BUS 110 Chapter 17

d

A Certified Public Accountant (CPA) is ___________ . a) basically the same as a certified management accountant, since both have passed a series of exams b) a government employee who has a degree in accounting c) a professional who has studied both personal financial management and financial accounting and passed brokerage qualification exams d) an accountant who has met educational requirements and has passed exams established by the American Institute of Certified Public Accountants

the company has more debt than equity.

A debt to equity ratio of over 100% would mean:

Ledger

A specialized accounting book in which information is accumulated into specific categories and posted so managers can find all information about one account in the same place is a:

d

Accumulated earnings from a firm's profitable operations that are kept in the business and not paid out to stockholders are called _____________. a) appreciated earnings b) gross revenues c) accumulated capital d) retained earnings

c

Buying and selling goods, acquiring insurance and using supplies represent __________ transactions. a) resource trading b) management c) financial d) marketing

d

Celia's boss asked her to determine if their company is operating with too many borrowed funds. Which ratio will Celia utilize to help her with her decision? a) Inventory turnover b) Liquidity c) Profitability d) Leverage

d

Darby's company reported net income after taxes of $2,000,000, on sales of $225 million. Her boss asked her to calculate the earnings per share for stockholders. Darby noted that the company's balance sheet showed 44 million shares outstanding. To explain to him that her calculation is correct, Darby's correct response is __________. a) $5.12 per share. Earnings per share is calculated by taking the sales dollars and dividing by the number of shares issued and outstanding b) $0.45 per share. Earnings per share means sales of $225 million is divided by the number of common shares outstanding c) $4.50 per share. Earnings per share is calculated by taking the number of shares issued and outstanding and dividing by the net income after taxes d) $0.045 per share. Earnings per share is calculated by taking net income after taxes and dividing by the total number of common shares issued and outstanding

b

If Beck's Bicycles, Inc.'s income statement shows gross profit of $350 million, with operating expenses of $120 million, and if Beck's tax rate is 30%, what is the firm's net income after taxes? a) $141 million b) $161 million c) $69 million d) $11.6 million

divide transactions into meaningful categories.

If you were working as a bookkeeper, the first action you would take is to:

transactions such as sales, payroll, and other expenses; financial statements

In a private company's accounting system, inputs are _______________ and outputs are _________.

Independent Auditors

In order for information to be meaningful, a firm's accounting processes and procedures should be certified as accurate by acceptable accounting standards. Companies hire ________ to provide unbiased opinions about the accuracy of a firm's financial statements.

c

Jim Hopson is an accountant who works for a number of businesses as a consultant. He has helped to design an accounting system, provides accounting services, and has analyzed the financial strength of many of his clients. Jim is working as a: a) certified internal auditor. b)certified management accountant. c) public accountant. d) private accountant.

c

Ledgers are used to compile information to complete which of the following? a) Departmental checks and balances b) A gross margin balance c) A trial balance d) A retained balance

d

Small businesses that are just getting off the ground often have problems with the difference between cash coming into the business and cash going out of the business. For example, if the company allows far too lenient credit sales terms, customers do not pay on time, which could cause cash to come in too slowly. That's why all businesses must keep a careful watch on their ________. a) advance payments accounts b) asset summarization c) recording processes d) cash flow

a

The accounting cycle is a six-step process that results in: a) the compilation of financial statements and their analysis. b) the independent audit. c) the annual report. d) the double entry bookkeeping system.

d

The following information is listed on Beck's Bicycles, Inc.'s balance sheet as of 12/30/2015. Assets Liabilities Current Assets Current Liabilities Cash $3,000,000.00 Accts. Payable $12,000,000.00 Accts. Receivables 2,000,000.00 Inventory 9,000,000.00 Total Current Assets $14,000,000.00 Total Current Liabilities $12,000,000.00 Fixed Assets $125,000,000.00 Long-Term Debt $75,000,0000.00 If you were one of Beck's accountants and you were asked to evaluate if the firm has enough funds to pay its bills that are coming due in the next few months, how would you respond? a) Beck's does not have enough funds to pay bills that are coming due because it has $3 million in cash, and it owes $87,000,000 in the next few months. b) Beck's will not have enough funds to pay bills coming due in the next few months because it cannot depend on selling inventory to pay those bills. It must depend only on cash and credit sales already produced. Total cash and credit sales are only $5 million. c) Beck's has enough funds to pay bills that are coming due because it has $3 million in cash assets. d) Beck's will have enough funds to pay bills coming due in the next few months, as long as it continues to collect money that others owe Beck's and it continues to turn its inventory and sell bikes.

a

The fundamental accounting equation is ________. a) assets = liabilities + owner's equity b) owners' earnings = assets - revenues c) assets = liabilities - owner's earnings d) liabilities = owners' equity + revenues

c

The primary purpose of accounting is to: a) make sure a business is paying its taxes. b) allow for government tracking of business activities. c) help managers evaluate the financial condition of the firm. d) provide a method of spending money wisely.

a

This legislation created new government reporting standards for publicly traded companies. a) The Sarbanes-Oxley Act b) The Clayton Act c) The Robinson-Patman Act d) The Public Company Oversight Act

b

Which of the following assets would be considered to be the most liquid (able to convert easily to cash) assets? a) Intangible assets b) Current assets c) Long-term assets d) Fixed assets

d

Which of the following describes an activity associated with accounting? a) Forecasting demand for a new product. b) Developing strategies for entering new markets. c) Establishing a channel of distribution and supply chain. d) Summarizing and interpreting company financial information.

b

Which of the following is most helpful in analyzing the financial performance of a company? a) The trial balance b) Financial ratios c) The customer base payments schedule d) General ledger statements

a

Which of the following is true of the use of computers in accounting? a) Computers can free up accountants to do important tasks, such as financial analysis and forecasting. b) Computers have been programmed to make their own financial decisions. c) Computerized accounting systems have actually made the accounting process slightly more complicated because of the need to understand the software. d) Computerized accounting systems are primarily used only in large corporations.

d

Which of the following would be considered a current asset? a) Accounts payable b) Copyrights c) Buildings d) Accounts receivable

d

__________ accounting is used to provide information and analysis to managers within the firm to assist them in decision making. a) Financial b) Tax c) Accrual d) Managerial