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How does accounting affect daily activities?

Select one:

a.Accounting captures daily business transactions for future reporting.

b.Accounting does not affect daily activities.

c.Accounting does not affect daily activities, except when a company pays a bill.

d.Accounting affects daily activities that require graphs and other graphics.

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Which of the following statements support the reliability and usefulness of financial information? (Select all that apply.)

Select one or more:

a.Accounting information is likely to be accurate.

b.Accounting information is likely to be objective.

c.Accounting information is likely to be consistent.

d.Accounting information is likely to be guessed.

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What are internal controls?

Select one:

a.Processes to improve customer service

b.Controls to manage the risk of loss and fraud within a company

c.Controls to train accounting system users

d.Controls to ensure that a company does not spend more than it should

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How can accounting minimize company losses?

Select one:

a.Accounting can predict the future with certainty.

b.Accounting can show managers information that can help minimize losses.

c.Accounting can demonstrate companies' exact total expenses for the next year.

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What is the relationship between daily activities and accounting in companies?

Select one:

a.Accounting does not relate to daily business activities.

b.Companies need accounting when they receive and pay a bill.

c.Only daily sales activities involve accounting.

What is the difference between a chart of accounts and a general ledger?

Select one:

a.A chart of accounts contains graphs and notes, but a general ledger does not.

b.A chart of accounts contains information about budgets. A general ledger contains account numbers, descriptions, and graphs (one graph per account).

c.Only managers use charts of accounts, whereas investors use general ledgers.

d.A chart of accounts contains account numbers and descriptions. A general ledger contains account numbers, descriptions, and numbers that reflect transactions in each account.

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What is the function of a trial balance?

Select one:

a.A trial balance has no function when a company uses the manual system.

b.A trial balance presents important graphs and notes to managers.

c.A trial balance shows all transactions in an account, which facilitates research.

d.A trial balance shows summarized balances by account, which facilitates analysis and financial statement compilation.

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Which of the following items are parts of the traditional accounting cycle? (Select all that apply.)

Select one or more:

a.Entering transactions into the accounting system

b.Deleting all cash transactions

c.Closing the accounting books

d.Compiling financial statements

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Why does a company need to close its accounting books?

Select one:

a.Training in the system is finished.

b.Storage space is limited.

c.Companies need to zero out certain accounts to start anew for the next period.

d.Certain financial statements take too much time.

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Which of these statements correctly describe the chart of accounts and the general ledger? (Select all that apply.)

Select one or more:

a.The chart of accounts is made up of graphs and detailed notes.

b.The chart of accounts is a list of accounts that includes numbers and descriptions.

c.The general ledger is a list of accounts that includes numbers, descriptions, and changes in those accounts.

d.The general ledger is known as the core of any accounting system.

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Operating expenses are those that __________.

Select one:

a.relate to long-term marketing plans

b.relate to day-to-day activities

c.relate to extraordinary items

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Which of the following statements correctly describes net income or loss?

Select one:

a.Net income or loss is often used in bank reconciliations.

b.Net income or loss is shown as the first item on an income statement.

c.Net income or loss is the result of a company's revenues less expenses.

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What is revenue on an income statement?

Select one:

a.Costs related to transportation

b.Income that a competitor generates

c.Costs that manufacturing generates

d.Income that a company generates

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Revenues can be classified in an income statement to facilitate understanding of financial information. Which of the following is a type of revenue?

Select one:

a.Operating revenue

b.Graphic revenue

c.Quick revenue

d.Long-term revenue

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What is a net income or loss, as shown on an income statement?

Select one:

a.Net income or loss is calculated as assets less liabilities.

b.Net income or loss is calculated as revenues less expenses.

c.Net income or loss is calculated as expenses less dividends.

d.Net income or loss is calculated as equity less liabilities.

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What are common items in the stockholder equity section of a corporation's balance sheet? (Select all that apply.)

Select one or more:

a.Extraordinary items

b.Retained earnings

c.Operating expenses

d.Capital stock

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Which of the following are examples of long-term liabilities? (Select all that apply.)

Select one or more:

a.A company issues bonds due in 10 years.

b.A company gives clients 3 months to pay their bills.

c.A company receives a 1-month extension to pay its bills.

d.A company obtains a loan from the bank that is due in full in 3 years.

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How does a balance sheet relate to a cash flow statement?

Select one:

a.Cash flow statements and balance sheets show marketing plan details.

b.The cash amount on a balance sheet relates to equity from a cash flow statement.

c.A cash flow statement analyzes the cash amount on a balance sheet.

d.These two reports are completely independent of each other.

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Larry's company owes $100,000 to the bank on a note due with interest 3 years from now. How would this note be classified on the balance sheet?

Select one:

a.The balance sheet would show the $100,000 as a current liability.

b.The balance sheet would show the $100,000 as a current asset.

c.The balance sheet would show the $100,000 as a long-term liability.

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Which of the following statements correctly describes retained earnings?

Select one:

a.Retained earnings include liabilities.

b.Retained earnings include net income or loss from the income statement.

c.Retained earnings include current assets.

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A company receives $3,000 from customers. Which section of a cash flow statement would include this transaction?

Select one:

a.Cash inflow from investing

b.Cash inflow from operations

c.Cash inflow from derivatives

d.Cash inflow from financing

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Which of the following is an example of an operating activity, as related to the cash flow statement?

Select one:

a.Payments of loans

b.Payments to suppliers

c.Payments of cash dividends

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Which of the following is an example of an investing activity shown in the cash flow statement?

Select one:

a.Cash received from customers

b.Cash received from selling old computer servers

c.Cash received from owners of a company

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Which area of the cash flow statement does the direct method affect?

Select one:

a.Investing

b.Financing

c.Operating

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Which of the following correctly describes financing activities on a cash flow statement?

Select one:

a.Financing activities are usually listed as the first part of a cash flow statement.

b.Financing activities are usually listed as notes and graphs on a cash flow statement.

c.Financing activities are usually listed as the last part of a cash flow statement.

What are the three common ways to conduct financial analysis?

Select one:

a.Vertical, upright, and uplifting

b.Horizontal, vertical, and ratios

c.Simple, complex, and ratios

d.Horizontal, diagonal, and descriptive

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What are the limitations of financial analysis, including ratios?

Select one:

a.There are no real limitations of financial analysis; any financial data can be analyzed.

b.Financial analysis targets only the future, not the present or past, which limits its usage.

c.Accounting information, the basis for analysis, excludes important information, such as a company's reputation.

d.Financial analysis is too complicated to use computerized systems, which limits its usage.

Question28

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Lynn, a company owner, looks at her financial statements. She wants to know how much the cash balance contributed to total assets on the balance sheet. What would you suggest?

Select one:

a.Check the company' bank statements, including those closed in the past 3 years.

b.Conduct a vertical financial analysis using a total from the balance sheet.

c.Conduct a horizontal financial analysis of the past 3 years to look for trends in the cash balance area.

Question29

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Bob reviews an income statement that includes percentages of how each item relates to sales. What kind of financial analysis is this?

Select one:

a.Ratio analysis

b.Horizontal analysis

c.Break-even analysis

d.Vertical analysis

Question30

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What do liquidity ratios measure?

Select one:

a.The assets that a company turns over

b.A company's ability to meet its current obligations

c.A company's change in cash throughout the years

d.The bank reconciliations that a company performs during a year

Question31

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What is a limitation of a managerial accounting computer system?

Select one:

a.The system cannot handle the amount of data.

b.The system costs a great deal to purchase and maintain.

c.The system takes too long to process reports.

d.The system produces too many reports to meet managers' needs.

Question32

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Fred owns a small manufacturing plant. His friend Paul also owns a manufacturing plant and has talked to Fred about issues he has found so far with his system. What is Paul likely to say? (Select all that apply.)

Select one or more:

a.You may have to tell your accountant to conduct reconciliations to ensure that the rates in the system make sense when compared to actual rates.

b.Beware of the high price to buy and maintain the cost accounting system.

c.Be sure that the cost accounting system picks up current stock prices from the Internet.

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What is cost accounting?

Select one:

a.It is part of financial accounting. It is often used to provide data to investors.

b.It is part of management accounting. It is often used by manufacturing companies.

c.It is part of financial accounting. It often does not include enough details to be useful to managers.

Question34

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How do managers use budgets?

Select one:

a.Managers usually ignore budgets and base their decisions on gut feelings.

b.Budgets help managers review bank and investment reconciliations.

c.Budgets guide managers on financial matters and help identify areas that are not going according to plan.

Question35

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What is the break-even point as related to cost-volume-profit analysis?

Select one:

a.The point at which sales equal fixed costs plus variable costs

b.The point at which variable costs and fixed costs are the same

c.The point at which a company starts to lose employees

d.The point at which profit reaches $100

Question36

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Which standard financial statement would you use if you want to know details of revenues and expenses?

Select one:

a.Cash flow statement

b.Balance sheet

c.Income statement

d.Break-even analysis

Question37

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Which of the following is an example of accounting that uses the accrual basis?

Select one:

a.A company recognizes revenue when it provides a service to a client.

b.A company recognizes an expense when a bill is paid.

c.A company receives a bill but loses it and never pays it.

d.A company recognizes revenue when a client makes a payment on an invoice.

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Which of the following statements correctly describes accounting?

Select one:

a.Financial statements can be compiled using accrual or cash basis accounting.

b.Accounting can be classified as "glorified" and "out-of-standard."

c.The core of an accounting system is the manager's gut feelings.

Question39

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Why is the myth that accountants work only on taxes incorrect?

Select one:

a.Accountants ignore taxes as much as possible to avoid making biased decisions.

b.The myth is actually correct; a government mandate requires accountants to know about taxes.

c.Only chartered accountants work solely with taxes.

d.Accountants can focus on various aspects of accounting, such as management accounting, financial statements, and internal controls, and may not know much about taxes.

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Suppose you want to know how much a company owes others. Which standard financial statement would you use?

Select one:

a.Balance sheet

b.Break-even analysis

c.Cash flow statement

d.Income statement

Question41

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Which standard financial statement would you use if you want to know details of cash inflows and outflows?

Select one:

a.Cash flow statement

b.Break-even analysis

c.Balance sheet

d.Income statement

Question42

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Which statement best describes a budget?

Select one:

a.A budget is comprised of notes, not numbers.

b.A budget is an estimation of future revenues and expenses.

c.A budget is typical of financial accounting, not management accounting.

Question43

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Which statements correctly describe financial analysis? (Select all that apply.)

Select one or more:

a.Financial analysis is a tool to help managers focus on specific items not clearly visible on financial statements.

b.Financial analysis helps parties conduct bank and investment reconciliations.

c.Financial analysis can be conducted by comparing trends throughout the years.

Question44

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Which of these statements correctly describe the cash flow statement below? (Select all that apply.)Cash flow statementAs of June 30 2012Operating ActivitiesCollections from customers34,565.00Payments to suppliers(7,455.00)Payments for operating expenses(8,889.00)Payments for income taxes(1,788.00)Payments for interest(701.00)Cash provided by operating activities15,732.00Investing ActivitiesPurchase of equipment(10,000.00)Proceeds from sale of equipment2,000.00Cash used by investing activities(8,000.00)Financing ActivitiesProceeds from loan1,700.00Payments on loan(4,030.00)Payment of dividends(200.00)Cash provided by financing activities(2,530.00)Net increase in cash5,202.00Beginning cash1,409.00Ending cash6,611.00

Select one or more:

a.The company bought equipment for $10,000 with cash.

b.The company received a cash loan of $1,700.

c.The company's ending cash balance is $1,343.

d.The company received $8,000 from customers in cash.

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What are fixed assets?

Select one:

a.Items a company uses right away, such as cash

b.Assets a company disposes of immediately

c.Expensive items a company uses for longer than a year