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Exam 17: Understanding Accounting and Financial Information

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Question 181

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An individual who provides accounting services to individuals and businesses on a fee basis is referred to as a private accountant.

A) True
B) False

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Question 182

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The current ratio is a good indicator of the degree to which a firm relies on borrowed funds in its operations.

A) True
B) False

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Question 183

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A firm's balance sheet reports its financial condition on a specific date.

Although accounting has several specific uses, the overall purpose of accounting can be summarized as

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

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

The accounting profession follows generally accepted accounting principles as defined by

Financial ratios that reflect the degree to which a firm relies on borrowed funds are called ________ ratios.

PharmaONE plans to use its computers to post information from journals to the ledger instantaneously. One obvious benefit of this technology is

One way to make ratio analysis more meaningful is to compare the ratios of one firm to those of other firms in the same industry.

Churches, schools, and charitable organizations all need accountants.

In addition to the tasks of recording and classifying accounting information, the best accounting software programs currently available for small businesses have the ability to make financial decisions, thus eliminating the need for owners of small businesses to consult with accountants or understand accounting terminology.

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

The basic earnings per share and the diluted earnings per share would have quite different values for a firm that relied heavily on preferred stock and convertible debt securities to acquire funds.

Day-by-Day Calendar Company's statement of cash flows showed the following activities for the year ended December 31, 2019: The year-end cash balance for this firm is:

Net income is simply the difference between revenue and cost of goods sold.

Recent accounting scandals raised serious questions about the legitimacy of an accounting firm performing both auditing and consulting work for the same company.

Kimberly has been helping Jonah in preparing his personal income tax forms for a couple of years. Jonah's boss recommended Kimberly because she had done a good job setting up the company's new accounting system. Jonah is very satisfied with Kimberly's work and feels that the fees she charges are quite reasonable. Kimberly would be classified as a(n)

The ________ shows how the capital is structured in the business, including the value of assets and the amount the firm owes at a specific point in time.

It is impossible to run a company effectively without the ability to read and understand basic accounting reports and financial statements.