Question 1

Damian, a recent college graduate with a degree in accounting, is helping a newly formed construction company set up its accounting system. Although the company had purchased accounting software, Damian wants to make certain that future reports will distinguish between current liabilities and long-term liabilities. In the future, he will need to know the amount of total current liabilities in order to

Accepted Answer

A)   know when it is time to make a long-term mortgage payment.
B)   calculate if the company has purchased too much inventory for home building.
C)   analyze whether the company can afford to make capital purchases such as additional land acquisition.
D)   analyze whether the company has enough funds to pay the near-term bills.E) None of the above
F) A) and D)

Question 2

________ refers to how quickly an asset can be converted into cash.

Accepted Answer

A)   Liquidity
B)   Velocity
C)   Fundability
D)   AccessibilityE) B) and D)
F) None of the above

Question 3

A journal is where the initial record of a day's transactions is entered.

Accepted Answer

A) True 
 B)False

Question 4

A lower than average inventory turnover ratio indicates excellent inventory management practices.

Accepted Answer

A) True 
 B)False

Question 5

As a first step in the accounting cycle, ________ involves the recording of business transactions.

Accepted Answer

A)   marketing
B)   bookkeeping
C)   auditing
D)   economicsE) C) and D)
F) B) and C)

Question 6

Which of the following would be classified as a general expense on an income statement?

Accepted Answer

A)   salaries paid to salespeople
B)   dividends paid to stockholders
C)   payments made for insurance
D)   costs associated with an advertising campaignE) B) and C)
F) A) and D)

Question 7

In businesses that handle a lot of perishable items (such as supermarkets) the actual movement of goods through inventory most closely resembles the LIFO inventory valuation technique.

Accepted Answer

A) True 
 B)False

Question 8

An accountant who works for a single business or government agency is referred to as a

Accepted Answer

A)   public accountant.
B)   private accountant.
C)   certified accountant.
D)   commission accountant.E) B) and C)
F) C) and D)

Question 9

A comparison of bookkeeping and accounting indicates that

Accepted Answer

A)   the two are virtually the same in practice.
B)   bookkeeping involves recording financial information, while accounting is concerned with classifying, summarizing, and interpreting this information.
C)   bookkeeping is more useful for small businesses while accounting is more useful for large businesses.
D)   accounting is a subsystem of the process of bookkeeping.E) All of the above
F) A) and B)

Question 10

Company resources that are purchased with the intention that they will convert to cash within one year are

Accepted Answer

A)   fixed assets
B)   current liabilities
C)   current assets
D)   owners' equityE) B) and C)
F) B) and D)

Question 11

Which of the following is an example of a financial transaction?

Accepted Answer

A)   A firm purchases a fire insurance policy.
B)   An internal auditor discovers an error in a firm's inventory valuation.
C)   A potential customer accesses a firm's web page.
D)   A manager reviews the financial statements prepared by an accountant.E) A) and D)
F) A) and B)

Question 12

The ________ is a six-step procedure that results in the preparation and analysis of the major financial statements.

Accepted Answer

A)   double-entry method
B)   financial management process
C)   financial performance appraisal
D)   accounting cycleE) None of the above
F) A) and B)

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Taxpayers and special interest groups often have interest in the information generated by government accounting.

Accepted Answer

A) True 
 B)False

Question 15

The inventory turnover ratio for all firms should be greater than 2 times.

Accepted Answer

A) True 
 B)False

Question 16

Many businesses now use computers and accounting software to simplify the mechanical aspects involved in accounting.

Accepted Answer

A) True 
 B)False

Question 17

Earnings per share, return on sales, and return on equity are examples of

Accepted Answer

A)   leverage ratios.
B)   liquidity ratios.
C)   equity ratios.
D)   profitability ratios.E) None of the above
F) A) and B)

Question 18

Accounting software has proven to be especially helpful for small-business owners.

Accepted Answer

A) True 
 B)False

Question 19

Marshall Manufacturing has recorded its unpaid bill for supplies under a current liabilities account on the balance sheet. This payment will be due to the supplier in less than a year.

Accepted Answer

A) True 
 B)False

Question 20

A(n)  ________ provides accounting services to individuals or firms on a fee basis.

Accepted Answer

A)   contract accountant
B)   account agent
C)   public accountant
D)   independent accountantE) B) and C)
F) A) and B)

Exam 17: Understanding Accounting and Financial Information

As a first step in the accounting cycle, ________ involves the recording of business transactions.

Correct Answer
verified

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

Correct Answer
verified

Which of the following would be classified as a general expense on an income statement?

Correct Answer
verified

A journal is where the initial record of a day's transactions is entered.

Correct Answer
verified

An accountant who works for a single business or government agency is referred to as a

Correct Answer
verified

Marshall Manufacturing has recorded its unpaid bill for supplies under a current liabilities account on the balance sheet. This payment will be due to the supplier in less than a year.

Correct Answer
verified

The inventory turnover ratio for all firms should be greater than 2 times.

Correct Answer
verified

Earnings per share, return on sales, and return on equity are examples of

Correct Answer
verified

A(n) ________ provides accounting services to individuals or firms on a fee basis.

Correct Answer
verified

The ________ is a six-step procedure that results in the preparation and analysis of the major financial statements.

Correct Answer
verified

________ refers to how quickly an asset can be converted into cash.

Correct Answer
verified

Taxpayers and special interest groups often have interest in the information generated by government accounting.

Correct Answer
verified

A lower than average inventory turnover ratio indicates excellent inventory management practices.

Correct Answer
verified

Accounting software has proven to be especially helpful for small-business owners.

Correct Answer
verified

In businesses that handle a lot of perishable items (such as supermarkets) the actual movement of goods through inventory most closely resembles the LIFO inventory valuation technique.

Correct Answer
verified

Company resources that are purchased with the intention that they will convert to cash within one year are

Correct Answer
verified

Many businesses now use computers and accounting software to simplify the mechanical aspects involved in accounting.

Correct Answer
verified

A comparison of bookkeeping and accounting indicates that

Correct Answer
verified

Which of the following is an example of a financial transaction?

Correct Answer
verified

Correct Answer
verified

Exam 17: Understanding Accounting and Financial Information

As a first step in the accounting cycle, ________ involves the recording of business transactions.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following would be classified as a general expense on an income statement?

Correct AnswerverifiedShow Answer

A journal is where the initial record of a day's transactions is entered.

Correct AnswerverifiedShow Answer

An accountant who works for a single business or government agency is referred to as a

Correct AnswerverifiedShow Answer

Marshall Manufacturing has recorded its unpaid bill for supplies under a current liabilities account on the balance sheet. This payment will be due to the supplier in less than a year.

Correct AnswerverifiedShow Answer

The inventory turnover ratio for all firms should be greater than 2 times.

Correct AnswerverifiedShow Answer

Earnings per share, return on sales, and return on equity are examples of

Correct AnswerverifiedShow Answer

A(n) ________ provides accounting services to individuals or firms on a fee basis.

Correct AnswerverifiedShow Answer

The ________ is a six-step procedure that results in the preparation and analysis of the major financial statements.

Correct AnswerverifiedShow Answer

________ refers to how quickly an asset can be converted into cash.

Correct AnswerverifiedShow Answer

Taxpayers and special interest groups often have interest in the information generated by government accounting.

Correct AnswerverifiedShow Answer

A lower than average inventory turnover ratio indicates excellent inventory management practices.

Correct AnswerverifiedShow Answer

Accounting software has proven to be especially helpful for small-business owners.

Correct AnswerverifiedShow Answer

In businesses that handle a lot of perishable items (such as supermarkets) the actual movement of goods through inventory most closely resembles the LIFO inventory valuation technique.

Correct AnswerverifiedShow Answer

Company resources that are purchased with the intention that they will convert to cash within one year are

Correct AnswerverifiedShow Answer

Many businesses now use computers and accounting software to simplify the mechanical aspects involved in accounting.

Correct AnswerverifiedShow Answer

A comparison of bookkeeping and accounting indicates that

Correct AnswerverifiedShow Answer

Which of the following is an example of a financial transaction?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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