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Exam 17: Understanding Accounting and Financial Information

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Question 141

Multiple Choice

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Today's computerized accounting programs are

A) very helpful for small-business owners who lack strong accounting support within their companies.
B) too expensive and complicated for most small businesses.
C) a poor investment for small start-up companies due to the fact that these programs are seldom needed unless the firm is considered a mid-sized to large company.
D) so sophisticated that they can make most financial decisions without the aid of an accountant.

E) All of the above
F) C) and D)

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Question 142

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The most liquid asset is

A) sales.
B) cash.
C) accounts payable.
D) owners' equity.

E) None of the above
F) A) and D)

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Question 143

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A ________ provides a summary of cash coming into and money going out of a firm from operations activities, financing activities, and investing activities.

A bookkeeper's first task is to record the firm's transactions in a journal.

The income statement reports the difference between a firm's assets and its liabilities as of a certain date.

Careful consideration of the use of computers in accounting indicates that computers

The best way for a firm to avoid serious cash flow problems is to sustain a rapid growth in sales.

The Internal Revenue Service is responsible for establishing accounting standards used by accountants working in government accounting.

Mayree is the owner of Spines Books, a small eclectic-style bookstore in a bustling college town. Mayree prides herself in selecting hard-to-find books and magazines that her clientele enjoy. Recently, Mayree is experiencing a cash flow shortage, and she is concerned that she may be purchasing too many copies of each title. Having recently completed a business class, you suggest to Mayree that she calculate the ________ ratio for her store, and then compare it to other stores in her industry.

The financial ratios that measure a firm's ability to pay its short-term debts are called

As the burden of taxes grows, the role of the auditor becomes increasingly important to the organization.

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

Accounting involves both the recording and the interpreting of financial events.

A company's income statement is important to accountants and other stakeholders. It reveals a

It is impossible to run a company effectively without the ability to read and understand basic accounting reports and financial statements.

Leverage ratios indicate the extent to which ________ has been used to fund a business's operations.

Talk Time Communications is considering the purchase of a new satellite. The firm believes the satellite will help generate future earnings. In addition, the firm recognizes the tax benefits of a lower net income provided by the annual ________ of the asset.

In order to understand if the results of ratio calculations indicate a financially strong company, the results

The accounting book that provides all the information about a single account in one place is called the ledger.

Blake took a marketing class at the local community college before starting his landscape business. He decided that his time would be better utilized in this class because if he could learn to sell his services well, the revenues and profits would follow. Your assessment of his plan might include which of the following?