Practice Quiz 8
You own a grocery store and you have the following information about your business: Sales = $75,000 COGS = $40,000 Operating expenses = $20,000 Interest expense = $7,000 Taxes = 20% of net income before tax Calculate your gross profit.
$35,000
You own a grocery store and you have the following information about your business: Sales = $75,000 COGS = $40,000 Operating expenses = $20,000 Interest expense = $7,000 Taxes = 20% of net income before tax Calculate your net income before tax.
$8,000
The cash flow statement is divided into all of the following activities, except _______. 1) operating activities 2) investing activities 3) management activities 4) financing activities
3) management activities
All of the following are true about the balance sheet, except _______. 1) communicates assets, liabilities, and equity at a given point in time (incorrect) 2) records what economic resources a business owns or controls 3) tells its stakeholders the sources of financing the business uses to finance economic resources. 4) communicates how the business has performed during a period
4) communicates how the business has performed during a period (??? - seek confirmation)
The primary difference between IFRS and US GAAP is _______.
IFRS reports assets and liabilities based on current value
__________ attempts to meet the information needs of a business's managers by looking at the details of a business transaction.
Managerial accounting
Sarbanes-Oxley is _______.
a law that requires management to disclose the significant risks faced by a business
When a business buys inventory and agrees to pay for it at a later date, this obligation is considered _______.
a liability
There are two systems (basis) of accounting that determine when to recognize a business transaction. These are _______ systems.
accrual and cash
A(n) _________ accounting system recognizes business transactions when they occur, regardless of whether the transaction immediately affects cash.
accrual basis
The worst possible audit opinion a company could receive is a(n) _______.
adverse opinion
Accounting is the function within a business that does what with the information about a business's transactions? 1) measures 2) records 3) reports
all are correct
Conservatism with regard to US GAAP entails _______. 1) not understating the value of liability or debt 2) not overstating the value of an asset 3) all are correct 4) the increased value of an asset isn't reported until it is proven with cash or a similar transaction
all are correct
The PCAOB _______. 1) approves any revisions made by the FASB to US GAAP 2) all are correct 3) oversees the FASB 4) is directed by the SEC
all are correct
A(n) ________ is an economic resource that a business owns or controls.
asset
Assets, Liabilities, and Owner's equity are all accounts of the _______.
balance sheet
You go into a store, find something you want, but realize you do not have the cash to pay for it . You use your credit card. Using the _________ system you would not recognize the transaction until you paid your credit card bill.
cash
Assets expected to be converted to cash within the next year are called _______.
current assets
When a business decides not to retain its earnings in the business, it pays the earnings to the owners in the form of _______.
dividends
At an automobile manufacturer, such as Hyundai, you can find all types of produced inventory. Completed automobiles would be considered _______.
finished goods inventory
Copyrights, trademarks, and patents are examples of _______.
intangible assets
All of the following are long-term assets, except _______.
inventory
All of the following are current assets, except _______. 1) accounts receivable 2) land 3) inventory 4) cash
land
Return on equity is computed as _______.
net income/ total owner's equity
The difference between actual and budgeted (standard) amounts is called _______.
variance