the balance sheet,income statement,and statement of cash flows for his company.The next step in the accounting cycle will involve:

Accepted Answer

A)  analyzing the firm's financial statements to evaluate the financial condition of the firm.
B)  placing the data used to construct the statements into an archive known as a data warehouse.
C)  posting the results of these statements to the appropriate journal.
D)  conducting forensic tests of the data to ensure its accuracy.E) B) and C)
F) None of the above

Question 6

What are the benefits of computerized accounting software programs to managers?

Accepted Answer

It's now possible,thanks to computers,to...

Question 7

The income statement reports the difference between a firm's assets and its liabilities as of a certain date.

Accepted Answer

A) True 
 B)False

Question 8

A bookkeeper's first task is to record the firm's transactions in a journal.

Accepted Answer

A) True 
 B)False

Question 9

The cost of goods sold reflects the selling price of the merchandise sold over a period of time.

Accepted Answer

A) True 
 B)False

Question 10

The key financial statements are the balance sheet,income statement,and cash flow statement.

Accepted Answer

A) True 
 B)False

Question 11

The current ratio is used to evaluate a firm's ability to pay its short-term debts.

Accepted Answer

A) True 
 B)False

Question 12

Taylor Casual,a chain of retail clothing stores,wants to assure investors and other outsiders that its financial statements are accurate.One way to do so would be to hire a public accounting firm to:

Accepted Answer

A)  provide a "generally accepted practices" endorsement.
B)  take over all of its accounting functions.
C)  produce an internal audit.
D)  perform an independent audit.E) B) and C)
F) A) and B)

Question 13

The sixth step in the accounting cycle involves:

Accepted Answer

A)  preparing the income statement.
B)  performing a trial balance to verify that the accounting statements are internally consistent.
C)  auditing the books to ensure that they were prepared according to generally accepted accounting principles.
D)  analyzing major accounting statements to evaluate the financial condition of the firm.E) All of the above
F) B) and C)

Question 14

The job of reviewing and evaluating the records used to prepare a company's financial statements is referred to as compliance.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

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

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Explain the differences between managerial and financial accounting and give examples of the types of problems and issues examined by each of these areas of accounting.

Accepted Answer

Managerial accounting is used to provide...

Question 18

The accounting profession is divided into two main fields: bookkeeping and auditing.

Accepted Answer

A) True 
 B)False

Question 19

There standard inventory turnover ratio that applies to any company in any industry is what?

Accepted Answer

A)  0
B)  -1
C)  1
D)  There is no standardE) A) and C)
F) None of the above

Question 20

A firm's annual report is a yearly statement of the financial condition,progress,and expectations of the organization during one year.

Accepted Answer

A) True 
 B)False

Exam 16: Understanding Accounting and Financial Information

The cost of goods sold reflects the selling price of the merchandise sold over a period of time.

Correct AnswerverifiedShow Answer

The income statement reports the difference between a firm's assets and its liabilities as of a certain date.

Correct AnswerverifiedShow Answer

Explain the differences between managerial and financial accounting and give examples of the types of problems and issues examined by each of these areas of accounting.

Correct AnswerverifiedManagerial accounting is used to provide...View AnswerShow Answer

The job of reviewing and evaluating the records used to prepare a company's financial statements is referred to as compliance.

Correct AnswerverifiedShow Answer

The key financial statements are the balance sheet,income statement,and cash flow statement.

Correct AnswerverifiedShow Answer

There standard inventory turnover ratio that applies to any company in any industry is what?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What are the benefits of computerized accounting software programs to managers?

Correct AnswerverifiedIt's now possible,thanks to computers,to...View AnswerShow Answer

The calculation revenue minus cost of goods sold will give the firm its:

Correct AnswerverifiedShow Answer

Accountant Alan Wingspan has just finished working on the balance sheet,income statement,and statement of cash flows for his company.The next step in the accounting cycle will involve:

Correct AnswerverifiedShow Answer

A firm's annual report is a yearly statement of the financial condition,progress,and expectations of the organization during one year.

Correct AnswerverifiedShow Answer

Financial accounting and managerial accounting are similar in that they both provide information intended primarily for people inside the organization.

Correct AnswerverifiedShow Answer

The current ratio is used to evaluate a firm's ability to pay its short-term debts.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Taylor Casual,a chain of retail clothing stores,wants to assure investors and other outsiders that its financial statements are accurate.One way to do so would be to hire a public accounting firm to:

Correct AnswerverifiedShow Answer

A bookkeeper's first task is to record the firm's transactions in a journal.

Correct AnswerverifiedShow Answer

The accounting profession is divided into two main fields: bookkeeping and auditing.

Correct AnswerverifiedShow Answer

General expenses would include office salaries,rent,and insurance.

Correct AnswerverifiedShow Answer

Because each business is unique,the accounting profession recognizes that the accounting principles followed by one company may need to be completely different from the accounting principles followed by another firm.

Correct AnswerverifiedShow Answer

The sixth step in the accounting cycle involves:

Correct AnswerverifiedShow Answer

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Managerial accounting is used to provide...
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It's now possible,thanks to computers,to...
View Answer

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Correct Answer
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