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Exam 17: Understanding Accounting and Financial Information

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Question 131

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There are five key working areas in accounting: financial accounting,managerial accounting,auditing,tax accounting,and government and not-for-profit accounting.

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Question 132

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A firm's balance sheet reports its financial condition on a specific date.

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Question 133

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Peak Performance Sporting Goods Company competes with several other firms in the retail industry for important visibility and retail space in large stores.The company's chief financial officer knows that in order to attract investors,the company must demonstrate growth,and its management must outperform the competition.The CFO continuously watches __________________ because these are key to measuring growth.

Green Living Construction Company installs solar panels in large newly constructed buildings.The company employs several expert installers who work on a full-time basis.Although the installers work everyday,the company pays them at the end of the month,for the previous month's work.Employee salaries are recorded as ___________ on Green Living's Balance Sheet.

GAAP refers to a set of standards concerning accounting principles that were established by the Financial Accounting Standards Board.

The balance sheet is composed of the following types of accounts:

The U.S.government is a user of a firm's accounting information.

The acid-test ratio is found by dividing inventory by cost of goods sold.

Information contained in a firm's annual report largely represents work done by managerial accountants.

Patents and copyrights are examples of intangible assets.

The Barkley Company wants to know the value of its owners' equity.It will total its assets and subtract its liabilities.

During a period of rising prices,the FIFO technique of inventory valuation will result in a lower net income figure than would the LIFO technique.

A person's pulse rate and blood pressure are indicators of a person's health.Similarly,_________ can help assess the health of a business.

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

For firms that sometimes have difficulty selling their inventory,the current ratio is likely to be a better measure of liquidity than the acid-test ratio.

The accounting book or computer program where each day's transactions are first recorded is called a:

An individual who provides accounting services to individuals and businesses on a fee basis is referred to as a private accountant.

Assets are reported on the firm's balance sheet.

__________ involves the review and evaluation of the records that are used to prepare the organization's financial statements.

In the Making Ethical Decisions box titled,"Barking-Up the Wrong Financial Statement," the situation provides the student with an ethical dilemma that might present itself to an accounting professional.The story focuses on: Is it ethical to __________________________