Chapter 14 Quiz Review

The $350 charged to the homeowner for electrical work performed one month ago is an example of a note receivable.

False

All publicly held companies must include a statement of cash flows in their financial reports to stockholders.

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

A(n) _____ is a yearly document that describes a firm's financial status and usually discusses a firm's financial activities during the past year and its prospects for the future.

annual report

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

_____ is the process of distributing the original cost of a long-term asset over the years of its useful life.

depreciation

The acceptable turnover ratio is:

different for each industry

Managerial accounting provides all of the following financial information EXCEPT:

income statements

By dividing cost of goods sold by the average inventory to measure the speed with which inventory moves through the firm and is turned into sales, the _____ ratio is calculated.

inventory turnover

For which of the following assets would a wholesale company use depreciation?

its warehouses

Which of the following is NOT really a financial ratio though it is often used to measure a firm's overall liquidity?

net working capital

What type of expense would be shown on an income statement when the owner of a dirt racing track promoted an upcoming race by purchasing advertising time on a local radio station?

operating

_____ are bills that have accumulated and must be paid at a specified future date within the year although no bill has been received by the firm.

Accrued expenses

Haley Optics manufactures lenses used in cameras, binoculars, and scientific equipment. It had sales of $300,000 during the last quarter. It depreciated assets during the year by $20,000. The Earnings before interest and taxes was calculated to be $120,000. On an income statement, an accountant would classify the remaining $160,000 as:

Cost of goods sold

Profitability ratios measure how well a firm uses its assets.

False