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Exam 17: Understanding Accounting and Financial Information

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Question 141

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During a period of rising prices, using FIFO (first-in, first-out) inventory valuation method will result in ________ net income figures than would LIFO (last-in, first-out) .

A) higher
B) lower
C) the same
D) less accurate

E) B) and D)
F) None of the above

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Question 142

Multiple Choice

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Patents and copyrights are classified as ___________ on the Balance Sheet.

A) fixed assets
B) intangible assets
C) current assets
D) owners' equity

E) A) and C)
F) A) and D)

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Question 143

Multiple Choice

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The Music Museum, LLC, sells a unique assortment of sheet music. The company indexes just about any published music ever written before 1970. Its customers are high school and college band directors, church choir directors, and glee clubs who require several copies of the same music, including music written for a variety of instruments. To buy inventory for resale, the business seeks out wholesalers with large inventories. Due to the fact that cash flow is always an important concern, the owner keeps a watchful eye on how quickly various genres of sheet music sell. To help him in this assessment, which of the following ratios would be an important part of this company's financial analysis?

The U.S. government is a user of a firm's accounting information.

The statement of cash flows calculates cash flows from operations, investing activities, and financing activities.

The best way for a firm to avoid serious cash flow problems is to sustain a rapid growth in sales.

________ measures the speed of inventory moving through the firm and its conversion into sales.

Bark Three Times Pet Store's accountant has recorded the following: Total current assets = $60,000, including Cash = $24,000; Accounts Receivable = $20,000; and Inventory = $16,000. Total assets = $230,000; Total current liabilities = $48,000; and Total current and long-term liabilities = $98,000. The store's current ratio = 1.25. The store's acid-test ratio = .92

Similar to the example of FIFO and LIFO inventory accounting methods, a college store purchased sweatshirts for the upcoming fall semester. Using the following data, where a total of 100 sweatshirts were purchased by the store and placed in inventory, select the correct statement from the following choices.

Assets are economic resources that are owned by a firm.

When valuing items in inventory for financial reporting purposes, generally accepted accounting principles (GAAP) requires firms to value the cost of goods sold by assuming that the items that have been in inventory the longest are the ones that are sold first.

Which of the following responses is the best and most comprehensive? "A company's accounting information is useful to _____________."

Leverage ratios are concerned with the extent to which a firm relies on borrowed funds in its operations.

Bark Three Times Pet Store's owner is concerned with how his business decisions affect the bottom line. This is another way of saying that he is concerned with the impact of his decisions on net income after taxes.

There are two major financial statements prepared at the completion of the accounting cycle: the journal and the ledger.

In order to calculate the current ratio for your firm, you divide the total value of current assets by:

Explain the difference between current, fixed, and intangible assets. Give two examples of each of these different types of assets.

Jasmine is categorizing journal entries in order to post to the ________.

The purpose of a trial balance is to:

Which of the following is a key step in the accounting cycle?