BA CH 13-15

Assume a company has inventory valued at $50,000, its total current assets, including this inventory, total $90,000. Its total current liabilities total $20,000. Its quick ratio is:

2

A kennel designed for boarding small dogs has current assets of $8,000, current liabilities of $2,000, and fixed assets of $25,000. The small company has a current ratio of:

4

Which of the following statements about computer networks is true?

A computer network is a group of two or more computers linked together by communications channels to share data and information.

Which of the following statements about the accounting profession is true? Most CPAs first work for public accounting firms and later become private accountants or financial managers. Managerial accountants become a certified management accountant when they meet the requirements of the professional certification program. Public accountants serve individuals and organizations on a fee basis. Private accountants are also called corporate accountants. All of the above statement about the accounting profession are true.

All of the above statement about the accounting profession are true.

Which of the following statements about international banking is true?

All of the above statements about international banking are true. x

A computer program that copies itself into other software and can spread to other computer systems is called a software infestation.

False

Grid computing is another term used for telecommuting.

False

The Federal Deposit Insurance Corporation (FDIC) charges the same insurance premiums to all member banks.

False

The Federal Deposit Insurance Corporation (FDIC) only insures deposits at commercial banks.

False

The income statement is a snapshot of the firm's financial position at a certain point in time.

False

The primary use for an expert system is to answer "what if" questions.

False

The three tools used by the Federal Reserve to manage monetary policy are reserve requirements, the prime rate, and the discount rate.

False

_____ deals with reporting to outsiders. _____ accounting deals with the internal operations of the firm.

Financial accounting; Managerial accounting

_____ benefits the check writer by allowing it to retain the funds until the funds are actually withdrawn from its account.

Float

_____ allows people with PCs or other types of machines connected to the Internet to donate processor cycles to the search for extraterrestrial life. This process involves sifting through the static of deep space on billions of radio channels looking for stray signals that are generated by alien civilizations.

Grid computing

_____ refers to all of the equipment and techniques needed to manage and process information.

Information technology

_____ are internal corporate wide area networks that use Internet technology to link employees in many different locations and with many different types of computers.

Intranets

How has the Sarbanes-Oxley Act affected accountants?

It has eliminated many nonauditing tasks they use to provide for their customers.

Which of the following statements about knowledge management is true?

Knowledge management focuses on gathering and sharing an organization's collective knowledge to improve productivity and foster innovation.

_____ are temporary investments of excess cash in bonds and stocks that can readily be converted into cash.

Marketable securities

_____ is arrived at by subtracting current liabilities from current assets.

Net working capital

Which of the following statements about knowledge management is true?

None of the above statements about knowledge management is true.

_____ are bills that have accumulated and must be paid at a specified future date within the year although no bill has been received by the firm.

Notes receivable

_____ are independent accountants who serve organizations and individuals on a fee basis.

Public accountants

_____ involves calculating and interpreting financial ratios taken from the firm's financial statements in order to assess its condition and performance.

Ratio analysis

A local area network (LAN) connects computers at one site and enables their users to exchange data and share hardware and software from a variety of computer manufacturers.

True

Accounting is the process of collecting, recording, classifying, summarizing, reporting, and analyzing the financial condition of an organization.

True

An enterprise portal is an internal Web site that provides proprietary corporate information to a defined user group.

True

By lowering the reserve requirement, the Federal Reserve tries to make more money available for loans and stimulate the economy.

True

Data marts are special subsets of a data warehouse that deals with a single area of data, which are organized for quick analysis

True

Depository financial institutions include commercial banks, thrift institutions, and credit unions.

True

Independent accountants who serve organizations and individuals on a fee basis are called public accountants.

True

Margin requirements tell the minimum amount of cash an investor must put up when borrowing from a bank or brokerage firm to purchase stock.

True

National banks must belong to the Federal Reserve System and must carry FDIC insurance.

True

One of the trends in information technology is digital forensics.

True

The Federal Deposit Insurance Corporation (FDIC) is an independent, quasi-public corporation backed by the full faith and credit of the United States government.

True

The Federal Deposit Insurance Corporation (FDIC) monitors the banking practices of the institutions that it insures.

True

The five-step process that takes a transaction from being mere raw financial data to its being summarized in the financial statements is called the accounting cycle.

True

Which of the following statements about computer viruses is true?

Viruses copy themselves onto other software.

Which of the following statements about computer networks is true? Computer networks include clients and servers. Within a computer network, the server is the application that runs on a personal computer or workstation. Within a computer network, the client manages the network's resources. Networks have eliminated the need for data sharing. All of the above statements about computer networks are true.

Within a computer network, the server is the application that runs on a personal X

Managerial accounting provides information that would probably be most beneficial to:

a middle manager of the company

At Samaritan Medical Center (SMC) in Watertown, N.Y., care providers needed to continuously monitor patients' vital signs as staff moved them from the emergency department to radiology and other hospital areas. The hospital administrators decided to use a(n) _____, a cost-effective way to connect the monitoring devices and to prioritize the critical data that the devices were gathering. A nurse sitting at a terminal knows immediately if there is a problem.

administrative portal x extranet x

Insurance policyholders make premium payments to buy financial protection. Insurance companies invest the premiums in:

all of the above

Money is used as:

all of the above

A(n) _____ is a service company that buys and maintains software on its servers and distributes it through high-speed networks to subscribers for a set period of time and a predetermined price.

application service provider

Which of the following calculations is a formal expression of the accounting

assets = liabilities + owners' equity

The operating license for a commercial bank is called a(n):

bank charter

Adam Hassib works for the Federal Deposit Insurance Corporation. He arrives unannounced at member banks where he conducts audits of managerial and financial practices. Hassib is a:

bank examiner

An accountant who has a bachelor's degree, passes a test prepared by the professional organization AICPA, and has a certain number of years of on-the-job training becomes a:

certified public accountant

In the process of financial intermediation, households, businesses, and governments can all be are categorized as:

channels of exchange x monetary partners x

Finance companies make loans to people who could not get credit anywhere else. To compensate for taking this extra risk, finance companies:

charge higher interest rates than commercial banks do

State banks are:

chartered by the state in which they are based

The two types of finance companies are:

commercial finance companies and consumer finance companies

Virtual private networks (VPNs):

connect two or more private networks using a public network

When Hadley Jones wanted to buy a truck so he could get to and from his job in a nearby community, his credit rating was poor. Jones found that the only place he could get a loan was from a(n) _____ finance company.

consumer

In 2004, a large department store chain in Germany was forced to withdraw customer loyalty cards when the press discovered that the company had secreted radio-frequency identification (RFID) tags in the plastic. Even when enclosed in a wallet or purse, these cards can transmit information over distances of about a meter, and the stores planned to use them to track which departments the customer visited. At issue was which data security issue?

consumer privacy

There are two types of expenses recorded on the income statement. They are:

cost of goods sold and operating expenses

The Financial Accounting Standards Board (FASB) is currently:

creating international accounting regulations

The U.S. money supply is composed of:

currency, demand deposits, and time deposits

A(n) _____ is an organization's management support system that combines many databases to improve management decision making.

data warehouse

Australia's Health Insurance Commission processes 300 million health claims and makes annual payments of $8 billion of payments to clients. The company would store all of its more than three gigabytes of information in a(n) _____ to support management decision making.

data warehouse

Cerner Corporation has created a(n) _____ containing the medical records of more than 400,000 people who received treatment at more than 200 different emergency rooms. It can be used to help emergency room physicians make decisions about what kind of treatment to give their patients.

database

The _____ ratio measures the relationship between the amount of debt financing and the amount of equity financing.

debt-to-equity

Ground water is a vital water resource in the Choushui River area of Taiwan. A significantly increased demand for water, resulting from rapid economic development, has led to large scale ground water extraction. Overdraft of ground water has considerably lowered the ground water level, and caused seawater intrusion, land subsidence, and other environmental damage. Sound ground water management thus is essential. Chinese government officials have set up a(n) _____ system that allows it to make water management decisions using interactive computer models based on real-world processes.

decision support

If a manager needs a reporting system that provides the ability to ask "what if" questions, he or she would probably install a(n) _____ system.

decision support

Academic advisement is unevenly provided in many high schools and colleges. There is a plan to provide advice to high school students and to college freshmen that are seeking a potential major. The on-demand consultation gathers information about a student's grades, interests, test scores, interests and aptitudes. It assesses student qualifications for a variety of majors. The _____ will then recommend six majors for them to consider and provides further information sources about the major.

decision support X

A retail manager who wants to know how his store's sales would be affected if he reduces the number of different national brands the store carries would use what type of information system?

decision support system

Cerner Corporation has created a(n) ______ that helps emergency room physicians make decisions about what kind of treatment to give their patients. The system contains the medical records of more than 400,000 people who received treatment at more than 200 different emergency rooms. By comparing inputted information about a patient with information stored in the system, doctors can get a diagnosis and suggestions as to possible treatments.

decision support system

Which type of information systems is used by both operational managers and middle managers?

decision support system

A checking account is also commonly referred to as a:

demand deposit

Hal Silverstein has a savings account, also called a _____, at his local credit union.

demand deposit x

Financial institutions can be divided into two broad categories. These are ______ institutions.

depository and nondepository

The acceptable turnover ratio is:

different for each industry

John Sgromolo works for the 20th-largest accounting firm in the United States, but he's not an accountant. He works with hard drives and various other types of computer equipment strewn across several desks. Sgromolo, spends his days culling together bits and pieces of data people think they have erased from existence months, even years, before. His findings have been used in cyber-crime cases and murder investigations. Sgromolo engages in:

digital forensics

According to the text, the three IT trends that are having the greatest impact on the IT environment are:

digital forensics, the distributed workforce, and grid computing

The _____ characteristic of money is revealed by the fact that a dollar can be converted into four quarters or ten times.

divisibility

Companies are adopting enterprise portals because the portals:

do all of the above

The Banking Act of 1933 gave the Federal Reserve System the authority to:

do all of the above

When bank examiners conclude that a bank has serious financial problems, the FDIC can:

do any of the above x provide the bank with extra equity capital x

International accounting standards:

do not exist

In accounting, every transaction must be recorded as two entries. This system is called:

double-entry bookkeeping

A(n) _____ is a management support system that is customized for an individual executive. It provides specific information for strategic decision making.

executive information system

A _____ makes short-term loans for which the borrower puts up tangible assets (such as an automobile, inventory, machinery, or property) as security.

finance company

Financial intermediation is the process in which:

financial institutions act as intermediaries between the suppliers and demanders of funds

To ensure accuracy and consistency in the way financial information is reported, accountants follow rules known as:

generally accepted accounting principles

The idea behind _____ is to take the massive amounts of idle capacity sitting on desktops and in server farms and put it to use performing complex calculations that would otherwise have to be done on very large parallel supercomputers that would cost millions of dollars.

grid computing

The difference between net sales and cost of goods sold is:

gross profit

Office automation decisions are specifically designed to:

improve organizational communications

A(n) _____ is the financial statement that is used to assess the sources and uses of cash flow during the year.

income statement x

At the first level of a management support system is a(n) _____ system, which uses summary data collected by the transaction processing system to provide managers with decision-making information.

information reporting

The Federal Deposit Insurance Corporation (FDIC):

insures deposits in commercial banks

General Electric saves $1.6 billion per year by using its private corporate network that links its 340,000 employees. Another name for this network that operates behind a firewall is a(n):

intranet

To stimulate the economy, the Federal Reserve can:

lower the reserve requirement

Thrift institutions were formed specifically to encourage household savings and to:

make home mortgage loans

A(n) _____ is the collective term that describes the methods and the equipment used to provide information about all aspects of a firm's operation.

management information system

The most important function of the Federal Reserve System is carrying out ______ policy.

monetary

Any object or objects that a group of people use to buy and sell goods and services is called:

money

Which of the following is an example of a liability that might be owned by an antique mall?

money owed to utility companies

After all expenses have been subtracted from revenues on an income statement, the final figure or bottom line is called the _____ when it is a negative number.

net loss

Gross sales for Nevada Silver, a retailer of silver jewelry was $120,000 for the month of May. Sales discounts amounted to $18,000. There were no returns. The difference, $102,000, is Nevada Silver's:

net sales

A group of two or more computer systems linked together by communications channels to share data and information is called a computer:

network

Current assets, such as marketable securities and inventory, usually are expected to be turned into cash within:

one year

Fixed assets are property and buildings that a firm expects to use for more than:

one year

Processing data as they become available is called _____ processing.

online

The most frequently used and the most flexible tool that the Federal Reserve has that it can use to change the economic environment is:

open market operations

What type of expense would be shown on an income statement when the owner of a dirt racing track promoted an upcoming race by purchasing advertising time on a local radio station?

operating

In manufacturing, all costs directly related to production including raw materials, labor, and factory overhead are classified as:

operating expenses x

Which of the following is NOT one of the six steps in the accounting cycle?

paying accounts payable

One of the major financial burdens for many companies is the need to provide and maintain funds to provide benefits needed by former employees. One of the ways that Delta Airline tried to avoid bankruptcy was by reducing the payout from this fund because returns on investments were not keeping pace with the number of retirees and their benefit demands. This example reflects a problem with:

pension funds

The last step in the accounting cycle is to:

prepare trial balance X

Accountants employed within organizations are called:

private accountants

Managerial accounting provides all of the following financial information EXCEPT:

production reports x

Which of the following is NOT one of the key characteristics required in order for money to be an acceptable medium of exchange?

profitability

Which of the following is an example of an asset that might be owned by a minor league baseball team?

reputation as a winning team

Federal Reserve banks must hold a certain portion of their deposits in reserve. This percentage is called the:

reserve requirement

The three principal tools of the Federal Reserve System are:

reserve requirements, discount rate, and open market operations

The Sarbanes-Oxley Act:

restricts the types of nonaudit services auditors can provide audit clients

The dollar amount of sales plus any other income received from sources like interest and dividends is called:

revenues

The power the Federal Reserve has to control credit terms on some loans made by banks and other lending institutions is called ______ controls.

selective credit

Which of the following assets is NOT an example of a fixed asset for a manufacturer of road building equipment?

shipping area for finished goods and receiving area for component parts x

Liquidity ratios measure:

short-term financial stability

By limiting the number of times a person can use a type of software before registering as the authorized owner of that software, software firms are dealing with problems associated with:

software piracy

Symantec Corp. has been granted a judgment totaling $3 million in a suit against a Maryland software firm accused of selling counterfeit copies of Symantec software, including Norton SystemWorks and Norton Antivirus. Symantec d won a legal judgment against the Maryland firm for:

software piracy

What are the broad categories of commercial banks in the United States?

state and national banks

A(n) _____ is a summary of the money flowing into and out of a firm.

statement of cash flows

Ruth Hu recently inherited $200,000. She has invested the inherited money in real estate and government securities. Hu is using her money as a:

store of value

Accounting involves the _____ of the financial activities for firms.

summarizing

On a statement of cash flows for a provider of tutoring services, the cash flows from financing activities would include:

the flashcards used to tutor math students x

On a statement of cash flows for a manufacturer of digital thermometers, the cash flows from investment activities section would include:

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

On a statement of cash flows for a manufacturer of digital thermometers, the cash flows from operating activities would include:

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

Which of the following is an example of a data security issue? unauthorized access chat rooms sexual innuendoes expressed through lewd humor biometrics all of the above

unauthorized access

To keep pace with changing technology, officers of the Honolulu Police Department (HPD) needed a better means to perform such tasks as running a license plate number while simultaneously sending back field reports to precinct headquarters. Through the use of a _____, officers were able to use the Internet to connect with the information stored in state databases and to connect with their superiors.

wireless local networks X

Which of the following is NOT an example of a cost of goods sold for a manufacturer of electric fans?

wood and glass for barometers

ATMs let customers of banks make deposits and withdrawals while in a shopping center or supermarket 24 hours a day. The letters ATM stand for:

automated teller machine

Collecting data over a period of time and then processing that data all at the same time is called _____ processing.

batch

In a transaction processing system the database can be updated in two ways. They are _____ processing.

batch and on-line

Computers can enhance accounting by:

controlling purchase orders x

A bank chartered by the Comptroller of Currency, a branch of the U.S. Treasury Department, is called a _____ bank.

national

Larry's Kite Shack operates on the Florida beaches during the tourist season. Last year, Larry sold $25,000 worth of kites. His cost of goods was $7,000, and he paid himself a salary of $20,000. On an income statement, Larry's business would have a(n):

net loss

A small company that trains executives on how to act when working in Japan had $70,000 worth of inventory on January 1, 2018, and it had $50,000 worth of inventory on December 31, 2018. If its cost of services provided for that period was $30,000, and its net profit was $90,000, what was its inventory to turnover ratio?

2 times

Which of the following statements about the accounting profession is true?

Accountants are typically classified as private or public accountants.

ASPs, which are also called area server portals, provide computer users with access to e-commerce opportunities.

False

An alphabetic listing of the names and GPAs of everyone in your class is an example of data.

False

Data tracking is a sophisticated data application that looks for hidden patterns in a group of data to help predict future behavior.

False

Knowledge management is much easier than information management.

False

Sarbanes-Oxley allowed accountants to serve as both auditors and advisors for their clients

False

The balance sheet summarizes a firm's financial position over a period of time, for instance 3 months or a year.

False

The prime rate is the interest rate that the Federal Reserve charges member banks for loans.

False

The ratio of current assets to current liabilities is called the ownership ratio.

False

_____ management focuses on gathering and sharing an organization's collective knowledge to improve productivity and foster innovation.

Knowledge

_____ are large pools of money set aside by corporations, unions, and governments for later use in paying retirement benefits to their employees or members.

Pension funds

Which of the following statements about the Federal Deposit Insurance Corporation (FDIC) is true?

The FDIC bank examiner looks at banks' loan quality, management practices, earnings, liquidity, and whether the bank has enough equity to safely support its activities.

A bank charter:

The license authorizing the operation of a bank.

_____ are deposits at a bank or other financial institution that pay interest but cannot be withdrawn on demand without penalty.

Time deposits

An accounting journal is a chronological list of transactions, each assigned to a particular account.

True

An accounts clerk who is able to record a payment of 50 dollars into the company's main computer system as the payment is made is using an online processing system.

True

Earnings per share (EPS) is the dollar amount earned by each share, not the actual amount given to stockholders in the form of dividends.

True

The Sarbanes-Oxley Act redefines the public corporation-auditor relationship and restricts the types of services auditors can provide to clients.

True

A computer program that copies itself into other software and can spread to other computer systems is called:

a computer virus

The purchase or sale of U.S. government bonds by the Federal Reserve to stimulate or slow down the economy is called:

an open market operation

Today's companies are spending increasing amounts of money on IT and reaping the benefits of this investment.

False

When a bank collects deposits during the day, then deposits them all after banking hours, it is using a reserve processing system.

False

Money is anything that is acceptable as payment for goods and services.

True

_____ is the company's ability to expense fixed assets over their useful life.

Depreciation

The $350 charged to the homeowner for electrical work performed one month ago is an example of a note receivable.

False

_____ are profit-oriented depository financial institutions that accept deposits, make business and consumer loans, invest in government and corporate securities, and provide other financial services.

Commercial banks

_____ are debts that are to be paid within twelve months.

Current liabilities

_____ are examples of wide area networks (WANs).

Extranets and intranets

In 2004, a large department store chain in Germany was forced to withdraw customer loyalty cards when the press discovered that the company had secreted radio-frequency identification (RFID) tags in the plastic. Even when enclosed in a wallet or purse, these cards can transmit information over distances of about a meter, and the stores planned to use them to track which departments the customer visited. All of the customer information gathered was stored in a(n):

data warehouse

The governor of New York that he has directed the state's Division of Criminal Justice Services to gather DNA from the broadest range of convicted criminals permitted under current law. This will result in the collection of as many as 40,000 DNA profiles. The additional DNA profiles may be obtained as a condition of release on parole or probation, as a condition of participation in the Department of Correctional Services' temporary release programs, and as a condition of a plea bargain. This _____ will be used for solving crimes.

database

Net sales:

deducts sales discount and returns and allowances from gross sales deducting sales discount and returns and allowances from gross sales

The idea behind _____ is the need that criminal investigators have for examining evidence on computer hard drives such as in e-mails or databases in order to build cases against embezzlers and others.

digital forensics

Which of the following is an activity performed by the Federal Reserve System as it carries out its monetary policy?

distributing currency

Savings banks:

do not invest their money in stocks and bonds X

The ratio of net profit to total owners' equity is called return on:

earnings x

The three major categories of applications supplied by application service providers are:

enterprise applications, collaborative applications, and applications for personal use

Dwain Hutcheson is a recent college graduate who found himself in debt as a result of credit card expenditures and in need of dependable transportation. Hutcheson recently purchased a used motorcycle from Speed Cycles. In financing the cycle, Hutcheson found that he would be making payments to Beneficial Corp., a company that deals in poor credit risks and short-term loans. Hutcheson was dealing with a:

finance company

Financial institutions act as intermediaries between suppliers and demanders of funds. They accept savers' deposits and invest them in such things as business loans or mortgages. This process is called:

financial intermediation

Intranets are essentially mini-Internets that operate behind a(n) _____ that prevents unauthorized access.

firewall

Victoria Secret maintains a large data warehouse in which it keeps track of inventory, buying patterns, and regional differences. An examination of information from a data warehouse subset that contained data from its Miami, Florida, stores showed that for every one black bra purchased ten ivory bras were purchased. This subset is referred to as a(n):

information network x

NMCI is the name used for a large-scale effort to link Navy and Marine Corps computer systems on bases, boats, and in offices around the world. When completed, this internal WAN will use Internet technology to link soldiers in the field with support personnel on bases, etc. NMCI is an example of a(n):

intranet

Money market deposit accounts and certificates of deposit are officially called ______ deposits.

investor x

For which of the following assets would a wholesale company use depreciation?

its warehouses

A system that collects and stores the company's key data and produces the information needed by managers for analysis, control, and decision making is called a(n):

management support system

A(n) _____ is an information system that uses information technology tools to improve communications throughout an organization.

office automation system

When The Bank of Bank County borrows funds from the Federal Reserve; the rate the Fed charges the commercial bank is called the _____ rate.

reserve x

Which of the following is an example of a data security issue?

all of the above

After all expenses have been subtracted from revenues on an income statement, the final figure or bottom line is called the _____ when it is a positive number.

net profit

Which of the following is NOT a type of ratio analysis used by managers to interpret the numbers in financial statements?

debt x