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Exam 17: Understanding Accounting and Financial Information

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Question 141

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In businesses that handle a lot of perishable items such as supermarkets)the actual movement of goods through inventory most closely resembles the LIFO inventory valuation technique.

A) True
B) False

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Question 142

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In an effort to maintain a competitive advantage,firms do not share accounting information with people outside of the firm.

A) True
B) False

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Question 143

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Cash flow statements identify three sources of cash receipts and disbursements: Assets,liabilities and owners' equity.

The Balance Sheet,the Statement of Cash Flows,and the ______________ are three key financial statements prepared by accountants.

Meg Malloy is running an income statement on her QuickBooks™ computer accounting program.Which of the following accounts will be used to calculate gross profit?

The current ratio is found by dividing the firm's total assets by its total liabilities.

Brianna is a bookkeeper for Monograms,Limited.She takes the firm's transactions and records them in a record book or computer program referred to as:

The value of resources the firm owns,minus the amount of money the firm owes to others = ____________.

In addition to the tasks of recording and classifying accounting information,the best accounting software programs currently available for small businesses have the ability to make financial decisions,thus eliminating the need for owners of small businesses to consult with accountants or understand accounting terminology.

The Barkley Company is a fast growing start-up.The accountant calculated earnings per share = $.13.This information will provide him/her with insight into the firm's ability to pay dividends.

Government organizations such as the IRS and other government regulatory agencies are interested in a firm's accounting information in order to help the firm strategize about ways to cut costs in order to minimize net income before taxes.

The purpose of liquidity ratios is to indicate the degree to which a firm relies on borrowed funds in its operations.

The cost of goods sold includes all the costs of buying and keeping merchandise available for sale.

A firm's ________ reports the profit or loss for the firm over a specified time period.

Marissa is taking her first course in accounting this semester.One of the first things she learns is that "revenue" and "net income" mean the same thing.

A firm's efficient use of its assets in running the business is key to maintaining sufficient cash flow.Ratios that accountants utilize to measure the efficient use of assets are called ____________ ratios.

As a first step in the accounting cycle,_________ involves the recording of business transactions.

Prattville Manufacturing has applied for a short-term loan with the First National Bank.The loan officers of the bank are likely to look carefully at Prattville's liquidity ratios before they decide to grant the loan.

A tax accountant is responsible for preparing tax returns and developing tax strategies.

Accountant Alan Wingspan has just finished working on the balance sheet,income statement,and statement of cash flows for his company.The next step in the accounting cycle involves: