Question 1

Which of the following represents a firm's liability?

Accepted Answer

A)  Cash
B)  Inventory
C)  Land
D)  Equipment
E)  LoanF) C) and D)
G) A) and B)

Question 2

Total asset turnover:

Accepted Answer

A)  determines the speed with which a company can turn its assets into cash to meet debts.
B)  compares current (short-term) assets to current liabilities.
C)  measures the most valuable asset of a company.
D)  measures the amount of inventory that is required by a company at any point of time.
E)  measures how well an organization uses all of its assets in creating sales.F) D) and E)
G) A) and B)

Question 3

Which of the following equations is equivalent to the accounting equation?

Accepted Answer

A)  Equity = liabilities - assets
B)  Owners' equity = assets - liabilities
C)  Revenues - expenses = net income
D)  Net income = expenses - revenues + taxes
E)  Profit = sales - revenuesF) B) and D)
G) None of the above

Question 4

_____ compare current assets to current liabilities to indicate the speed with which a company can turn its assets into cash to meet debts as they fall due.

Accepted Answer

A)  Asset utilization ratios
B)  Liquidity ratios
C)  Debt ratios
D)  Profitability ratios
E)  Current ratiosF) A) and C)
G) A) and E)

Question 5

The financial statement that explains how a firm's cash changed from the beginning of the accounting period to the end is called the:

Accepted Answer

A)  statement of cash flows.
B)  balance sheet.
C)  income statement.
D)  master budget.
E)  profit-loss statement.F) D) and E)
G) C) and D)

Question 6

_____,a category of cash flow,is calculated from changes in the long-term liability accounts and the contributed capital accounts in owners' equity.

Accepted Answer

A)  Cash from profiteering activities
B)  Cash from investing activities
C)  Cash from financing activities
D)  Cash from operating activities
E)  Cash from marketing activitiesF) All of the above
G) C) and D)

Question 7

Depreciation,a type of expense account,is included in the:

Accepted Answer

A)  interest category.
B)  selling category.
C)  general and administrative category.
D)  research and development category.
E)  retained category.F) A) and C)
G) B) and D)

Question 8

Which of the following is a liability in a balance sheet?

Accepted Answer

A)  Accounts receivable
B)  Cash
C)  Inventory
D)  Current assets
E)  Accounts payableF) B) and D)
G) D) and E)

Question 9

Which of the following equations is used to calculate return on equity?

Accepted Answer

A)  Return on equity = net income/sales
B)  Return on equity = revenue - expenses
C)  Return on equity = net income/owners' equity
D)  Return on equity = assets + liabilities
E)  Return on equity = net income/total assetsF) A) and D)
G) B) and E)

Question 10

The _____ is a stringent measure of liquidity.

Accepted Answer

A)  liquidity ratio
B)  current ratio
C)  quick ratio
D)  receivables turnover ratio
E)  debt utilization ratioF) A) and D)
G) C) and E)

Question 11

An account that represents all unpaid financial obligations incurred by an organization is called:

Accepted Answer

A)  current assets.
B)  accounts payable.
C)  cost of goods sold.
D)  accrued expenses.
E)  long-term liabilities.F) A) and D)
G) A) and C) D

Question 12

Do-It-Yourself Home Repair Shop started the accounting period with $10,000 worth of shovels in inventory.During the accounting period,it purchased $5,000 worth of shovels and sold $7,500 worth.In this scenario,what is the cost of goods sold?

Accepted Answer

A)  $15,000
B)  $2,500
C)  $5,000
D)  $7,500
E)  $10,000F) C) and E)
G) None of the above

Question 13

_____ is the total amount of money received from the sale of goods or services,as well as from other business activities such as the rental of property and investments.

Accepted Answer

A)  Profit
B)  Expense
C)  Net income
D)  Revenue
E)  PriceF) A) and B)
G) A) and C) D

Question 14

Deviations between expected operating expenses and _____ serve as a "feedback loop" to launch more detailed financial analyses in an effort to pinpoint trouble spots and opportunities.

Accepted Answer

A)  fixed operating costs
B)  variable operating costs
C)  operating revenues
D)  basic operating costs
E)  overhead operating expensesF) B) and E)
G) D) and E) C

Question 15

What are the fundamentals of the accounting process?

Accepted Answer

A)  Journals and ledgers
B)  The accounting equation and the double-entry bookkeeping system
C)  The accounting equation and the accounting cycle
D)  The double-entry bookkeeping system and the accounting cycle
E)  Ledgers and financial statementsF) B) and E)
G) A) and D)

Question 16

_____,a category of cash flow,is calculated from changes in the long-term or fixed asset accounts.

Accepted Answer

A)  Cash from profiteering activities
B)  Cash from investing activities
C)  Cash from financing activities
D)  Cash from operating activities
E)  Cash from marketing activitiesF) B) and E)
G) B) and D)

Question 17

At the end of each accounting period,the dollar amounts in all the revenue and expense accounts are moved into an account called _____.

Accepted Answer

A)  net earnings
B)  net expense
C)  interest expense
D)  retained expense
E)  retained earningsF) None of the above
G) B) and C)

Question 18

Which of the following is the first step in the accounting cycle?

Accepted Answer

A)  Record transactions
B)  Examine source documents
C)  Post transactions
D)  Prepare financial statements
E)  Generate annual reportsF) D) and E)
G) B) and D)

Question 19

Accounting refers to the process of:

Accepted Answer

A)  recording,measuring,and interpreting financial information.
B)  producing goods and services.
C)  reporting to only those within the organization.
D)  reporting to only those outside the organization.
E)  developing promotional plans.F) B) and E)
G) B) and D)

Question 20

Inventory turnover is calculated by:

Accepted Answer

A)  dividing sales by total inventory.
B)  subtracting sales from total inventory.
C)  dividing sales by accounts receivable.
D)  subtracting sales from accounts receivable.
E)  multiplying sales by total inventory.F) D) and E)
G) A) and C)

Exam 14: Accounting and Financial Statements

Which of the following represents a firm's liability?

Correct AnswerverifiedShow Answer

Total asset turnover:

Correct AnswerverifiedShow Answer

Which of the following equations is equivalent to the accounting equation?

Correct AnswerverifiedShow Answer

_____ compare current assets to current liabilities to indicate the speed with which a company can turn its assets into cash to meet debts as they fall due.

Correct AnswerverifiedShow Answer

The financial statement that explains how a firm's cash changed from the beginning of the accounting period to the end is called the:

Correct AnswerverifiedShow Answer

_____,a category of cash flow,is calculated from changes in the long-term liability accounts and the contributed capital accounts in owners' equity.

Correct AnswerverifiedShow Answer

Depreciation,a type of expense account,is included in the:

Correct AnswerverifiedShow Answer

Which of the following is a liability in a balance sheet?

Correct AnswerverifiedShow Answer

Which of the following equations is used to calculate return on equity?

Correct AnswerverifiedShow Answer

The _____ is a stringent measure of liquidity.

Correct AnswerverifiedShow Answer

An account that represents all unpaid financial obligations incurred by an organization is called:

Correct AnswerverifiedD

Do-It-Yourself Home Repair Shop started the accounting period with $10,000 worth of shovels in inventory.During the accounting period,it purchased $5,000 worth of shovels and sold $7,500 worth.In this scenario,what is the cost of goods sold?

Correct AnswerverifiedShow Answer

_____ is the total amount of money received from the sale of goods or services,as well as from other business activities such as the rental of property and investments.

Correct AnswerverifiedD

Deviations between expected operating expenses and _____ serve as a "feedback loop" to launch more detailed financial analyses in an effort to pinpoint trouble spots and opportunities.

Correct AnswerverifiedC

What are the fundamentals of the accounting process?

Correct AnswerverifiedShow Answer

_____,a category of cash flow,is calculated from changes in the long-term or fixed asset accounts.

Correct AnswerverifiedShow Answer

At the end of each accounting period,the dollar amounts in all the revenue and expense accounts are moved into an account called _____.

Correct AnswerverifiedShow Answer

Which of the following is the first step in the accounting cycle?

Correct AnswerverifiedShow Answer

Accounting refers to the process of:

Correct AnswerverifiedShow Answer

Inventory turnover is calculated by:

Correct AnswerverifiedShow Answer

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D

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D

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C

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