Practice Quiz 8

You own a grocery store and you have the following information about your business: Sales = $75,000 COGS = $40,000 Operating expenses = $20,000 Interest expense = $7,000 Taxes = 20% of net income before tax Calculate your gross profit.

$35,000

You own a grocery store and you have the following information about your business: Sales = $75,000 COGS = $40,000 Operating expenses = $20,000 Interest expense = $7,000 Taxes = 20% of net income before tax Calculate your net income before tax.

$8,000

The cash flow statement is divided into all of the following activities, except _______. 1) operating activities 2) investing activities 3) management activities 4) financing activities

3) management activities

All of the following are true about the balance sheet, except _______. 1) communicates assets, liabilities, and equity at a given point in time (incorrect) 2) records what economic resources a business owns or controls 3) tells its stakeholders the sources of financing the business uses to finance economic resources. 4) communicates how the business has performed during a period

4) communicates how the business has performed during a period (??? - seek confirmation)

The primary difference between IFRS and US GAAP is _______.

IFRS reports assets and liabilities based on current value

__________ attempts to meet the information needs of a business's managers by looking at the details of a business transaction.

Managerial accounting

Sarbanes-Oxley is _______.

a law that requires management to disclose the significant risks faced by a business

When a business buys inventory and agrees to pay for it at a later date, this obligation is considered _______.

a liability

There are two systems (basis) of accounting that determine when to recognize a business transaction. These are _______ systems.

accrual and cash

A(n) _________ accounting system recognizes business transactions when they occur, regardless of whether the transaction immediately affects cash.

accrual basis

The worst possible audit opinion a company could receive is a(n) _______.

adverse opinion

Accounting is the function within a business that does what with the information about a business's transactions? 1) measures 2) records 3) reports

all are correct

Conservatism with regard to US GAAP entails _______. 1) not understating the value of liability or debt 2) not overstating the value of an asset 3) all are correct 4) the increased value of an asset isn't reported until it is proven with cash or a similar transaction

all are correct

The PCAOB _______. 1) approves any revisions made by the FASB to US GAAP 2) all are correct 3) oversees the FASB 4) is directed by the SEC

all are correct

A(n) ________ is an economic resource that a business owns or controls.

asset

Assets, Liabilities, and Owner's equity are all accounts of the _______.

balance sheet

You go into a store, find something you want, but realize you do not have the cash to pay for it . You use your credit card. Using the _________ system you would not recognize the transaction until you paid your credit card bill.

cash

Assets expected to be converted to cash within the next year are called _______.

current assets

When a business decides not to retain its earnings in the business, it pays the earnings to the owners in the form of _______.

dividends

At an automobile manufacturer, such as Hyundai, you can find all types of produced inventory. Completed automobiles would be considered _______.

finished goods inventory

Copyrights, trademarks, and patents are examples of _______.

intangible assets

All of the following are long-term assets, except _______.

inventory

All of the following are current assets, except _______. 1) accounts receivable 2) land 3) inventory 4) cash

land

Return on equity is computed as _______.

net income/ total owner's equity

The difference between actual and budgeted (standard) amounts is called _______.

variance