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Exam 15: Using Accounting Information

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Question 61

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Ridgley, Cooper, and Ross (RCR) Katie is the CEO of Ridgley, Cooper, and Ross (RCR) , a regional accounting firm.RCR offers services in most areas of accounting, including auditing and consulting services.The firm must follow the GAAP rules, just like any other accounting firm.If there are information gaps that are not addressed and resolved by the firm, RCR could be considered a violator of the Sarbanes-Oxley Act.Katie understands what must be done and wants every employee of the firm to understand that they have to follow all the rules and regulations.Like any other industry, accounting is a competitive industry and employees of accounting firms must be productive, progressive, and well trained. -Refer to Ridgley, Cooper, and Ross.If you applied for a job at RCR and were asked to state the accounting equation, which of these would you state?

A) Assets = liabilities -owners' equity
B) Assets + liabilities = owners' equity
C) Assets /liabilities = owners' equity
D) Assets = liabilities + owners' equity
E) Assets = liabilities * owners' equity

F) C) and E)
G) B) and E)

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Question 62

Multiple Choice

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The trial balance is the

A) calculation of the net income.
B) verification that the firm earned a profit.
C) process of transferring journal entries to the general ledger.
D) summary of the information for the month.
E) summary of the firm's general ledger accounts at the end of the accounting period.

F) None of the above
G) A) and D)

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Question 63

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As a stockholder, Charlotte is concerned about the level of long-term debt her company has.Which ratio would you recommend for determining whether or not her company has too much debt?

The process of transferring information from a general journal to a general ledger is referred to as _____.

Most lenders would prefer to lend money to a firm that has a high debt-to-owners' equity ratio.

Dave Murray's Pontiac dealership has an inventory turnover of 5.What does this figure mean?

According to the Sarbanes-Oxley Act, the FTC is required to establish a full- time, five-member federal oversight board that will police the accounting industry.

The trial balance is prepared directly from the information contained in the general and specialized journals.

Ridgley, Cooper, and Ross (RCR) Katie is the CEO of Ridgley, Cooper, and Ross (RCR) , a regional accounting firm.RCR offers services in most areas of accounting, including auditing and consulting services.The firm must follow the GAAP rules, just like any other accounting firm.If there are information gaps that are not addressed and resolved by the firm, RCR could be considered a violator of the Sarbanes-Oxley Act.Katie understands what must be done and wants every employee of the firm to understand that they have to follow all the rules and regulations.Like any other industry, accounting is a competitive industry and employees of accounting firms must be productive, progressive, and well trained. -Refer to Ridgley, Cooper, and Ross.Which of the following represents a key component of the Sarbanes-Oxley Act relating to consulting services?

When Josh sold his Internet auction site to eBay, he received $2,000,000 more than the total value of his assets as listed on his balance sheet.How will eBay classify this $2,000,000?

Working capital is the difference between

Extreme Sports, a bicycle, ATV, and motorbike retailer, buys its inventory on credit.Before Extreme pays for this merchandise in 60 days, the money owed is classified on its balance sheet as a(n) _____.

The president of Universal Foods Corporation is seeking your advice on the kinds of information provided by an accounting system that would be helpful to her.Since the president is developing a new, company-wide strategy, she would be most interested in the

Accounting information is, first and foremost, management information.

Information that is not divulged to anyone outside the business is commonly referred to as ____ information.

Why are current assets listed before fixed assets on the balance sheet?

Ridgley, Cooper, and Ross (RCR) Katie is the CEO of Ridgley, Cooper, and Ross (RCR) , a regional accounting firm.RCR offers services in most areas of accounting, including auditing and consulting services.The firm must follow the GAAP rules, just like any other accounting firm.If there are information gaps that are not addressed and resolved by the firm, RCR could be considered a violator of the Sarbanes-Oxley Act.Katie understands what must be done and wants every employee of the firm to understand that they have to follow all the rules and regulations.Like any other industry, accounting is a competitive industry and employees of accounting firms must be productive, progressive, and well trained. -Refer to Ridgley, Cooper, and Ross.In order to be successful in the accounting industry, RCR employees must

The information provided by managerial accounting is of most benefit to a firm's _____.

For a corporation, the owners' equity amount is the total value of stock minus the retained earnings that have accumulated to date.

Because of the Sarbanes-Oxley Act, accountants must maintain financial documents and audit work for _____.