Ch. 15
Which of the following best describes a collection period ratio?
Accounts receivable divided by average daily credit sales
________ are those paid without an intermediary to a taxing authority by the person or business against which they are levied.
Direct taxes
If a firm is making profits, it is impossible for that firm to fail financially.
False
Planning is the process of assuring that organizational goals are achieved.
False
Working capital can be calculated by subtracting current assets from total assets.
False
Which of the following statements is a characteristic of an internal audit?
It functions primarily as a service to management for the improvement of its financial controls.
Which of the following statements is a characteristic of a cash flow budget?
It tells whether arrangements need to be made for external sources of cash, such as borrowing or owner investments.
Which of the following is a method of computing inventory that small firms tend to use to save taxes when prices rise?
Last-in, first-out method
A(n) ________ budget forecasts sales and allocates expenses for achieving them.
Operating
Visa and MasterCard are examples of one of the many choices available to use the services referred to as ________.
Peer-to-Peer (P2P) payment services
________ are acceptable levels that are set in advance that is used to measure how well employees meet expectations.
Performance standards
Which of the following helps increase the assets or decrease the liabilities of a company?
Retained earnings
________ is the percentage of net profit the owners' equity earns, before taxes.
Return on equity
Which of the following budgets is planned first when preparing the operating budget?
The sales budget
Which of the following is true of S corporation shareholders?
They are taxed at individual rates
A capital budget reflects a business's plans for obtaining, replacing, and expanding its physical facilities.
True
A financial audit of a company consists of a formalized, methodical study, examination, and/or review of its financial records.
True
If a company turns its inventory over too slowly, it is most likely to be keeping obsolete or deteriorating goods.
True
A(n) ________ budget plans expenditures for obtaining, expanding, and replacing physical facilities.
capital
________ is the amount of current assets less current liabilities.
Working capital
The ________ is the ratio of current assets, less inventory, to current liabilities.
acid test ratio
The ________ shows how easily a company can pay its short-term obligations.
current ratio
A(n) ________ is an additional tax on certain items imposed by the federal government.
excise tax
A ________ is a formalized examination and/or review of a company's financial records.
financial audit
Working capital indicates the ability a company has:
to pay its current liabilities.