Question 1

Professionals who are responsible for gathering,recording,reporting,and interpreting the financial information of an organization are known as

Accepted Answer

A)  statisticians.
B)  accountants.
C)  IRS agents.
D)  IRS agents' managers.E) A) and D)
F) B) and D)

Question 2

Carmen works as a tax accountant at a mid-sized manufacturing company.Carmen would be considered a

Accepted Answer

A)  management consultant.
B)  public accountant.
C)  management accountant.
D)  government accountant.E) A) and B)
F) B) and C)

Question 3

Benicio is a loan officer for a bank and is reviewing the financial statements of a prospective borrower.As a user of accounting information,Benicio is most interested in using this information

Accepted Answer

A)  to plan and control daily operations.
B)  in contract negotiations.
C)  to make an investment decision and estimate its future returns.
D)  to evaluate financial soundness of potential clients.E) All of the above
F) A) and C)

Question 4

A firm has $15 million in assets and $5 million in owner's equity.Therefore,the firm must also have $15 million in liabilities.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following was established in 1973 to promote worldwide consistency in financial reporting practices?

Accepted Answer

A)  FASB
B)  IASC
C)  The World Bank
D)  GAAPE) All of the above
F) B) and D)

Question 6

All of the following are profitability ratios EXCEPT

Accepted Answer

A)  inventory turnover.
B)  return on equity.
C)  net profit margin.
D)  gross profit margin.E) B) and C)
F) B) and D)

Question 7

Which of the following current assets is NOT included when calculating the acid-test ratio?

Accepted Answer

A)  Inventory
B)  Marketable securities
C)  Cash
D)  Accounts receivableE) A) and C)
F) C) and D)

Question 8

A(n) ________ of a business is anything owed to creditors-that is,the claims of a company's creditors.

Accepted Answer

A)  owners' equity
B)  asset
C)  liability
D)  accumulated profits not paid in dividendsE) A) and D)
F) None of the above

Question 9

Yashmi is involved in obtaining new funds to run and expand the business.She is engaged in an investing activity.

Accepted Answer

A) True 
 B)False

Question 10

If Simone Enterprises has a debt ratio of 40%,it means that for every $1 in _____,the firm has 40 cents in _____.

Accepted Answer

A)  owners' equity; liabilities
B)  assets; liabilities
C)  owners' equity; assets
D)  assets; owners' equityE) B) and D)
F) None of the above

Question 11

On a balance sheet,total assets must always equal the sum of liabilities and owners' equity.

Accepted Answer

A) True 
 B)False

Question 12

Astrid works for a travel agency.Her job involves preparing financial reports and interpreting those reports to provide information for decision making.Which title is appropriate for Astrid's job?

Accepted Answer

A)  Market researcher
B)  Systems analyst
C)  Investor
D)  AccountantE) A) and B)
F) None of the above

Question 13

A debt ratio of 20% means that the firm is relying more on borrowed money than owners' equity.

Accepted Answer

A) True 
 B)False

Question 14

Gus is an accountant and works for a firm that provides tax planning and preparation services to other businesses.Gus is a management accountant.

Accepted Answer

A) True 
 B)False

Question 15

Ratios assist managers by interpreting actual performance and making comparisons with what should have happened.

Accepted Answer

A) True 
 B)False

Question 16

Nicole is the Executive Director of a local food bank and is assessing the financial situation of her not-for-profit organization.Nicole uses a(n) _____ to determine whether revenues from contributions and other sources will cover operating costs.

Accepted Answer

A)  statement of cash flows
B)  income statement
C)  balance sheet
D)  accrual accountingE) B) and C)
F) All of the above

Question 17

Elsa owns a business and is reviewing her company's current financial statements.As a user of accounting information,Elsa is most interested in using this information to

Accepted Answer

A)  evaluate credit risk.
B)  approve new issues of stocks and bonds.
C)  plan and control activities.
D)  evaluate tax liabilities.E) B) and D)
F) All of the above

Question 18

An accountant employed by a business other than an accounting firm is called a management accountant.

Accepted Answer

A) True 
 B)False

Question 19

To provide reliable,consistent,and unbiased information to decision makers,accountants follow guidelines,or standards,known as

Accepted Answer

A)  the accounting process.
B)  the accounting system.
C)  generally accepted accounting principles (GAAP) .
D)  Financial Accounting Standards Board (FAS
B)  .E) A) and C)
F) A) and B)

Question 20

Accounting information can be as important to those outside the organization as it is to those inside the organization.

Accepted Answer

A) True 
 B)False

Exam 15: Understanding Accounting and Financial Statements

Nicole is the Executive Director of a local food bank and is assessing the financial situation of her not-for-profit organization.Nicole uses a(n) _____ to determine whether revenues from contributions and other sources will cover operating costs.

Correct AnswerverifiedShow Answer

An accountant employed by a business other than an accounting firm is called a management accountant.

Correct AnswerverifiedShow Answer

Yashmi is involved in obtaining new funds to run and expand the business.She is engaged in an investing activity.

Correct AnswerverifiedShow Answer

Gus is an accountant and works for a firm that provides tax planning and preparation services to other businesses.Gus is a management accountant.

Correct AnswerverifiedShow Answer

Benicio is a loan officer for a bank and is reviewing the financial statements of a prospective borrower.As a user of accounting information,Benicio is most interested in using this information

Correct AnswerverifiedShow Answer

A debt ratio of 20% means that the firm is relying more on borrowed money than owners' equity.

Correct AnswerverifiedShow Answer

Ratios assist managers by interpreting actual performance and making comparisons with what should have happened.

Correct AnswerverifiedShow Answer

Elsa owns a business and is reviewing her company's current financial statements.As a user of accounting information,Elsa is most interested in using this information to

Correct AnswerverifiedShow Answer

On a balance sheet,total assets must always equal the sum of liabilities and owners' equity.

Correct AnswerverifiedShow Answer

Professionals who are responsible for gathering,recording,reporting,and interpreting the financial information of an organization are known as

Correct AnswerverifiedShow Answer

Which of the following current assets is NOT included when calculating the acid-test ratio?

Correct AnswerverifiedShow Answer

To provide reliable,consistent,and unbiased information to decision makers,accountants follow guidelines,or standards,known as

Correct AnswerverifiedShow Answer

A firm has $15 million in assets and $5 million in owner's equity.Therefore,the firm must also have $15 million in liabilities.

Correct AnswerverifiedShow Answer

Carmen works as a tax accountant at a mid-sized manufacturing company.Carmen would be considered a

Correct AnswerverifiedShow Answer

A(n) ________ of a business is anything owed to creditors-that is,the claims of a company's creditors.

Correct AnswerverifiedShow Answer

All of the following are profitability ratios EXCEPT

Correct AnswerverifiedShow Answer

If Simone Enterprises has a debt ratio of 40%,it means that for every $1 in _____,the firm has 40 cents in _____.

Correct AnswerverifiedShow Answer

Astrid works for a travel agency.Her job involves preparing financial reports and interpreting those reports to provide information for decision making.Which title is appropriate for Astrid's job?

Correct AnswerverifiedShow Answer

Which of the following was established in 1973 to promote worldwide consistency in financial reporting practices?

Correct AnswerverifiedShow Answer

Accounting information can be as important to those outside the organization as it is to those inside the organization.

Correct AnswerverifiedShow Answer

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If Simone Enterprises has a debt ratio of 40%,it means that for every $1 in _,the firm has 40 cents in _.

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