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Exam 15: Using Accounting Information

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Question 111

True/False

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The debts of a business are called its liabilities.

A) True
B) False

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Question 112

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Christine's First Job Christine has just earned her undergraduate degree in accounting and has successfully completed the CPA exam.She recently interviewed with a relatively small and new company and was offered a job.The offer sounded very promising; the job had opportunities to grow with the company and provided diverse challenges.Christine accepted the job. Once Christine started working, she realized that the owners and employees did not have a general understanding of accounting.She had to teach them the steps in an accounting cycle so they would be able to understand how she was going to create reports.When she talked about the statement of financial position, they had no idea what she was talking about.She was the qualified individual responsible for accounting.No one else working with her had much knowledge.They did not even know the different financial ratios that someone could use to understand the financial standing of a company.Christine knows it will be a challenge to keep everyone on the same page when it comes to numbers and reports. -Refer to Christine's First Job.When Christine explained the asset side of the statement, she included which of the following?

A) retained earnings
B) notes payable
C) merchandise inventory
D) long-term liabilities
E) stockholders' equity

F) A) and E)
G) A) and B)

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Question 113

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What is the accounts receivable turnover? What is an inventory turnover? Why are these important ratios for a manager to track?

Ruin Company's net sales for the period were $175,000.Its cost of goods sold was $85,000.What is this firm's gross profit on sales?

After Jocelyn, a public accountant, prepares and checks the financial statements for one of her clients, she then

External groups that require information on a firm's financial condition before they will commit themselves to either short-term or long-term loans are known as _____.

The double-entry bookkeeping system requires two separate entries to maintain the balance shown in the basic accounting equation.

Christine's First Job Christine has just earned her undergraduate degree in accounting and has successfully completed the CPA exam.She recently interviewed with a relatively small and new company and was offered a job.The offer sounded very promising; the job had opportunities to grow with the company and provided diverse challenges.Christine accepted the job. Once Christine started working, she realized that the owners and employees did not have a general understanding of accounting.She had to teach them the steps in an accounting cycle so they would be able to understand how she was going to create reports.When she talked about the statement of financial position, they had no idea what she was talking about.She was the qualified individual responsible for accounting.No one else working with her had much knowledge.They did not even know the different financial ratios that someone could use to understand the financial standing of a company.Christine knows it will be a challenge to keep everyone on the same page when it comes to numbers and reports. -The process of systematically collecting, analyzing, and reporting financial information is called _____.

Because of the accounting problems at WorldCom, Enron, and other major corporations, the U.S.Congress tightened key accounting and financial reporting rules, and corporations have enacted more stringent accounting practices.

The process of spreading the cost of a fixed asset over the asset's useful life is called _____.

While chief executives and financial officers are currently not subject to criminal penalties, they are required to certify periodic financial reports.

During the year Comer, Inc., had $200,000 in goods available for sale.At the end of the accounting period it had an ending inventory of $40,000.The cost of goods sold by Comer was therefore _____.

If the liabilities of a business are $85,000 and the owners' equity is $110,000, which of the following is a correct statement?

An airplane that FedEx owns and uses to deliver packages is a(n) ____ of FedEx.