Question 1

Montreal Fabrication has $80 million in assets and $50 million in owners' equity. How much does the firm have in liabilities?

Accepted Answer

A)   $20 million
B)   $30 million
C)   $50 million
D)   $80 millionE) B) and D)
F) A) and B)

Question 2

Complete the following using the terms listed below.
-The ______ is the federal law that prohibits Canadian citizens and companies from bribing foreign officials to win or continue business.

Accepted Answer

A)  Chartered Professional Accountant
B)  International Financial Reporting Standards
C)  Asset
D)  Liability
E)  owners' equityF) accounting equationG) balance sheetH) income statementI) Corruption of Foreign Public Officials ActJ) accrual accountingK) open book managementL) BudgetM) GAAPN) AcSBO) profitability ratioP) International Accounting Standards CommitteeQ) liquidity ratiosR) budgetS) A) and N)
T) D) and H)

Question 3

Differentiate between public accountants and management accountants.

Accepted Answer

A public accountant is an accounting pro...

Question 4

Using the following balance sheet information, find the firm's acid-test ratio. Cash and marketable securities $20 million
Accounts receivable $10 million
Inventory $30 million
Current liabilities $30 million

Accepted Answer

A)   0.60
B)   1.00
C)   1.40
D)   2.00E) A) and D)
F) A) and C)

Question 5

Depreciation is reported as an expense on the firm's income statement, but does NOT involve any actual cash.

Accepted Answer

A) True 
 B)False

Question 6

Define GAAP and explain its purpose.

Accepted Answer

GAAP stands for generally accepted accou...

Question 7

A budget is essentially a long-term financial plan.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following assets would be listed first on the assets side of a balance sheet?

Accepted Answer

A)   Fixed assets
B)   Goodwill
C)   Accounts receivable
D)   InventoryE) All of the above
F) C) and D)

Question 9

Define accounting and determine the stakeholders who uses accounting information.

Accepted Answer

Accounting is the process of measuring, ...

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

The debt ratio and the long-term debt to equity ratio help interested parties evaluate ______.

Accepted Answer

A)   how effectively management uses the firm's resources
B)   a firm's ability to meet its short-term obligations
C)   how much a firm relies on debt financing
D)   the ability to generate revenues that are greater than its operating costs and other expensesE) C) and D)
F) B) and C)

Question 12

Explain the purpose of the Sarbanes-Oxley Act.

Accepted Answer

The Sarbanes-Oxley Act (SOX) created the...

Question 13

All of the following are tangible assets EXCEPT ______.

Accepted Answer

A)   cash
B)   inventory
C)   building
D)   patentsE) None of the above
F) B) and C)

Question 14

Which of the following statements is correct?

Accepted Answer

A)   Budgets serve as a planning and control tool.
B)   Budgets are limited to projecting cash inflows and outflows.
C)   GAAP standards are used in budget development.
D)   Budgets serve as the standard by which estimated performance is compared.E) B) and D)
F) B) and C)

Question 15

The GAAP standard of relevance ensures that one firm's financial statements can be compared with those of similar businesses.

Accepted Answer

A) True 
 B)False

Question 16

Kwane wants to assess his firm's ability to meet its short-term obligations. Which of the following ratios are the most relevant?

Accepted Answer

A)   profitability ratios
B)   liquidity ratios
C)   debt ratios
D)   activity ratiosE) B) and C)
F) C) and D)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Emilio is NOT an employee of the Modesto Corporation, but was hired as a management consultant to provide unbiased advice about Modesto's financial condition. Emilio is a (n)  ______.

Accepted Answer

A)   management accountant
B)   government accountant
C)   public accountant
D)   internal auditorE) All of the above
F) A) and B)

Question 19

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

Accepted Answer

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

Question 20

All of the following are profitability ratios EXCEPT ______.

Accepted Answer

A)   return on equity
B)   inventory turnover
C)   return on assets
D)   gross profit marginE) A) and D)
F) C) and D)

Exam 15: Understanding Accounting and Financial Statements

Define GAAP and explain its purpose.

Correct AnswerverifiedGAAP stands for generally accepted accou...View AnswerShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Define accounting and determine the stakeholders who uses accounting information.

Correct AnswerverifiedAccounting is the process of measuring, ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Kwane wants to assess his firm's ability to meet its short-term obligations. Which of the following ratios are the most relevant?

Correct AnswerverifiedShow Answer

Differentiate between public accountants and management accountants.

Correct AnswerverifiedA public accountant is an accounting pro...View AnswerShow Answer

The GAAP standard of relevance ensures that one firm's financial statements can be compared with those of similar businesses.

Correct AnswerverifiedShow Answer

Which of the following assets would be listed first on the assets side of a balance sheet?

Correct AnswerverifiedShow Answer

Using the following balance sheet information, find the firm's acid-test ratio. Cash and marketable securities $20 million Accounts receivable $10 million Inventory $30 million Current liabilities $30 million

Correct AnswerverifiedShow Answer

All of the following are profitability ratios EXCEPT ______.

Correct AnswerverifiedShow Answer

Montreal Fabrication has $80 million in assets and $50 million in owners' equity. How much does the firm have in liabilities?

Correct AnswerverifiedShow Answer

All of the following are tangible assets EXCEPT ______.

Correct AnswerverifiedShow Answer

Explain the purpose of the Sarbanes-Oxley Act.

Correct AnswerverifiedThe Sarbanes-Oxley Act (SOX) created the...View AnswerShow Answer

The debt ratio and the long-term debt to equity ratio help interested parties evaluate ______.

Correct AnswerverifiedShow Answer

Depreciation is reported as an expense on the firm's income statement, but does NOT involve any actual cash.

Correct AnswerverifiedShow Answer

Complete the following using the terms listed below. -The ______ is the federal law that prohibits Canadian citizens and companies from bribing foreign officials to win or continue business.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Emilio is NOT an employee of the Modesto Corporation, but was hired as a management consultant to provide unbiased advice about Modesto's financial condition. Emilio is a (n) ______.

Correct AnswerverifiedShow Answer

A budget is essentially a long-term financial plan.

Correct AnswerverifiedShow Answer

Correct Answer
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GAAP stands for generally accepted accou...
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Correct Answer
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Correct Answer
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Accounting is the process of measuring, ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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A public accountant is an accounting pro...
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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The Sarbanes-Oxley Act (SOX) created the...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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