Question 1

Non-business entities typically obtain revenues through the sale of their assets.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following equations is correct?

Accepted Answer

A)  Profit margin = net income/sales
B)  Profit margin = assets + liabilities
C)  Profit margin = revenue - expenses
D)  Profit margin = net income/total assets
E)  Profit margin = net income/stockholder's equityF) A) and D)
G) All of the above

Question 3

In the accounting cycle,after examining source documents and recording transactions in an accounting journal,what is the next step taken by a financial manager?

Accepted Answer

A)  Closing the books
B)  Posting recorded transactions
C)  Gathering credit card receipts
D)  Preparing a trial balance
E)  Balancing the accounting equationF) C) and D)
G) A) and B)

Question 4

Which of the following is a function of the Public Company Accounting Oversight Board?

Accepted Answer

A)  It provides relief to banks during financial crisis.
B)  It ensures that accounting firms do not separate their consulting and auditing businesses.
C)  It makes rules and policies for accounting firms and businesses.
D)  It overlooks the accounts department of the federal government.
E)  It certifies individuals to provide accounting services.F) D) and E)
G) All of the above

Question 5

_____ brings the complex information from a company's income statement and balance sheet into sharper focus.

Accepted Answer

A)  General analysis
B)  Specific analysis
C)  Cash-flow analysis
D)  Feedback analysis
E)  Ratio analysisF) B) and E)
G) All of the above

Question 6

Cash from investing activities is calculated from changes in the long-term liability accounts and the contributed capital accounts in owners' equity.

Accepted Answer

A) True 
 B)False

Question 7

Asset utilization ratios measure:

Accepted Answer

A)  the performance of the firm relative to others on a per-share basis.
B)  how much income a firm generates relative to its assets,equity,and sales.
C)  how much debt the firm is using relative to other sources of financing.
D)  the speed with which a company can turn its short-term assets into cash to pay off its short-term debts.
E)  how well a firm uses its assets to generate each $1 of sales.F) A) and E)
G) B) and E)

Question 8

_____ refer to calculations that measure an organization's financial health.

Accepted Answer

A)  General analysis
B)  Specific analysis
C)  Ratio analysis
D)  Feedback analysisE) All of the above
F) A) and C)

Question 9

Companies record their _____ in the revenue and expense accounts during an accounting period.

Accepted Answer

A)  operational activities
B)  managerial activities
C)  administrative activities
D)  research activities
E)  developmental activitiesF) None of the above
G) C) and D)

Question 10

Individuals and businesses can hire a _____ to,an individual,to provide accounting services ranging from the preparation of financial records and the filing of tax returns to complex audits of corporate financial records.

Accepted Answer

A)  Certified Fraud Examiner
B)  Certified Public Accountant
C)  Certified Private Accountant
D)  Certified Management Accountant
E)  Certified Forensic AccountantF) B) and C)
G) All of the above

Question 11

All asset accounts are listed in descending order of _____.

Accepted Answer

A)  investments
B)  inventory
C)  revenues
D)  liquidity
E)  accounts receivableF) B) and E)
G) A) and B)

Question 12

Derek,an accountant,allocates the cost of a piece of earth-moving equipment over a specific period of time.Based on the given information,it can be concluded that Derek is implementing the process of:

Accepted Answer

A)  cost plus pricing.
B)  appreciation.
C)  discounting.
D)  expense designation.
E)  depreciation.F) B) and D)
G) All of the above

Question 13

The net income of a company is equal to the total profit or loss minus:

Accepted Answer

A)  assets and liabilities.
B)  equity.
C)  sales.
D)  expenses,including taxes.
E)  income and profits.F) B) and E)
G) A) and B)

Question 14

Vikram is an accountant employed by a large corporation.He works for the billing and taxation department.He is most likely to be a:

Accepted Answer

A)  public accountant.
B)  private accountant.
C)  legal accountant.
D)  junior accountant.
E)  senior accountant.F) A) and B)
G) A) and C)

Question 15

Which of the following equations describes the information presented in an income statement?

Accepted Answer

A)  Equity = liabilities - assets
B)  Equity = assets - liabilities
C)  Net income = expenses - revenues + taxes
D)  Revenues - expenses = net income
E)  Costs of goods sold = beginning inventory + interim purchases - ending inventoryF) A) and D)
G) A) and C)

Question 16

The single most important component of an annual report is the:

Accepted Answer

A)  balance sheet.
B)  income statement.
C)  cash flow statement.
D)  signature of a Certified Public Accountant.
E)  signature of the firm's owners or stakeholders.F) A) and B)
G) A) and C)

Question 17

One of the ways to analyze a company's financial performance is to compare its performance with those of:

Accepted Answer

A)  the foreign governments.
B)  the manufacturers producing their products.
C)  the companies in the same industry.
D)  the U.S.government.
E)  the suppliers of the raw materials.F) C) and E)
G) A) and E)

Question 18

A company's financial obligations to short-term creditors,which must be repaid within one year,are called its:

Accepted Answer

A)  current assets.
B)  equity.
C)  net profit.
D)  current liabilities.
E)  accounts payable.F) C) and D)
G) A) and D)

Question 19

The _____,a debt utilization ratio,indicates how much of a firm is financed by debt and how much by owners' equity.

Accepted Answer

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

Question 20

A Certified Public Accountant has the right to:

Accepted Answer

A)  express,officially,an unbiased opinion regarding the accuracy of a client's financial statements.
B)  publicly express a biased opinion about the accuracy of a firm's financial statements.
C)  express his or her personal opinion in all financial matters.
D)  handle every firm's reports by different rules.
E)  limit the types of assets commercial banks can buy.F) A) and E)
G) D) and E)

Exam 14: Accounting and Financial Statements

In the accounting cycle,after examining source documents and recording transactions in an accounting journal,what is the next step taken by a financial manager?

Correct AnswerverifiedShow Answer

Derek,an accountant,allocates the cost of a piece of earth-moving equipment over a specific period of time.Based on the given information,it can be concluded that Derek is implementing the process of:

Correct AnswerverifiedShow Answer

Asset utilization ratios measure:

Correct AnswerverifiedShow Answer

Which of the following equations is correct?

Correct AnswerverifiedShow Answer

The net income of a company is equal to the total profit or loss minus:

Correct AnswerverifiedShow Answer

Companies record their _____ in the revenue and expense accounts during an accounting period.

Correct AnswerverifiedShow Answer

A Certified Public Accountant has the right to:

Correct AnswerverifiedShow Answer

The single most important component of an annual report is the:

Correct AnswerverifiedShow Answer

Individuals and businesses can hire a _____ to,an individual,to provide accounting services ranging from the preparation of financial records and the filing of tax returns to complex audits of corporate financial records.

Correct AnswerverifiedShow Answer

Which of the following is a function of the Public Company Accounting Oversight Board?

Correct AnswerverifiedShow Answer

All asset accounts are listed in descending order of _____.

Correct AnswerverifiedShow Answer

Cash from investing activities is calculated from changes in the long-term liability accounts and the contributed capital accounts in owners' equity.

Correct AnswerverifiedShow Answer

Non-business entities typically obtain revenues through the sale of their assets.

Correct AnswerverifiedShow Answer

_____ brings the complex information from a company's income statement and balance sheet into sharper focus.

Correct AnswerverifiedShow Answer

Vikram is an accountant employed by a large corporation.He works for the billing and taxation department.He is most likely to be a:

Correct AnswerverifiedShow Answer

_____ refer to calculations that measure an organization's financial health.

Correct AnswerverifiedShow Answer

Which of the following equations describes the information presented in an income statement?

Correct AnswerverifiedShow Answer

The _____,a debt utilization ratio,indicates how much of a firm is financed by debt and how much by owners' equity.

Correct AnswerverifiedShow Answer

A company's financial obligations to short-term creditors,which must be repaid within one year,are called its:

Correct AnswerverifiedShow Answer

One of the ways to analyze a company's financial performance is to compare its performance with those of:

Correct AnswerverifiedShow Answer

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