BUSN10 Chapter 8 Quiz

The assets of Prosian Italia, a marble and granite company, amount to $400 million, and its liabilities add up to $180 million. Based on the accounting equation, Prosian Italia's owners' equity is equal to _____.

$220 million

Maurice, the supervising manager of a telecommunications company, requires detailed information about the expenses that the company incurred from its monthly operations in the last fiscal year. In this scenario, Maurice should refer to the _____.

A profit and loss statement

Logan, an independent auditor, is assigned to perform an audit for a software company. After the audit, he notices some serious lapses and discrepancies in the numbers mentioned in the firm's financial statements. In this scenario, Logan is most likely to offer a(n) _____ opinion in his audit report.

Adverse

Fiona, the external auditor reviewing a telecommunications company's accounts, finds that the company's internal accountants have entered false data in the company records. Instead of stating the actual figures, which would reveal the poor performance of the company, the accountants have overstated the company's earnings. In this case, she will most likely offer a(n) _____ in the independent auditor's report.

Adverse Opinion

is a management tool that explicitly shows how a firm will acquire and use the resources needed to achieve its goals over a specific time period.

Budgeting

Milora, a clothing company, purchases 50 sewing machines from a company called Quick Sew on credit. Milora is supposed to pay an amount of $76,000 to Quick Sew. This amount is due within a year of the date on the balance sheet. In this scenario, the amount of credit that Milora owes Quick Sew is referred to as Milora's

Current Liability

In the context of balance sheets, accounts receivable is an example of__________.

Current assets

A famous musician sells the copyright of one of his songs to a record company for $2 million. In this scenario, the sale of the copyright of the song exemplifies the sale of a(n)

Intangible asset

While performing a financial analysis for his organization, Morris discovers that there has been mismanagement of employee funds over the past three months. He immediately reports this to his supervisors. In this scenario, Morris is most likely a(n)

Internal Auditor

In the context of balance sheets, which of the following is a difference between liabilities and owners' equity?

Liabilities indicate the claims outsiders have against the firm's assets, whereas owners' equity refers to the claims the owners have against their firm's assets.

George, a managerial accountant in a jute manufacturing company, is asked to calculate the total amount of money the company spends on the wages of its workers and on the payments it makes to its suppliers for raw materials. By finding out the company's total actual expenses, the management can come to a decision on whether or not the company can increase its workers' wages by at least ten percent. In this scenario, George is asked to calculate the company's

Out-of-pocket costs

Luke works in an accounting firm that offers services such as tax preparation and external auditing to corporate companies. Luke is currently providing consultation to a client that deals in automobile parts. In this scenario, Luke is most likely a:

Public Accountant

In the context of the income statement of an organization, accountants use accrual-basis accounting when recognizing

Revenues

The management of an electronics company created the annual budget on a single assumed level of sales. This level of sales is to remain constant for the whole year. Later, the management finds it difficult to accurately measure the financial progress of the firm as the values in the estimated budget vary significantly from the actual sales. In the given scenario, the management most likely created a

Static budget

In the context of accounting, which of the following best defines cost?

The value of what is given up in exchange for something else

In the context of owners' equity, which of the following is true of retained earnings

They are accumulated earnings reinvested in a company rather than being paid to the owners.

John and Elizabeth evaluate three telecommunication companies to determine the best company to invest in. A horizontal analysis will enable them to make comparisons of financial statements of the three companies over the past several years and help in the determination of the increase in their profits.

True

Costs are deducted from revenue in several stages to show how net income is determined. The first step in this process is to deduct:

costs of goods sold

Poline Foods, a food processing company, needs to increase its declining cash inflow through its operating activities. In this context, Poline Foods is most likely to:

sell its goods or services.

If an auditor doesn't find any problems with the way a firm's financial statements were prepared and presented, the report will offer a(n) _____ opinion.

unqualified