Question 1

Assets = liabilities + owners' equity is the equation for information reported on the
A)checking balance.
B)balance sheet.
C)income statement.
D)earnings statement.
E)statement of owners' equity.

Accepted Answer

The equation Assets = Liabilities + Owners' Equity is the fundamental equation used for reporting financial information on a balance sheet. The balance sheet provides a snapshot of a company's financial position at a given point in time, by listing its assets, liabilities, and owners' equity. Therefore, the correct answer is B.

Question 2

Christine has just earned her undergraduate degree in accounting and has successfully completed the CPA exam. She recently interviewed with a relatively small and new company and was offered a job. The offer sounded very promising; the job had opportunities to grow with the company and provided diverse challenges. Christine accepted the job.
Once Christine started working, she realized that the owners and employees did not have a general understanding of accounting. She had to teach them the steps in an accounting cycle so they would be able to understand how she was going to create reports. When she talked about the statement of financial position, they had no idea what she was talking about. She was the qualified individual responsible for accounting. No one else working with her had much knowledg
-Refer to Christine's First Job. When Christine explained the asset side of the statement, she included which of the following?
A)Retained earnings
B)Notes payable
C)Merchandise inventory
D)Long-term liabilities
E)Stockholders' equity

Accepted Answer

Merchandise inventory is an asset, while retained earnings, notes payable, long-term liabilities, and stockholders' equity are components of the liabilities and equity side of the statement of financial position.

Question 3

The Cheese Shoppe's liabilities total $59,000 and its owners' equity is $124,000. Which of the following is true?
A)The total assets equal $65,000.
B)The firm's assets are $124,000.
C)The current liabilities are less than the current assets.
D)The total assets equal $183,000.
E)The firm's sales are $183,000.

Accepted Answer

According to the accounting equation, Assets = Liabilities + Owner's Equity. Therefore, the total assets of The Cheese Shoppe can be calculated as follows: Assets = Liabilities + Owner's Equity = $59,000 + $124,000 = $183,000. Hence, D is the correct choice.

Question 4

The value of a firm's stock plus any retained earnings that have accumulated to date is referred to as
A)current assets.
B)long-term liabilities.
C)fixed assets.
D)owners' equity.
E)revenue.

Accepted Answer

The value of a firm's stock plus any retained earnings that have accumulated to date is referred to as owners' equity. It represents the residual interest in the assets of the company after deducting liabilities.

Question 5

Numerical or verbal descriptions that usually result from measurements of some sort are known as
A)information.
B)statistics.
C)software.
D)assets.
E)data.

Accepted Answer

Numerical or verbal descriptions that result from measurements are referred to as data. Information refers to organized and analyzed data, statistics is a branch of mathematics used to analyze and interpret data, software is a program used to perform specific tasks on a computer, and assets are tangible or intangible possessions owned by an individual or organization.

Question 6

As the accountant for Ideal Manufacturing Company, you determine the following totals in your balance sheet: total assets-$124,000; current liabilities-$41,000; long-term liabilities-$13,000. What is the total owners' equity for this company?
A)$178,000
B)$165,000
C)$137,000
D)$70,000
E)$0

Accepted Answer

The answer of As the accountant for Ideal Manufacturing Company,...

Question 7

The cash that Coca-Cola receives from providing customers with Coke and other soft drinks and juices would appear in the ____ section of the statement of cash flows.
A)financing
B)business
C)receiving
D)operating
E)investing

Accepted Answer

Cash received from providing customers with Coke and other soft drinks and juices is part of the company's core business operations, therefore it would appear in the operating section of the statement of cash flows.

Question 8

The specific types of information that managers need depend on their area of management and on their
A)level within the firm.
B)understanding of data.
C)background in computer science.
D)use of the information.
E)accounting background.

Accepted Answer

The specific types of information needed by managers are influenced by their level within the firm. For instance, top-level managers require information that focuses on strategic issues like sales, financial performance, and market trends, whereas middle-level managers need information related to operational issues. On the other hand, lower-level managers require data on the daily activities of their department.

Question 9

Which section of the statement of cash flows would show Wendy's payments for food ingredients and wages paid to employees?
A)Cash flows from operating activities
B)Cash flows from financing activities
C)Business cash flows
D)Non-business-related cash flows
E)Cash flows from investing activities

Accepted Answer

Payments for food ingredients and wages paid to employees are both expenses related to operating activities, so they would be included in the cash flows from operating activities section of the statement of cash flows.

Question 10

Walmart takes its net sales and subtracts the cost of goods sold during the previous period. The result is Walmart's
A)gross sales.
B)net income.
C)gross profit.
D)net margin.
E)net purchases.

Accepted Answer

Walmart's net sales minus the cost of goods sold is their gross profit.

Question 11

Debts that are to be repaid in two years are referred to as
A)expenses.
B)current assets.
C)long-term liabilities.
D)fixed assets.
E)current liabilities.

Accepted Answer

The answer of Debts that are to be repaid in...

Question 12

The Dress Barn offered its customers a reduction in price on some clothing items that were slightly faded from being in the window at the front of the store. This reduction is called a
A)cost of goods sold.
B)sales allowance.
C)sales return.
D)sales discount.
E)sales bargain.

Accepted Answer

A sales allowance is a reduction in price offered to customers due to some defect or imperfection in the product. In this case, the slight fading would be considered an imperfection, and the reduction in price offered to customers would be a sales allowance. The other options do not fit the scenario described. Cost of goods sold is the cost of producing or purchasing the goods sold, sales return is when a customer returns a product to the store, and sales discount is a reduction in price offered to incentivize prompt payment. Sales bargain is not a commonly used accounting term.

Question 13

​John's business has more expenses than it has revenues this year; therefore, his business has a
A)​net loss.
B)​net increase.
C)​net income.
D)​net cash flow.

Accepted Answer

When a business has more expenses than revenues, it means that the business is operating at a loss. The net loss is the amount by which expenses exceed revenues.

Question 14

The debts of a business that will be paid in one year or less are called its
A)current liabilities.
B)expenses.
C)prepaid expenses.
D)current assets.
E)long-term liabilities.

Accepted Answer

Current liabilities are debts that are expected to be paid off within a year, such as accounts payable, short-term loans, and accrued expenses. The other options are not applicable to debts that will be paid off in a year or less.

Question 15

As the accountant for Marston Retail Stores, you must calculate the current ratio for the firm's last accounting period. The firm's current assets were $120,000, its fixed assets were $240,000, its current liabilities were $80,000, and its long-term liabilities were $60,000. Given these facts, what is the firm's current ratio?
A)1
B)1.5
C)2
D)3
E)4

Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. Therefore, the current ratio for Marston Retail Stores is $120,000 / $80,000 = 1.5.

Question 16

For the previous year, Sambino's Italian Restaurant had a total of $320,000 in expenses and $295,000 in revenues. Sambino's
A)had a net income of $325,000 for the year.
B)had a net loss of $25,000 for the year.
C)lost $25,000 in revenues.
D)acquired an additional $295,000 in assets.
E)increased its stockholders' equity by $25,000.

Accepted Answer

To calculate the net income, we subtract the total expenses from the total revenues. Therefore, Sambino's net income for the year is $295,000 - $320,000 = -$25,000. This means that the restaurant had a net loss of $25,000 for the year.

Question 17

The mortgage on Prudential Insurance's local facility will be paid off over the next 30 years. The majority of this mortgage would be classified on Prudential's balance sheet as a(n)
A)current asset.
B)current liability.
C)long-term asset.
D)long-term liability.
E)account payable.Christine's First Job

Accepted Answer

The mortgage is a long-term liability as it will be paid off over the next 30 years. It is not a current liability as it is not due within the next year, and it is not a long-term asset as it does not generate income for the company. It is also not a current asset or account payable as it is not an asset that can be quickly converted to cash or a liability that is due soon.

Question 18

The information provided by managerial accounting is of most benefit to a firm's
A)investors.
B)creditors.
C)managers.
D)lenders.
E)bankers.

Accepted Answer

Managerial accounting provides information to the managers of a company, helping them make decisions related to planning, controlling, and evaluating operations. It is not primarily intended for use by external parties such as investors, creditors, lenders, or bankers, although some of the information may be shared with these stakeholders.

Question 19

For John Deere, a tractor and farm equipment manufacturer, spark plugs to be installed in its equipment would be classified on the balance sheet as
A)prepaid expenses.
B)supplies.
C)equipment.
D)depreciation.
E)inventory.

Accepted Answer

Spark plugs are considered inventory for John Deere because they are products that the company intends to sell or use in the production of goods to be sold to generate revenue.

Question 20

A firm has $260,000 in assets and $158,000 in stockholders' equity. It owes $55,000 from a long-term loan, and this is its only long-term liability. This firm has ____ in total current liabilities.
A)$55,000
B)$103,000
C)$47,000
D)$102,000
E)$213,000

Accepted Answer

Total liabilities can be calculated by subtracting stockholders' equity from total assets:

Total liabilities = Total assets – Stockholders' equity
Total liabilities = $260,000 - $158,000
Total liabilities = $102,000

Since the only given long-term liability is $55,000, the remaining liabilities must be current liabilities:

Current liabilities = Total liabilities - Long-term liability
Current liabilities = $102,000 - $55,000
Current liabilities = $47,000

Therefore, the answer is C) $47,000.

Quiz 15: Using Management Information Systems and Accounting Information

Assets = liabilities + owners' equity is the equation for information reported on the

The Cheese Shoppe's liabilities total $59,000 and its owners' equity is $124,000. Which of the following is true?

The value of a firm's stock plus any retained earnings that have accumulated to date is referred to as

Numerical or verbal descriptions that usually result from measurements of some sort are known as

As the accountant for Ideal Manufacturing Company, you determine the following totals in your balance sheet: total assets-$124,000; current liabilities-$41,000; long-term liabilities-$13,000. What is the total owners' equity for this company?

The cash that Coca-Cola receives from providing customers with Coke and other soft drinks and juices would appear in the ____ section of the statement of cash flows.

The specific types of information that managers need depend on their area of management and on their

Which section of the statement of cash flows would show Wendy's payments for food ingredients and wages paid to employees?

Walmart takes its net sales and subtracts the cost of goods sold during the previous period. The result is Walmart's

Debts that are to be repaid in two years are referred to as

The Dress Barn offered its customers a reduction in price on some clothing items that were slightly faded from being in the window at the front of the store. This reduction is called a

​John's business has more expenses than it has revenues this year; therefore, his business has a

The debts of a business that will be paid in one year or less are called its

For the previous year, Sambino's Italian Restaurant had a total of $320,000 in expenses and $295,000 in revenues. Sambino's

The mortgage on Prudential Insurance's local facility will be paid off over the next 30 years. The majority of this mortgage would be classified on Prudential's balance sheet as a(n)

The information provided by managerial accounting is of most benefit to a firm's

For John Deere, a tractor and farm equipment manufacturer, spark plugs to be installed in its equipment would be classified on the balance sheet as

A firm has $260,000 in assets and $158,000 in stockholders' equity. It owes $55,000 from a long-term loan, and this is its only long-term liability. This firm has ____ in total current liabilities.

John's business has more expenses than it has revenues this year; therefore, his business has a