Chapter 14 & 15 Quiz
_____ are profit-oriented depository financial institutions that accept deposits, make business and consumer loans, invest in government and corporate securities, and provide other financial services.
Commercial banks
Items that groups of people use as money must be _____ to be acceptable mediums of exchange.
scarce, divisible, portable, and durable
Margin requirements tell the minimum amount of cash an investor must put up when borrowing from a bank or brokerage firm to purchase stock.
true
The _____ ratio measures the relationship between the amount of debt financing and the amount of equity financing.
debt-to-equity
The acceptable turnover ratio is:
different for each industry
The ratio of net profit to total owners' equity is called return on:
equity
Administrative accounting is the term given to the internal workings of the company, such as budgets, sales reports, and analyses of how well marketing strategies are working.
false
The Federal Deposit Insurance Corporation (FDIC) charges the same insurance premiums to all member banks.
false
The balance sheet summarizes a firm's financial position over a period of time, for instance 3 months or a year.
false
The income statement is a snapshot of the firm's financial position at a certain point in time.
false
Financial intermediation is the process in which:
financial institutions act as intermediaries between the suppliers and demanders of funds
On an income statement, operating expenses that cannot be linked to cost of goods sold or to sales are called _____ expenses.
general and administrative
A(n) _____ is a summary of the money flowing into and out of a firm.
statement of cash flows
Savings banks:
are a type of thrift institution
Which of the following is an example of an intangible asset for a manufacturer of padlocks?
a patent on titanium lock mechanism
A(n) _____ is a summary of what a company has earned and spent over a given period.
income statement
_____ benefits the check writer by allowing it to retain the funds until the funds are actually withdrawn from its account.
float
Accounting provides a framework for looking at:
past performance, financial performances of different firms, current financial health, and possible future performance. ALL OF THE ABOVE
The Banking Act of 1933 gave the Federal Reserve System the authority to:
tell banks how much reserve to maintain, ban interest on demand deposits, keep banks from investing in specific securities, and regulate interest rates on time deposits. ALL OF THE ABOVE
Money market deposit accounts and certificates of deposit are officially called ______ deposits.
time
Fixed assets are property and buildings that a firm expects to use for more than:
one year
The Federal Deposit Insurance Corporation (FDIC) insures deposits in commercial banks. The FDIC was created by the:
Banking Act of 1933
The three tools used by the Federal Reserve to manage monetary policy are reserve requirements, the prime rate, and the discount rate.
False
_____ deals with reporting to outsiders. _____ accounting deals with the internal operations of the firm.
Financial accounting; Managerial accounting
A current asset is one that can or will be converted into cash within one year.
True
An accounting journal is a chronological list of transactions, each assigned to a particular account.
True
By lowering the reserve requirement, the Federal Reserve tries to make more money available for loans and stimulate the economy.
True
The postage stamps and petty cash in the architect's drawer as well as his drawing table, his office furniture, and money owed to him by clients are all examples of assets.
True
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
When Hadley Jones wanted to buy a truck so he could get to and from his job in a nearby community, his credit rating was poor. Jones found that the only place he could get a loan was from a(n) _____ finance company.
consumer
Computers can enhance accounting by:
controlling purchase orders, providing a means to control inventory, handling general ledger functions, preparing tax returns, DOING ALL OF THESE
_____ is cash held in the form of coins and paper money.
currency
The ratios that are of special interest to the firm's creditors and measure the firm's ability to pay short-term debts as they come due are called _____ ratios.
liquidity
The Federal Reserve controls the minimum amount that a purchaser of securities must deposit with a stock brokerage firm in order to purchase stock. This minimum amount is called the _____ requirement.
margin
After all expenses have been subtracted from revenues on an income statement, the final figure or bottom line is called the _____ when it is a negative number. Correct!
net loss
Larry's Kite Shack operates on the Florida beaches during the tourist season. Last year, Larry sold $25,000 worth of kites. His cost of goods was $7,000, and he paid himself a salary of $20,000. On an income statement, Larry's business would have a(n):
net loss
Which of the following statements about international banking is true?
Foreign banks are subject to fewer regulations than U.S. banks.
Managerial accounting provides information that would probably be most beneficial to:
a middle manager of the company
