Chapter 14 Quiz

Things of value owned by a firm are called its:

assets

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

cost of goods sold and operating expenses

Haley Optics manufactures lens used in cameras, binoculars, and scientific equipment. It had sales of $300,000 during the last quarter. Its gross profit sold was $120,000. On an income statement, an accountant would classify the remaining $180,000 as:

costs of goods sold

Which of the following is the BEST example of a current asset for a university bookstore?

credit card charges by book buyers

The ratio of total current assets to current liabilities is called the _____ ratio.

current

The Art Institute, a school for training artists to be financially self-sufficient, has a debt-to-equity ratio of 120 percent. This means the school has:

more debt than equity

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

operating

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

cans of yellow paint for refurbishing equipment

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

Financial accounting; Managerial accounting

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

generally accepted accounting principles

The sporting goods store sold $75,000 worth of merchandise in June. The retailer gave no discounts and had no returns. Which of the following statements accurately describes the information seen on the company's income statement?

gross sales equal net sales.

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

increases in the manufacturer's inventory

The _____ ratio is a measure of the firm's ability to pay its current liabilities once inventory is subtracted from current assets.

acid-test

_____ ratios measure the degree and effect of the firm's use of borrowed funds to finance its operations.

debt

Sullins Cleaning Service has purchased a new pressure washer for $18,000. Sullins Cleaning is allowed to charge a portion of the company's cost during its useful life against the profits it generates. This practice is called:

depreciation

The Financial Accounting Standards Board (FASB) is a:

private organization that is responsible for establishing financial accounting standards in the United States

Accounting involves the _____ of the financial activities for firms.

summarizing

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

public accountants

A(n) _____ is a summary of what a company has earned and spent over a given period.

income statement

Managerial accounting provides all of the following financial information EXCEPT:

income statements