Question 1

Stockholders of the Sasha Deal Company are concerned about irregularities in the firm's accounting system.One approach to identify problems in the records of the company would be to have a(n) ______performed.

Accepted Answer

A)  certified audit
B)  internal audit
C)  independent audit
D)  GAAP analysis

Question 2

A(n) ______provides a summary of money coming in to and money going out of a firm in a given time period.

Accepted Answer

A)  income statement
B)  cash flow statement
C)  receivables and payables report
D)  cash budget

Question 3

The reports and financial statements prepared by accountants:

Accepted Answer

A)  have lost much of their relevance as firms have moved into a more global environment.
B)  are much more useful for profit-seeking businesses than for non-profit organizations.
C)  are mainly used to help the firm complete its tax forms.
D)  provide information that can be used by decision-makers both inside and outside the organization.

Question 4

A look at the EPS ratio for a corporation will give you insights into its ability to pay a dividend to its stockholders.

Accepted Answer

A) True 
 B)False

Question 5

Accounting has been called the language of business.

Accepted Answer

A) True 
 B)False

Question 6

The balance sheet is composed of the following types of accounts:

Accepted Answer

A)  assets,liabilities,and owners' equity.
B)  revenue,expenses,and earnings.
C)  capital,cost,and valuation.
D)  operating expenses,cash flow,and capital expenditures.

Question 7

Once a trial balance has been prepared,the next step of the accounting cycle involves:

Accepted Answer

A)  completing ratio analysis.
B)  posting the information to the correct ledger accounts.
C)  preparing major financial statements such as the balance sheet.
D)  classifying the transactions into logical categories.

Question 8

Computer-based continuous auditing can be used to discover cash flow problems.

Accepted Answer

A) True 
 B)False

Question 9

Both the current ratio and the acid-test ratio are ______ratios.

Accepted Answer

A)  liability
B)  performance
C)  liquidity
D)  leverage

Question 10

If total liabilities were subtracted from total assets,the residual value would be:

Accepted Answer

A)  revenues.
B)  current assets.
C)  current expenses.
D)  owners' equity.

Question 11

The balance sheet reports revenues and selling costs for a period of time.

Accepted Answer

A) True 
 B)False

Question 12

On a balance sheet,what a firm owes to creditors would be listed under:

Accepted Answer

A)  expenses.
B)  liabilities.
C)  owners' equity.
D)  contra-assets.

Question 13

There are five key working areas in accounting: financial accounting,managerial accounting,auditing,tax accounting,and governmental and not-for-profit accounting.

Accepted Answer

A) True 
 B)False

Question 14

is the accounting practice of recording every transaction in two places.

Accepted Answer

A)  Entry duplication
B)  Double-entry bookkeeping
C)  Trial balancing
D)  Account matching

Question 15

The accounting cycle usually involves the work of both the bookkeeper and the accountant.

Accepted Answer

A) True 
 B)False

Question 16

There is a standard inventory turnover ratio that applies to any company.

Accepted Answer

A) True 
 B)False

Question 17

The value of things you own minus the amount of money you owe others is called equity.

Accepted Answer

A) True 
 B)False

Question 18

The current ratio is found by dividing the firm's current assets by its______ _.

Accepted Answer

A)  total liabilities
B)  current liabilities
C)  debt
D)  equity

Question 19

Accounting involves both the recording and the interpreting of financial events.

Accepted Answer

A) True 
 B)False

Question 20

Careful consideration of the use of computers in accounting indicates that computers:

Accepted Answer

A)  cannot handle the increasing data demands of accounting.
B)  have a very limited use in accounting due to inadequate privacy controls.
C)  will soon eliminate all of the accounting functions.
D)  are tools to help the accountant perform his or her job.

Exam 16: Understanding Accounting and Financial Information

If total liabilities were subtracted from total assets,the residual value would be:

Correct AnswerverifiedShow Answer

is the accounting practice of recording every transaction in two places.

Correct AnswerverifiedShow Answer

Stockholders of the Sasha Deal Company are concerned about irregularities in the firm's accounting system.One approach to identify problems in the records of the company would be to have a(n) ______performed.

Correct AnswerverifiedShow Answer

Computer-based continuous auditing can be used to discover cash flow problems.

Correct AnswerverifiedShow Answer

The accounting cycle usually involves the work of both the bookkeeper and the accountant.

Correct AnswerverifiedShow Answer

The balance sheet reports revenues and selling costs for a period of time.

Correct AnswerverifiedShow Answer

A look at the EPS ratio for a corporation will give you insights into its ability to pay a dividend to its stockholders.

Correct AnswerverifiedShow Answer

The reports and financial statements prepared by accountants:

Correct AnswerverifiedShow Answer

The value of things you own minus the amount of money you owe others is called equity.

Correct AnswerverifiedShow Answer

Accounting involves both the recording and the interpreting of financial events.

Correct AnswerverifiedShow Answer

Both the current ratio and the acid-test ratio are ______ratios.

Correct AnswerverifiedShow Answer

There are five key working areas in accounting: financial accounting,managerial accounting,auditing,tax accounting,and governmental and not-for-profit accounting.

Correct AnswerverifiedShow Answer

The current ratio is found by dividing the firm's current assets by its______ _.

Correct AnswerverifiedShow Answer

Accounting has been called the language of business.

Correct AnswerverifiedShow Answer

There is a standard inventory turnover ratio that applies to any company.

Correct AnswerverifiedShow Answer

A(n) ______provides a summary of money coming in to and money going out of a firm in a given time period.

Correct AnswerverifiedShow Answer

On a balance sheet,what a firm owes to creditors would be listed under:

Correct AnswerverifiedShow Answer

Careful consideration of the use of computers in accounting indicates that computers:

Correct AnswerverifiedShow Answer

The balance sheet is composed of the following types of accounts:

Correct AnswerverifiedShow Answer

Once a trial balance has been prepared,the next step of the accounting cycle involves:

Correct AnswerverifiedShow Answer

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