Question 1

Geri's Gift Store wants to compute the revenues and expenses for its most recent accounting period to determine if it is making extra cash that it can use to invest in increased long-term capacity or to pay off its debts. To determine this, Geri should calculate cash from ________ activities by combining the changes in the revenue accounts, expense accounts, current asset accounts, and current liability accounts.

Accepted Answer

A)   profiteering
B)   bookkeeping
C)   financing
D)   operating
E)   marketingF) None of the above
G) B) and C)

Question 2

The purpose of the Sarbanes-Oxley Act was to

Accepted Answer

A)   require firms to be more rigorous in their accounting and reporting practices.
B)   define generally accepted accounting principles.
C)   eliminate accounting firms from having to hire accountants that are certified.
D)   force accounting firms to combine their consulting and auditing businesses.
E)   establish standards and testing procedures for becoming a CPA.F) B) and D)
G) B) and E)

Question 3

Camila manages a used car dealership that allows customers to buy cars for no money down and pay in installments throughout the year. Her company builds in a bad-debts adjustment that is deducted from the accounts receivable balance to present a more realistic view of the payments likely to be received in the future for these cars. The payments the company expects to receive are called

Accepted Answer

A)   current assets.
B)   net receivables.
C)   temporary investments.
D)   inventory payments.
E)   gross receivables.F) A) and D)
G) B) and E)

Question 4

Each type of stock sold by a corporation represents a claim on the organization and must be represented by a separate owners' equity account.

Accepted Answer

A) True 
 B)False

Question 5

How does ratio analysis relate to the income statement and balance sheet?

Accepted Answer

A)   It prevents interested parties from comparing an organization with similar entities.
B)   It adds complexity to the simplified information in the income statement and balance sheet.
C)   It makes the information from the income statement and balance sheet more abstract.
D)   It eliminates the need to reference the income statement and balance sheet.
E)   It brings the income statement and balance sheet into sharper focus.F) B) and E)
G) B) and C)

Question 6

Brad is an executive of Music Masters, a wedding and special events DJ music service. For years, he successfully hid illegal and misleading accounting practices, but eventually, he was exposed and punished with a jail sentence under the ________ Act.

Accepted Answer

A)   Gramm-Leach-Bliley
B)   Glass-Steagall
C)   Dodd-Frank
D)   Sarbanes-Oxley
E)   Celler-KefauverF) All of the above
G) B) and E)

Question 7

Kaden works for a publishing company, recording its routine, day-to-day business transactions. His main responsibility is obtaining and recording the information his company needs to analyze its financial position. Based on this description, Kaden is most likely a(n)

Accepted Answer

A)   accountant.
B)   financial manager.
C)   certified fraud examiner.
D)   bookkeeper.
E)   federal agent.F) All of the above
G) A) and C)

Question 8

All of the following are items that are classified as fixed assets EXCEPT

Accepted Answer

A)   temporary investments.
B)   equipment.
C)   reputation.
D)   trademarks.
E)   corporate "goodwill."F) C) and D)
G) A) and E) A

Question 9

What represents a commitment of organizational funds of at least one year?

Accepted Answer

A)   current assets
B)   fixed assets
C)   temporary investments
D)   inventory
E)   accounts receivableF) A) and D)
G) A) and C)

Question 10

Management's greatest single concern is ________, which is the movement of money through an organization over a daily, weekly, monthly, or yearly basis.

Accepted Answer

A)   expenses trajectory
B)   income trajectory
C)   accounting flow
D)   the budget
E)   cash flowF) B) and E)
G) B) and C)

Question 11

Lucia is an accountant who completed coursework beyond a basic four- or five-year college accounting degree. What does Lucia's additional training allow her to do?

Accepted Answer

A)   complete the complex mechanical tasks associated with recording a company's day-to-day business transactions
B)   understand, interpret, and even develop the sophisticated accounting systems necessary to classify and analyze complex financial information
C)   simply to obtain and record financial information
D)   become a certified management accountant
E)   specialize in forensic accountingF) C) and D)
G) A) and E)

Question 12

Claire is a certified public accountant who provides accounting services to individuals and businesses. Certification gives Claire the right to

Accepted Answer

A)   express, officially, an unbiased opinion regarding the accuracy of a client's financial statements.
B)   publicly express a biased opinion about the accuracy of a firm's financial statements.
C)   express her personal opinion in all financial matters.
D)   handle every firm's reports by different rules.
E)   limit the types of assets commercial banks can buy.F) A) and E)
G) All of the above

Question 13

Peeta owns a bakery. She has already gathered and examined the checks, credit card receipts, sales slips, and other related evidence concerning specific transactions. She has also recorded each financial transaction in a journal and transferred that information into a ledger. What must Peeta do at the end of the accounting period?

Accepted Answer

A)   She must check her journal for mistakes.
B)   She must prepare a trial balance.
C)   She must recheck all her source documents.
D)   She must attest that she used generally accepted accounting principles.
E)   She must throw away her ledger and start over.F) A) and E)
G) All of the above

Question 14

Qingyi works for a large technology company as an engineer. As an employee, why should he look at his company's financial statements?

Accepted Answer

A)   to ensure that his job is secure
B)   to see what his co-workers are making
C)   to get a sense of how competitive companies pay their employees
D)   to determine if his company needs his help to succeed
E)   to establish reasonable expectations for salary and other benefit requestsF) A) and B)
G) A) and C)

Question 15

Stan's Skateboards doesn't have a lot of inventory. As a result, its ________ ratio is almost exactly the same as its current ratio.

Accepted Answer

A)   liquidity
B)   total asset turnover
C)   quick
D)   receivables turnover
E)   debt utilizationF) All of the above
G) B) and E)

Question 16

Randall wants to become a certified public accountant. To accomplish this, he must be certified by the ________ in which he plans to provide accounting services.

Accepted Answer

A)   country
B)   state
C)   town
D)   company
E)   municipalityF) B) and D)
G) A) and C)

Question 17

Carl is using the double-entry bookkeeping system to account for all the transactions during his first month in business as an electrician. All of the following could be specific asset categories for Carl EXCEPT

Accepted Answer

A)   supplier credit.
B)   cash.
C)   tools.
D)   inventory.
E)   equipment.F) C) and D)
G) D) and E)

Question 18

Jack works for the Internal Revenue Service. His main responsibility is rooting out evidence of "cooked books" at major companies. Jack is a ________ accountant.

Accepted Answer

A)   criminal
B)   private
C)   forensic
D)   certified public
E)   noncertifiedF) C) and D)
G) A) and D) C

Question 19

John is an electrician who runs his own small shop. When tax season comes, he hires an accountant from one of "the Big Four" accounting firms to help him file his business's tax return. In this scenario, John has most likely hired a ________ accountant.

Accepted Answer

A)   certified private
B)   forensic
C)   certified public
D)   private
E)   noncertifiedF) A) and E)
G) A) and D)

Question 20

When Juan's Taco Hut decided to open several new locations, it spent millions of dollars on property and equipment. Which category of cash flow does this best describe?

Accepted Answer

A)   cash from profiteering activities
B)   cash from investing activities
C)   cash from financing activities
D)   cash from operating activities
E)   cash from marketing activitiesF) B) and E)
G) A) and B) B

Exam 14: Accounting and Financial Statements

Correct Answer
verified

The purpose of the Sarbanes-Oxley Act was to

Correct Answer
verified

Correct Answer
verified

Each type of stock sold by a corporation represents a claim on the organization and must be represented by a separate owners' equity account.

Correct Answer
verified

How does ratio analysis relate to the income statement and balance sheet?

Correct Answer
verified

Brad is an executive of Music Masters, a wedding and special events DJ music service. For years, he successfully hid illegal and misleading accounting practices, but eventually, he was exposed and punished with a jail sentence under the ________ Act.

Correct Answer
verified

Kaden works for a publishing company, recording its routine, day-to-day business transactions. His main responsibility is obtaining and recording the information his company needs to analyze its financial position. Based on this description, Kaden is most likely a(n)

Correct Answer
verified

All of the following are items that are classified as fixed assets EXCEPT

Correct Answer
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A

What represents a commitment of organizational funds of at least one year?

Correct Answer
verified

Management's greatest single concern is ________, which is the movement of money through an organization over a daily, weekly, monthly, or yearly basis.

Correct Answer
verified

Lucia is an accountant who completed coursework beyond a basic four- or five-year college accounting degree. What does Lucia's additional training allow her to do?

Correct Answer
verified

Claire is a certified public accountant who provides accounting services to individuals and businesses. Certification gives Claire the right to

Correct Answer
verified

Correct Answer
verified

Qingyi works for a large technology company as an engineer. As an employee, why should he look at his company's financial statements?

Correct Answer
verified

Stan's Skateboards doesn't have a lot of inventory. As a result, its ________ ratio is almost exactly the same as its current ratio.

Correct Answer
verified

Randall wants to become a certified public accountant. To accomplish this, he must be certified by the ________ in which he plans to provide accounting services.

Correct Answer
verified

Carl is using the double-entry bookkeeping system to account for all the transactions during his first month in business as an electrician. All of the following could be specific asset categories for Carl EXCEPT

Correct Answer
verified

Jack works for the Internal Revenue Service. His main responsibility is rooting out evidence of "cooked books" at major companies. Jack is a ________ accountant.

Correct Answer
verified
C

John is an electrician who runs his own small shop. When tax season comes, he hires an accountant from one of "the Big Four" accounting firms to help him file his business's tax return. In this scenario, John has most likely hired a ________ accountant.

Correct Answer
verified

When Juan's Taco Hut decided to open several new locations, it spent millions of dollars on property and equipment. Which category of cash flow does this best describe?

Correct Answer
verified
B

Exam 14: Accounting and Financial Statements

Correct AnswerverifiedShow Answer

The purpose of the Sarbanes-Oxley Act was to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Each type of stock sold by a corporation represents a claim on the organization and must be represented by a separate owners' equity account.

Correct AnswerverifiedShow Answer

How does ratio analysis relate to the income statement and balance sheet?

Correct AnswerverifiedShow Answer

Brad is an executive of Music Masters, a wedding and special events DJ music service. For years, he successfully hid illegal and misleading accounting practices, but eventually, he was exposed and punished with a jail sentence under the ________ Act.

Correct AnswerverifiedShow Answer

Kaden works for a publishing company, recording its routine, day-to-day business transactions. His main responsibility is obtaining and recording the information his company needs to analyze its financial position. Based on this description, Kaden is most likely a(n)

Correct AnswerverifiedShow Answer

All of the following are items that are classified as fixed assets EXCEPT

Correct AnswerverifiedA

What represents a commitment of organizational funds of at least one year?

Correct AnswerverifiedShow Answer

Management's greatest single concern is ________, which is the movement of money through an organization over a daily, weekly, monthly, or yearly basis.

Correct AnswerverifiedShow Answer

Lucia is an accountant who completed coursework beyond a basic four- or five-year college accounting degree. What does Lucia's additional training allow her to do?

Correct AnswerverifiedShow Answer

Claire is a certified public accountant who provides accounting services to individuals and businesses. Certification gives Claire the right to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Qingyi works for a large technology company as an engineer. As an employee, why should he look at his company's financial statements?

Correct AnswerverifiedShow Answer

Stan's Skateboards doesn't have a lot of inventory. As a result, its ________ ratio is almost exactly the same as its current ratio.

Correct AnswerverifiedShow Answer

Randall wants to become a certified public accountant. To accomplish this, he must be certified by the ________ in which he plans to provide accounting services.

Correct AnswerverifiedShow Answer

Carl is using the double-entry bookkeeping system to account for all the transactions during his first month in business as an electrician. All of the following could be specific asset categories for Carl EXCEPT

Correct AnswerverifiedShow Answer

Jack works for the Internal Revenue Service. His main responsibility is rooting out evidence of "cooked books" at major companies. Jack is a ________ accountant.

Correct AnswerverifiedC

John is an electrician who runs his own small shop. When tax season comes, he hires an accountant from one of "the Big Four" accounting firms to help him file his business's tax return. In this scenario, John has most likely hired a ________ accountant.

Correct AnswerverifiedShow Answer

When Juan's Taco Hut decided to open several new locations, it spent millions of dollars on property and equipment. Which category of cash flow does this best describe?

Correct AnswerverifiedB

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A

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C

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B