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