Question 1

In accounting,a ledger is a time-ordered list of accounting transactions.

Accepted Answer

A) True 
 B)False

Question 2

_____ refers to money owed a company by its clients or customers who have promised to pay for the products at a later date.

Accepted Answer

A)  Accounts payable
B)  Accounts receivable
C)  Current assets
D)  Current liabilities
E)  Balance sheetF) D) and E)
G) C) and D)

Question 3

Which of the following statements is true of the balance sheet?

Accepted Answer

A)  It represents the result of transactions completed over a specified accounting period.
B)  It represents all transactions conducted by an organization since its founding.
C)  It represents an organization's profitability over a period of time.
D)  It represents the overall revenues of an organization.
E)  It represents how the company's cash changed during an accounting period.F) B) and D)
G) A) and B)

Question 4

_____ provide information about how much debt an organization is using relative to other sources of capital,such as owners' equity.

Accepted Answer

A)  Liquidity ratios
B)  Current ratios
C)  Current debt figures
D)  Percentages of debt repaid
E)  Debt utilization ratiosF) A) and D)
G) C) and D)

Question 5

Profitability ratios measure:

Accepted Answer

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

Question 6

Which of the following statements is true of bookkeeping?

Accepted Answer

A)  Bookkeeping involves understanding and interpreting sophisticated accounting systems to classify financial information.
B)  Bookkeeping involves developing sophisticated accounting systems.
C)  Bookkeeping is a process that requires extensive training.
D)  Bookkeeping is a broader term than accounting.
E)  Bookkeeping involves day-to-day recording of business transactions.F) C) and D)
G) A) and D)

Question 7

Each type of stock issued by a company represents a different claim on the organization,thus each must be represented by a separate owners' equity account called _____.

Accepted Answer

A)  deferred revenue
B)  contributed capital
C)  insurance revenue
D)  accounts payable
E)  accrued taxesF) None of the above
G) A) and C)

Question 8

The process of spreading the costs of long-lived assets such as buildings and equipment over the total number of accounting periods in which they are expected to be used is called _____.

Accepted Answer

A)  depreciation
B)  gross profit
C)  budget
D)  net income
E)  revenueF) B) and C)
G) A) and B)

Question 9

_____ includes the owners' contributions to a company along with income earned by the company and retained to finance continued growth and product development.

Accepted Answer

A)  Owners' equity
B)  Owners' assets
C)  Owners' liabilities
D)  Revenue
E)  ProfitsF) A) and E)
G) D) and E)

Question 10

What is meant by owners' equity?

Accepted Answer

A)  It refers to a firm's economic resources.
B)  It refers to a firm's "goodwill" or reputation.
C)  It refers to debts a firm owes to others.
D)  It refers to outstanding loans and credit that a firm has to return.
E)  It refers to the money contributed to a firm that never has to be paid back.F) D) and E)
G) B) and D)

Question 11

_____,an expense account shown on income statements,include sales salaries.

Accepted Answer

A)  Interest expenses
B)  Selling expenses
C)  General and administrative expenses
D)  Research and development expenses
E)  Depreciation expensesF) A) and B)
G) C) and E)

Question 12

CPA stands for:

Accepted Answer

A)  Credentialed Public Accountant.
B)  Credentialed Private Accountant.
C)  Certified Private Accountant.
D)  Certified Public Accountant.
E)  Certified Professional Accountant.F) A) and B)
G) B) and E)

Question 13

The measure of liquidity that reflects a company's liquidity ratio after excluding its inventory is the _____.

Accepted Answer

A)  debt utilization ratio
B)  current ratio
C)  asset utilization ratio
D)  receivables turnover ratio
E)  quick ratioF) B) and D)
G) A) and B)

Question 14

_____ involves analyzing financial documents in search of fraudulent entries or financial misconduct.

Accepted Answer

A)  Financial accounting
B)  Management accounting
C)  Operational accounting
D)  Forensic accounting
E)  Tax accountingF) A) and B)
G) A) and C)

Question 15

An accounting term that is interchangeable with revenue is:

Accepted Answer

A)  services.
B)  expenses.
C)  net income.
D)  sales.
E)  price.F) B) and D)
G) None of the above

Question 16

The principal value of a budget lies in its:

Accepted Answer

A)  breakdown of cash inflows and outflows.
B)  forecast of income and expenses over a period of time.
C)  purpose of control over expenditures.
D)  evaluation of the firm's performance.
E)  development of a strategic financial plan.F) None of the above
G) A) and B)

Question 17

Which of the following is an asset in the balance sheet?

Accepted Answer

A)  Accrued expenses
B)  Accounts payable
C)  Accounts receivable
D)  Taxes payable
E)  Wages payableF) B) and E)
G) B) and D)

Question 18

Which of the following statements is true of Certified Public Accountant?

Accepted Answer

A)  They are required to be self-employed and cannot be a part of private firms.
B)  They are required to be members of large public accounting firms and cannot be self-employed.
C)  They have the right to express,officially,a biased opinion regarding the accuracy of a client's financial statements.
D)  They provide services ranging from the preparation of financial records to the filing of tax returns.
E)  They are appointed by the government and cannot be hired by private corporations.F) A) and B)
G) A) and C)

Question 19

Which of the following categories of cash flow includes all the accounts on the balance sheet that relate to computing revenues and expenses for the accounting period?

Accepted Answer

A)  Cash from investing activities
B)  Cash from operating activities
C)  Cash from marketing activities
D)  Cash from financing activities
E)  Cash from profiteering activitiesF) A) and E)
G) A) and D)

Question 20

A company with a low return on assets:

Accepted Answer

A)  is making profits.
B)  does not have debts.
C)  is not using its assets very productively.
D)  is lending its assets to other companies.
E)  does invest money in its assets.F) B) and D)
G) B) and C)

Exam 14: Accounting and Financial Statements

CPA stands for:

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The principal value of a budget lies in its:

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_____ refers to money owed a company by its clients or customers who have promised to pay for the products at a later date.

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_____ provide information about how much debt an organization is using relative to other sources of capital,such as owners' equity.

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A company with a low return on assets:

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What is meant by owners' equity?

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_____ includes the owners' contributions to a company along with income earned by the company and retained to finance continued growth and product development.

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Which of the following statements is true of Certified Public Accountant?

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The process of spreading the costs of long-lived assets such as buildings and equipment over the total number of accounting periods in which they are expected to be used is called _____.

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Which of the following statements is true of the balance sheet?

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In accounting,a ledger is a time-ordered list of accounting transactions.

Correct AnswerverifiedShow Answer

Each type of stock issued by a company represents a different claim on the organization,thus each must be represented by a separate owners' equity account called _____.

Correct AnswerverifiedShow Answer

Which of the following is an asset in the balance sheet?

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An accounting term that is interchangeable with revenue is:

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_____,an expense account shown on income statements,include sales salaries.

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Which of the following categories of cash flow includes all the accounts on the balance sheet that relate to computing revenues and expenses for the accounting period?

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Profitability ratios measure:

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Which of the following statements is true of bookkeeping?

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_____ involves analyzing financial documents in search of fraudulent entries or financial misconduct.

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The measure of liquidity that reflects a company's liquidity ratio after excluding its inventory is the _____.

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