Question 1

Which of the following will calculate the current ratio?
Current liabilities divided by current assets
Current assets divided by current liabilities
Current assets minus current liabilities
Current assets divided by total liabilities
Current liabilities minus current assets

Accepted Answer

The answer of Which of the following will calculate the...

Question 2

________ allows financial statement users to see how much net gain results from the assets that had to be given up in order to generate revenues during a given period.
Materiality
Revenue recognition
Compliance
Full disclosure
Matching

Accepted Answer

The answer of ________ allows financial statement users to see...

Question 3

Which of the following calculates the cost of goods sold during the period?
Beginning inventory plus purchases minus ending inventory
Ending inventory minus beginning inventory plus purchases
Purchases minus beginning inventory plus ending inventory
Beginning inventory plus ending inventory minus purchases
(Ending inventory plus beginning inventory) divided by two

Accepted Answer

The answer of Which of the following calculates the cost...

Question 4

The earnings cycle is complete under two conditions: ___________ and ___________.
revenue recognition; matching
the sale is complete; the customer has paid the company
at least two years have passed; the customer has paid the company
the sale is complete; the customer has promised to pay the company
the cost of goods sold has been determined; operating revenues exceed operating expenses

Accepted Answer

The answer of The earnings cycle is complete under two...

Question 5

How is the debt-to-owners'-equity ratio used?
To describe the extent to which the firm is financed through borrowed money
To determine how much net income the business earns for each dollar invested
To determine how readily the firm can meet unexpected demands for cash
To indicate the percentage of revenue which will be profit
To determine the percentage of profits paid out to debtholders

Accepted Answer

The answer of How is the debt-to-owners'-equity ratio used?
To describe...

Question 6

If Eric wants to know the cost of obtaining materials to make products that were sold during the year, he would look at the
income statement.
statement of cash flows.
operating expenses statement.
balance sheet.
none of these.

Accepted Answer

The answer of If Eric wants to know the cost...

Question 7

Which of the following calculates the debt-to-owners' equity ratio?
Long-term liabilities divided by owners' equity
Current liabilities divided by owners' equity
Long-term liabilities divided by retained earnings
Total liabilities divided by retained earnings
Total liabilities divided by owners' equity

Accepted Answer

The answer of Which of the following calculates the debt-to-owners'...

Question 8

Which of the following is designed primarily for internal use by a company's managers (e.g., the production manager)?
Income statements
Statement of retained earnings
Budget
Balance sheets
Statements of cash flow

Accepted Answer

The answer of Which of the following is designed primarily...

Question 9

Suppose a company unexpectedly receives a huge order for its main product. To cope with this, the owner borrows money to rent an additional facility to fill the orders and to pay the temporary workers who will produce the large order. The owner does this hoping that the additional costs will be more than covered by the revenue from selling the additional units of the product. Which ratio will be MOST affected by these decisions?
The short-term solvency ratio
The long-term solvency ratio
The profitability ratio
The activity ratio
The equity ratio

Accepted Answer

The answer of Suppose a company unexpectedly receives a huge...

Question 10

What is the purpose of computing the current ratio?
To provide investors with some measurement of the returns they can expect from their investment
To measure the extent to which a firm is financed through borrowed money
To measure how much cash the firm has
To measure the firm's ability to meet emergency demands for cash
To measure the firm's ability to meet its current obligations out of its current assets

Accepted Answer

The answer of What is the purpose of computing the...

Question 11

Cash flow from operations refers to
money received from borrowing or issuing stock.
cash transactions from buying and selling goods and services.
cash used in, or provided by, investing.
the cash outflow required to pay dividends.
all of these.

Accepted Answer

The answer of Cash flow from operations refers to
money received...

Question 12

Maggie's Antiques and Collectibles opened with $14 000 beginning inventory. Maggie purchased an additional $5500 in antiques and sold all but $7500. What is Maggie's cost of goods sold?
$27 000
$12 000
$19 500
$13 000
None of these

Accepted Answer

The answer of Maggie's Antiques and Collectibles opened with $14...

Question 13

To compute the current ratio, current assets are divided by
debt.
current liabilities.
long-term assets.
owners' equity.
quick assets.

Accepted Answer

The answer of To compute the current ratio, current assets...

Question 14

________ is the formal recording and reporting of revenues in financial statements.
Compliance
Materiality
Full disclosure
Matching
Revenue recognition

Accepted Answer

The answer of ________ is the formal recording and reporting...

Question 15

Executives at Belize Inc. want to see the company's short-term solvency ratios. What question do they most likely want to have answered?
Can immediate debts be paid without obtaining more loans?
Is there enough inventory to fulfill sales demands?
How much inventory does the company have on hand?
How much debt is the company carrying?
Are the company's products priced correctly to maximize revenue?

Accepted Answer

The answer of Executives at Belize Inc. want to see...

Question 16

The debt-to-owners' equity ratio measures a firm's ability to meet
dividend payments.
long-term liabilities.
interest payments.
short-term liabilities.
all liabilities.

Accepted Answer

The answer of The debt-to-owners' equity ratio measures a firm's...

Question 17

What is the difference between "profit" and "cash flow"?
Profit refers to what is left after expenses have been subtracted from revenues, while cash flow refers to cash receipts and cash payments
A firm cannot make a profit unless its cash flow is positive
A firm can maximize its profit only at the expense of cash flow
A firm can maximize its cash flow only at the expense of its profit
There is no real difference between profit and cash flow

Accepted Answer

The answer of What is the difference between "profit" and...

Question 18

Which of the following financial statements is designed primarily for internal use of the corporation managers (e.g., the production manager)?
Income statements
Statement of retained earnings
Budget
Balance sheets
Statements of cash flow

Accepted Answer

The answer of Which of the following financial statements is...

Question 19

The current ratio measures a firm's ability to meet
interest payments.
long-term liabilities.
short-term liabilities.
all liabilities.
dividend payments.

Accepted Answer

The answer of The current ratio measures a firm's ability...

Question 20

What is a budget?
The estimated number of people required to complete a manufacturing project
An estimate of costs submitted to a buyer in order to make a sale
An estimate of the cash balance for the year
A detailed estimate of receipts and expenditures for a given period of time
An estimate of research and development costs

Accepted Answer

The answer of What is a budget?
The estimated number of...

Quiz 11: Understanding Accounting

Which of the following will calculate the current ratio? Current liabilities divided by current assets Current assets divided by current liabilities Current assets minus current liabilities Current assets divided by total liabilities Current liabilities minus current assets

________ allows financial statement users to see how much net gain results from the assets that had to be given up in order to generate revenues during a given period. Materiality Revenue recognition Compliance Full disclosure Matching

If Eric wants to know the cost of obtaining materials to make products that were sold during the year, he would look at the income statement. statement of cash flows. operating expenses statement. balance sheet. none of these.

Which of the following is designed primarily for internal use by a company's managers (e.g., the production manager)? Income statements Statement of retained earnings Budget Balance sheets Statements of cash flow

Cash flow from operations refers to money received from borrowing or issuing stock. cash transactions from buying and selling goods and services. cash used in, or provided by, investing. the cash outflow required to pay dividends. all of these.

Maggie's Antiques and Collectibles opened with $14 000 beginning inventory. Maggie purchased an additional $5500 in antiques and sold all but $7500. What is Maggie's cost of goods sold? $27 000 $12 000 $19 500 $13 000 None of these

To compute the current ratio, current assets are divided by debt. current liabilities. long-term assets. owners' equity. quick assets.

________ is the formal recording and reporting of revenues in financial statements. Compliance Materiality Full disclosure Matching Revenue recognition

The debt-to-owners' equity ratio measures a firm's ability to meet dividend payments. long-term liabilities. interest payments. short-term liabilities. all liabilities.

Which of the following financial statements is designed primarily for internal use of the corporation managers (e.g., the production manager)? Income statements Statement of retained earnings Budget Balance sheets Statements of cash flow

The current ratio measures a firm's ability to meet interest payments. long-term liabilities. short-term liabilities. all liabilities. dividend payments.