ETR401 - Chapter 13

B

"_____" means that the value of the item can be realized, or must be paid as cash within one year, while "_____" means that the asset will still be valuable more than one year in the future, or that the business may take longer than one year to pay the amount owed. A. Dated, current B. Current, long-term C. Current, dated D. Long-term, current

B

A financial plan for the future based on a single level of operations is called a(n) A. balance sheet. B. budget. C. income statement. D. statement of cash flows.

D

To make good decisions, we need all of these EXCEPT A. good information. B. efficient ways to condense information so it is understandable. C. methods to help compare alternatives. D. certainty situation

A

What becomes a standard against which performance can be measured, once it has been established? A. Budget B. Liquidity C. Balance sheet D. Statement of cash flows

C

A(n) _____ is simply a record of transactions that are similar in nature. A. report B. description C. account D. narrative

A

What do you call the acquisition cost of the asset that is listed in a balance sheet? A. Historical value B. Financial strength C. Liquidity D. Depreciation

C

Which among the following is a variable cost? A. Lighting B. Security C. Shipping D. Cleaning

D

An accounting system should accomplish all of the following tasks EXCEPT A. provide a simple, easy-to-understand user interface. B. have an exhaustive context-sensitive help function. C. enforce security measures to reduce the opportunity for employee misuse or fraud. D. avoid the export of financial data

A

Breakeven point A. is the point at which total costs equal gross revenue. B. is the point at which fixed costs equal variable costs. C. is the point at which total costs equal profit. D. is the point at which variable costs equal gross revenue

A

Estimated or hypothetical financial statements are called A. pro forma statements. B. assumed income statements. C. tentative balance sheets. D. annual report statements

B

Fixed asset accounting A. ensures that payroll and employment taxes are kept current. B. automatically calculates and accumulates depreciation. C. records if your business keeps surplus cash invested in securities. D. records if your business has made improvements to leased property or equipment

C

Formal summaries of the content of an accounting system's records of transactions are called A. operating activities. B. investing activities. C. financial statements. D. variance analyses

B

Going concern is the A. legal obligation to give up things of value in the future. B. accounting concept that implies that a business may continue in business even if it is sold to other owners. C. difference between assets and liabilities of a business. D. value given up to obtain something that you want

A

Identify the managerial accounting technique which looks at the fixed and variable costs of a business to arrive at a number of unit sales to maximize profits. A. Cost-volume-profit analysis B. Marginal revenue costs analysis C. Break even analysis D. Cash flow analysis

C

Lenders use operating income specifically A. as a measure of how well management achieved sales. B. as an indication of future sales. C. as a measure of how much debt a business can support. D. as an indication of a business's ability to control costs.

D

The _____ budget shows the number of units that are expected to be acquired during the budget period. A. cash receipts B. labor C. sales D. purchases

A

The _____ is also called the Statement of Financial Position. A. balance sheet B. income statement C. cash flow statement D. statement of retained earnings

C

The difference between an actual and budgeted revenue or cost is called A. liquidity. B. financial flexibility. C. variance. D. investing activities.

C

The financial state of having more debt than assets means, you are A. rich. B. profitable. C. bankrupt. D. solvent.

C

The first step in preparing a master budget is to prepare a _____ budget. A. production B. direct materials C. sales D. direct labor

C

The information in the balance sheet is used to determine all of these EXCEPT A. liquidity. B. financial flexibility. C. profitability. D. financial strength

C

The key in controlling receivables is to have them _____, by sorting them into groups of those that are 30, 60, 90, and over 90 days past due. A. recorded B. cataloged C. aged D. classified

D

The most commonly used small business accounting systems include all of these EXCEPT A. Quickbooks. B. Peachtree. C. Great Plains. D. TaxCut.

D

The primary criteria for a small business's record keeping system are all of these EXCEPT A. simplicity of use. B. accuracy of detail. C. timeliness of reports. D. economical in cost.

B

The process of determining the effect of price and quantity changes on revenues and expenses refers to A. accounting analysis. B. variance analysis. C. pro forma budgeting. D. financial flexibility.

D

The quantity of goods sold times the price expected to be paid for each product is the calculation used for the A. overhead budget. B. sales budget. C. purchases budget. D. cost of goods sold budget.

B

The rule of thumb for evaluating current ratio is that the minimum acceptable ratio is A. 3.0. B. 2.0. C. 1.0. D. 4.0

B

The sum of all profits and losses, less all dividends paid since the beginning of the business is called A. liabilities. B. retained earnings. C. net income. D. tax liability

B

The value of current assets divided by current liabilities is called A. inventory turnover ratio. B. current ratio. C. total asset to total liabilities ratio. D. quick ratio

C

There are two difficulties that arise in understanding and interpreting the income statements. One is the disagreements about what exactly should be reported as revenues and the other is A. whether to report the revenues. B. what should be considered as expenses. C. disputes over when to recognize revenues. D. the preferable tax rate to incorporate

A

There are two formats for income statements, a(n) A. single-step and multiple-step format. B. revenue-only and revenue and expense format. C. owners' equity and balance sheet format. D. cash flow and retained earnings format.

D

This methodology comprises estimating the changes in revenues and expenses from current operating results that will occur if each alternative is taken. A. Variance analysis B. Net present value analysis C. Accounting analysis D. Differential revenues and expenses

A

A comprehensive budget is otherwise known as the A. master budget. B. sales budget. C. purchases budget. D. universal budget.

B

A(n) ______ is something you owe someone else. A. asset B. liability C. owners' equity D. cash flow

D

What do you call a decrease in owners' equity caused by consuming your product or service? A. Opportunity cost B. Cost C. Owners' equity D. Expense

B

_____ is an indicator of the business's ability to manage cash flows so that the company has the financial ability to respond appropriately if an unexpected opportunity or problem arises. A. Liquidity B. Financial flexibility C. Financial strength D. Profitability

B

A regular and systematic reduction in income that transfers asset value to expense over time is called A. bankruptcy. B. depreciation. C. liquidity. D. opportunity cost

D

Accurate and timely _____ are essential for making decisions concerning the extension of credit. They also help produce accurate billing of customers, and thus help to maintain good customer relations. A. payroll records B. leasehold records C. accounts payable records D. accounts receivable records

A

Activities involved in producing and selling goods and services are called _____ activities. A. operating B. investing C. financing D. marketing

C

Activities through which cash is obtained from and paid to lenders, owners, and investors are called _____ activities. A. operating B. investing C. financing D. marketing

C

Accounting is important to a small business for all of these reasons EXCEPT A. banks, creditors, development agencies, and investors require it. B. it provides easy-to-understand plans for business operations. C. it makes it difficult for others to acquire your business. D. it proves what your business did financially.

B

Which income statement format is preferred by most owners and managers of small bussinesses? A. Single-step B. Multiple-step C. Revenue-only D. Retained earnings

A

Which of the following accounting concepts makes it possible to separate business transactions from personal transactions? A. Business entity B. Costs and expenses C. Going concern D. Accounting equation

C

Which of the following accounting functions allows a business to keep track of what it owes, make timely payments in order to capture prompt pay discounts, and maintain a good credit rating? A. Credit card sales B. Accounts receivable records C. Accounts payable records D. Payroll records

A

Which of the following is more indicative of a business's financial strength? A. Short-term investments B. Prepaid expenses C. Accounts payable D. Large inventories

C

Which of the following ratios is used to estimate the liquidity of a firm? A. Inventory turnover ratio B. Total asset to total liabilities ratio C. Current ratio D. Quick ratio

C

Which of the following simply reconciles the net increase or decrease with the beginning cash balance and the ending cash balance? A. Net effect of foreign exchange rates B. Noncash investing and financing C. Net change in cash balance D. Noncash operating activities

B

Which of the following statements is true about fixed costs? A. They can be assigned to a specific item sold or manufactured. B. They are unaffected by changes in output. C. Fixed cost per item increases as the number of units produced increases. D. They include expendables.

D

Which of the following statements is true regarding the balance sheet? A. It has a limited impact on financial ratios. B. It contains an exhaustive list of a business's assets and liabilities. C. The balance sheet contains exact figures. D. All values listed in a balance sheet are historical values.

B

Which of these is NOT a common financial statement? A. Statement of retained earnings B. Statement of depreciation C. Cash flow statement D. Balance Sheet

D

Which of these is NOT identified as a most basic accounting concept? A. Business entity B. Costs and expenses C. Going concern D. Buy and sell

B

Which of these is a statement of what a business owns, what it owes to others, and how much value the owners have invested in it? A. Income statement B. Balance sheet C. Cash flow statement D. Statement of retained earnings

A

Which of these is used by managers for planning and controlling? A. Managerial accounting B. Tax accounting C. Financial accounting D. Market accounting

C

Which of these refers to the ability of a business to survive adverse financial events? A. Liquidity B. Financial flexibility C. Financial strength D. Profitability

C

Which of these refers to the concept that a business is expected to continue in existence for the foreseeable future? A. Business entity B. Costs and expenses C. Going concern D. Buy and sell

A

Which of these refers to the concept that information flows from the income statement through the statement of retained earnings, and of owners' equity to the balance sheet? A. Articulate B. Going concern C. Opportunity cost D. Leveraging

B

Which of these represent the accounting equation? A. Liabilities = Assets + Owners' Equity B. Assets = Liabilities + Owners' Equity C. Assets = Liabilities - Owners' Equity D. Owners' Equity = Assets + Liabilities

C

Which statement lists revenues and expenses, and shows the amount of profit a business makes for a specified period of time? A. Balance sheet B. Statement of retained earnings C. Income statement D. Cash flow statement

B

_____ activities include the acquisition and disposal of property, plant, equipment, and investment securities of other firms. A. Operating B. Investing C. Financing D. Marketing

B

_____ analysis is based on the concept that a dollar to be received right now has more utility than does a dollar to be received at some time in the future. A. Liquidity B. Net present value C. Financial strength D. Budget

C

_____ is a formal, rule-based set of accounting principles and procedures intended for use by outside owners, investors, banks, and regulators. A. Managerial accounting B. Tax accounting C. Financial accounting D. Market accounting

D

_____ is a measure of how quickly a company can raise money through internal sources by converting assets to cash. A. Financial flexibility B. Profitability C. Financial strength D. Liquidity

D

_____ is an accounting method which assigns costs based on the different types of work a business does in order to sell a particular product or service. A. Differential revenues and expenses B. Net present value analysis C. Cost-volume-profit analysis D. Activity-based cost estimates

B

_____ is the idea that it is cheaper (per item) to make many of an item thần few. Â. Inventory turnover B. Economy of scale C. Breakeven point D. Historical value

D

_____ is the most used item on the income statement. A. Net income B. Cost of sale C. Revenue D. Operating income