module 11

Wallace Plumbing Company had income from operations of $110,000. It paid federal income taxes of $26,000. What was the firm's net income after taxes?

$84,000

As the accountant for Franks Retail Stores, you must calculate the current ratio for the firm's last accounting period. The firm's current assets were $120,000, its fixed assets were $240,000, its current liabilities were $80,000, and its long-term liabilities were $60,000. Given these facts, what is the firm's current ratio?

1.5

What is the correct order for the balance sheet?

Assets, liabilities, owners' equity

Which of the following presents assets in the correct balance sheet order?

Cash, inventory, equipment

A private accountant is an accountant whose services may be hired on a fee basis by individuals or business firms.

False

According to the accounting equation, cash, inventory, equipment, and real estate are classified as owners' equity.

False

Because information rules must be checked out before a decision can be made, they lengthen the time required to analyze choices.

False

Current assets are assets that can be converted quickly into cash or that will be used in two years or less.

False

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

False

Managerial accounting generates financial statements and reports for interested people outside an organization.

False

Multinational corporations do not have the responsibility nor the incentive to follow international accounting standards as there still is no particular set of global standards that are generally accepted worldwide.

False

The standard form of the accounting equation is assets equal liabilities minus owners' equity.

False

Which of the following statements about the Sarbanes-Oxley Act is incorrect?

The act was passed in 1996.

Which of the following statements is true?

The more information a manager has, the less risk there is when making a decision.

Owners' equity is the dollar value that remains after the total liabilities of a business are subtracted from its total assets.

True

Resources that a firm owns are classified as assets.

True

The statement of cash flows illustrates the effects on cash of the operating, investing, and financing activities of a company for an accounting period.

True

There is added protection for whistle-blowers who report violations of the Sarbanes-Oxley Act.

True

If you wanted to evaluate the financial condition of Target Stores, a leading discount chain, you would most likely compare its financial ratios to ____ ratios.

Walmart's

The purpose of ____ is to distribute timely and useful information from both internal and external sources to the decision makers who need it.

a management information system

A price reduction to customers who pay their bills promptly is called

a sales discount.

Dr. Rick Torres runs a chiropractic clinic. He typically bills his customers for services he performs and gives them about 30 days to make the payments. These amounts of money that his customers owe are called

accounts receivable.

Another name for the statement of financial position is the

balance sheet.

When Vicky Tran prepared a personal income statement, the remainder or residual value is called

cash surplus.

The process of spreading the cost of a fixed asset over the asset's useful life is called

depreciation.

Operations managers need management information in all of the following areas except

future capitalization needs.

The purpose of an audit is to ensure that financial statements have been prepared according to

generally accepted accounting principles.

Trademarks and goodwill are both

intangible assets.

The number of times a firm sells and replaces its merchandise inventory in one year is known as its

inventory turnover.

Debts owed by a business are called

liabilities

Debts that are to be repaid in two years are referred to as

long-term liabilities.

Television sets that Walmart owns for selling to its customers are classified as

merchandise inventory.

The value of goods on hand for sale to customers is called

merchandise inventory.

James Howard graduated from college and obtained a full-time job in accounting. At the end of his first year of employment, his assets totaled $9,000. His liabilities totaled $3,000. His ____ was $6,000.

net worth

Each month, Bath & Body Works pays employees wages, telephone bills, and salaries to accountants. These are all considered

operating expenses.

If total liabilities were subtracted from total assets, the residual value would be

owners' equity.

Cassie has worked for one week but her employer only pays its employees every two weeks. The amount of money her company owes her is classified as

salaries payable.

Managers often compare financial and accounting data with previous accounting periods and with competing firms.

true