MGST Chapter 16

The net profit for a company that builds portable oil well exploration rigs was $10 million last year. The company paid out $4 million in dividends and has 2 million shares of common share outstanding. What are its earnings per share? Question options: $2.50 $3.00 $4 $5

$5

The income statement is a snapshot of the company's financial position at a certain point in time. Question options: False True

False

A current asset is one that can or will be converted into cash within one year. Question options: True False

True

All publicly held companies must include a statement of cash flows in their financial reports to shareholders. Question options: True False

True

Which of the following is a yearly document that describes a company's financial status and usually discusses a company's financial activities during the past year and its prospects for the future? Question options: an earnings report a trial balance an annual report a company summary

an annual report

What is another term for an operating statement or an earnings statement? Question options: a cash flow statement an income statement a balance sheet a transaction ledger

an income statement

The Jolly Green Giant appears on all packages of frozen and canned vegetables and other dishes sold by the Green Giant Company. Because it does not have a physical existence, what is the Jolly Green Giant? Question options: a retained asset a tangible expense an intangible asset a hidden asset

an intangible asset

Watts Regulator makes hydroponic pressure valves used in water pumps and water heaters. Watts had $100,000 in net sales for the month. Cost of goods sold was $42,000. On an income statement, how would the remaining $58,000 be classified? Question options: as gross profit as net revenues as general income as gross revenues

as gross profit

What are things of value owned by a company? Question options: intangibles assets owners' equity tangibles

assets

Which of the following is the system used to record a company's financial transactions in a routine and clerical process? Question options: auditing bookkeeping record keeping accounting

bookkeeping

In the accounting field, CMA stands for which of the following? Question options: certified management accountant centralized managerial accountant certified motivational accountant consolidated monetary auditor

certified management accountant

Which of the following are the two types of expenses recorded on the income statement? Question options: cost of goods sold and production costs sales expenses and administrative expenses` operating expenses and administrative expenses cost of goods sold and operating expenses

cost of goods sold and operating expenses

Which of the following is the best example of a current asset for a clinical psychologist? Question options: the building in which his clinic is located money he pays for rent and utilities credit card charges by patients his reputation as a compassionate man

credit card charges by patients

Which of the following is the process of distributing the original cost of a long-term asset over the years of its useful life? Question options: depreciation accountable life cost distribution appreciation

depreciation

What is the acceptable inventory turnover ratio? Question options: once every sixty days once per year once every ninety days differs for each industry

differs for each industry

What is the ratio of net profit to the number of shares of common share outstanding? Question options: equity earnings share-to-earnings ratio earnings for profit earnings per share (EPS)

earnings per share (EPS)

Which of the following is an example of a cost of goods sold for a manufacturer of electric fans? Question options: overtime hours needed to fill a large summer order the office phone bill sales commissions factory utilities

factory utilities

Which of the following deals with reporting to outsiders? Question options: financial accounting auditing bookkeeping internal accounting

financial accounting

Which of the following involves calculating and interpreting financial ratios taken from the company's financial statements in order to assess its condition and performance? Question options: organizational performance appraisal ratio analysis performance analysis financial reporting

financial reporting

On an income statement, operating expenses that cannot be linked to cost of goods sold or to sales are known as which type of expense? Question options: incidental functional miscellaneous general and administrative

general and administrative

What is the difference between net sales and cost of goods sold? Question options: net income general income net revenues gross profit

gross profit

For which of the following assets would a wholesale company use depreciation? Question options: its patented computer tracking equipment inventory of unsold merchandise gasoline used to power its delivery trucks its warehouse

its warehouse

What are ratios of special interest to the company's creditors and measure the company's ability to pay short-term debts as they come due? Question options: liquidity ratios earnings ratios profitability ratios current ratios

liquidity ratios

Managerial accounting provides which of the following financial information? Question options: monthly sales records income statements reports for bankers and other investors reports for shareholders

monthly sales records

Which of the following terms equals the total profits of a company minus all dividends (distributions of profits) to shareholders? Question options: net earnings net worth retained earnings owners' equity

retained earnings

What is the dollar amount of sales plus any other income received from sources such as interest and dividends? Question options: revenues capital intangible assets equities

revenues

Financial accounting produces financial reports that are important to which of the following groups? Question options: shareholders managers supervisors employees

shareholders

Which of the following is the financial statement used to assess the sources and uses of cash during the year? Question options: the trial balance the balance sheet the income statement the statement of cash flows

the balance sheet

Which of the following summarizes an organization's financial status at the end of an accounting period? Question options: the cash flow statement the balance sheet the trial balance the income statement

the balance sheet

How soon are current assets, such as marketable securities and inventory, usually expected to be turned into cash? Question options: within 1 month within 1 year within 18 months within 5 years

within 1 year

Myriad Canning Company has the following balance sheet figures for the year ending December 31, 200X: Cash $1,000 Marketable securities $5,000 Inventory $3,000 Total current assets $9,000 Accounts payable $2,000 Notes payable $1,000 Total current liabilities $3,000 What is its net working capital? Question options: $1,000 $3,000 $6,000 $9,000

$6,000

An example of an intangible asset is accounts receivable because the company does not see or feel it until it is paid in full. Question options: False True

False

Another term for "net worth" is "working capital." Question options: False True

False

Auditors are correctly portrayed as bean-counters. Question options: False True

False

The balance sheet summarizes a company's financial position over a period of time, for instance three months or a year. Question options: False True

False

The final figure or bottom line on an income statement is called the net revenue. Question options: False True

False

Which of the following is an example of an intangible asset for a manufacturer of padlocks? Question options: a patent on a titanium lock mechanism money owed to the company by a superstore chain a machine for forming the locks out of sheet metal a warehouse for storing locks

a patent on a titanium lock mechanism

What are amounts owed to the company by customers who bought goods and services on credit? Question options: notes payable owners' equity marketable receivables accounts receivable

accounts receivable

Which of the following calculations is a formal expression of the accounting equation? Question options: assets - owners' equity = liabilities assets = liabilities + owners' equity assets ´ liabilities = retained earnings assets + liabilities = owners' equity

assets = liabilities + owners' equity

Which of the following ratios measures the relationship between the amount of debt financing and the amount of equity financing? Question options: sales to ownership liability to ownership debt to equity debt to revenue

debt to equity

Which of the following is an example of a cost of goods sold for a manufacturer of electric fans? Question options: overtime hours needed to fill a large summer order the office phone bill sales commissions factory utilities

factory utilities

On an income statement, expenses such as professional salaries, office salaries, office supplies, rent, and insurance are known as which of the following? Question options: miscellaneous expenses managerial expenses functional expenses general and administrative expenses

general and administrative expenses

To ensure accuracy and consistency in the way financial information is reported, accountants have historically followed which of the following rules? Question options: generally accepted accounting principles comparable accounting standards accounting rules and principles principled accounting procedures

generally accepted accounting principles

Which of the following deals with the internal operation of the company? Question options: managerial accounting auditing accounting bookkeeping financial accounting

managerial accounting

Which of the following are temporary investments of excess cash in bonds and shares that can readily be converted into cash? Question options: marketable securities accounts receivable owners' net contribution margins notes payable

marketable securities

Which of the following is an example of a liability that might be owed by a discount shoe store? Question options: promotional signs money owed to shoe distributors money in the cash register the reduced prices paid by customers

money owed to shoe distributors

After all expenses have been subtracted from revenues on an income statement, if the final figure is negative, it is known as which of the following? Question options: owners' negative equity net loss negative liability net liability

net loss

After all expenses have been subtracted from revenues on an income statement, if the final figure is positive, it is known as which of the following? Question options: owners' equity net revenue net profit gross profit

net profit

Gross sales for Alfredo Milling Company was $100,000 for the month of May. Sales discounts amounted to $3,000. There were no returns. The difference, $97,000, represents which of the following for Alfredo Milling Company? Question options: cost of goods sold gross revenues gross profit net sales

net sales

Which of the following is often used to measure a company's overall liquidity even though it is not really a financial ratio? Question options: earnings per share return on equity net profit margin net working capital

net working capital

What is another term for owners' equity? Question options: assets gross worth net worth liabilities

net worth

Fixed assets are property and buildings that a company expects to use for more than which of the following periods of time? Question options: one month six months one year two years

one year

International Financial Reporting Standards will first be adopted by which of the following in Canada? Question options: companies with government loans owing publicly accountable organizations for-profit companies only all companies

publicly accountable organizations

Profitability ratios measure how well a company uses its assets. Question options: False True

True

The postage stamps and petty cash in the architect's drawer as well as his drawing table, his office furniture, and money owed to him by clients are all examples of assets. Question options: True False

True

The $200 fee owed to a landscape designer for work done two months ago is an example of a note receivable. Question options: False True

True

Bert Yelverton has a 20-year mortgage on the building where his office is located. The mortgage is an example of which of the following? Question options: a long-term liability a current asset owners' equity a current liability

a long-term liability

Which of the following statements best describes the accounting profession? Question options: Certified Management Accountants work for local, provincial, and national agencies. Accountants do not need a degree to obtain their designation. Accountants are typically classified as one of three professional designations. Accountants need a master's degree to obtain their designation.

Accountants are typically classified as one of three professional designations

What is the first step in the accounting cycle? Question options: Analyze the financial statements. Prepare the financial statements. Analyze the business transaction documents. Prepare the trial balance.

Analyze the business transaction documents

The Kosov School teaches adults how to communicate in a foreign language in a period of weeks. The school's debt-to-equity ratio is 120 percent. Which of the following interpretations is represented by the ratio? Question options: The school has surplus retained earnings. The school is very liquid. The school has more debt than equity. The school has high accrued expenses.

The school has more debt than equity.

An accounting journal is a chronological list of transactions, each assigned to a particular account. Question options: True False

True

An accounting system should generate both internal and external reports. Question options: True False

True

Earnings per share is the dollar amount earned by each share, not the actual amount given to shareholders in the form of dividends. Question options: True False

True

Which of the following is an example of a fixed asset for a manufacturer of road building equipment? Question options: patents held on a new type of asphalt shipping area for finished goods and receiving area for component parts computer cartridges cans of yellow paint for painting equipment

shipping area for finished goods and receiving area for component parts

What do liquidity ratios measure? Question options: long-term financial stability earnings per share annual sales and profits short-term financial stability

short-term financial stability

Which of the following ratios is a measure of the company's ability to pay its current liabilities once inventory is subtracted from current assets? Question options: the acid-test ratio the net margin ratio the profitability ratio the inventory ratio

the acid-test ratio

Which of the following is a summary of what a company has earned and spent over a given period? Question options: the balance sheet the cash flow statement the income statement the trial balance

the income statement

By dividing cost of goods sold by the average inventory to measure the speed with which inventory moves through the company and is turned into sales, which of the following ratios is calculated? Question options: the price-earnings ratio the inventory turnover ratio the profitability ratio the sales to inventory ratio

the inventory turnover ratio

Which of the following is the most significant current trend in accounting in Canada? Question options: the importance of knowledge assets the move to IFRS the importance of intellectual capital the expanded role of accountants

the move to IFRS

Which of the following is a summary of the money flowing into and out of a company? Question options: the short-term budget the statement of cash flows the balance sheet the income statement

the statement of cash flows

On a statement of cash flows for a manufacturer of digital thermometers, the cash flows from investment activities section would include which of the following? Question options: the sale of land adjacent to the manufacturer's administrative office building purchase of a new $25,000 copying machine repayment of long-term loan by a wholesaler of weather-related items the money borrowed from the bank to start the company

the sale of land adjacent to the manufacturer's administrative office building