Ch. 15 Quiz
Gibson Goods has current assets, including cash and accounts receivable, of $377,000. It owes$190,000 in short-term debt, including trade credit and accounts payable. What is its current ratio?
1.98
Which of the following ratios would be used to determine the size of the dividend that a firm can payshareholders?
Earnings per share
A large property development firm takes out a mortgage on an office complex it owns so that it can purchase raw land upon which it intends to build a shopping mall. This is an example of _______.
Leverage
The ease with which an asset can be converted to cash is known as _______.
Liquidity
_______ accounting serves internal users, whereas _______ accounting serves external users.
Managerial; financial
On a firm's balance sheet, which of the following would be characterized as a fixed asset?
Manufacturing equipment
Which of the following equations would be used to calculate a firm's gross profit?
Revenue - cost of revenues
Funds that flow into a business from the sale of its goods or services are known as _______.
Revenues
Which of the following financial ratios would BEST measure a firm's ability to pay its immediate debts?
Short-term solvency ratio
The three basic financial statements prepared by accountants are the _______.
balance sheet, income statement, and statement of cash flows
Current assets ÷ current liabilities represents a firm's _______.
current ratio
The principle of _______ suggests that accountants and managers should provide not only financial data but also its interpretation and explanations for that data
full disclosure
As a general rule, the _______ a firm's current ratio, the _______ the risk to investors or creditors.
higher; lower
Which of the following financial statements would report whether the firm earned a profit or incurred a loss during a specific period of time?
Income statement
Which of the following would be displayed on a firm's balance sheet?
Assets, liabilities, and owners' equity
Which of the following is the accounting equation?
Assets = Liabilities + Owners' Equity
Generally accepted accounting principles (GAAP) that govern the content and form of financial reports are established by the _______.
Financial Accounting Standards Board (FASB)
In the accounting equation, which of the following would be characterized as a liability?
Grant Industries has a mortgage on its manufacturing facility in the amount of $750,000.
Which of the following is the equation used to determine earnings per share?
Net income ÷ Number of shares of common stock
On a firm's balance sheet, which of the following would be characterized as an intangible asset?
Patents
Heritage Mechanical's balance sheet at the end of the year shows assets of $675,000 and owners' equity of $366,000. Which of the following can be assumed on the basis of this information?
The company has liabilities of $309,000.
Which of the following is the BEST description of cost of goods sold?
The direct costs attributable to the production of the goods sold by a company
Which of the following BEST summarizes the purpose of examining a company's current ratio?
To measure the company's ability to pay immediate debts
An office supply store maintains a supply of paper, toner, pencils and pens, and other items available for sale to customers. On the firm's balance sheet, the inventory would be classified as _______.
a current asset
When LaShandra graduates from medical school next year, she will have accumulated over $200,000 in student loans. If an accountant prepared a personal balance sheet for LaShandra, these student loans would be listed as _______ on the balance sheet.
a long-term liability
