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Exam 17: Understanding Accounting and Financial Information

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Question 161

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A statement of cash flows summarizes a company's cash receipts and cash payments over a period of time.

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Question 162

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Stockholders of the Sasha Deal Company are concerned about irregularities in the firm's accounting system.One approach to identify problems in the records of the company would be to have an) ________ performed.

A) internal audit
B) independent audit
C) unofficial audit
D) GAAP analysis

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Question 163

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Posting is a step in the accounting cycle that involves transferring information from the journal into the appropriate accounts in a ledger.

Independent audits are prepared by accountants within the organization to ensure that proper accounting procedures are followed.

________ is the monetary value that is received for goods sold,services rendered and money received from other sources.

Money received from tickets sold for the Rolling Stones concert is recorded as net income on the concert promoter's income statement.

During a period of rising prices,if a firm desires to report a low gross profit figure in hopes of reducing their income tax liability,the firm will use the __________ inventory valuation method.

Peak Performance Sporting Goods Company continues to perform well in spite of an economic recession.Company executives credit this to the strong partnerships it enjoys with category killer and large discount chains.Last week Peak Performance reported basic EPS [earnings per share] = $.80/share.If the firm has 4,000,000 shares outstanding,net income after taxes for the same period = ______.

Before starting his landscape business,Andrew took a marketing class at the local Community College.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:

"You Incorporated",Figure 17.6,in Chapter 17 shows how to calculate your personal balance sheet.You can list your assets as well as your debts,in order to calculate your _________.

Accountants not only provide financial information to the firm,they:

Bark Three Times Pet Store's accountant has recorded the following: Total current assets = $60,000,including Cash = $24,000;Accounts Receivable = $20,000;and,Inventory = $16,000.Total assets = $230,000;Total current liabilities = $48,000;and,Total current and long-term liabilities = $98,000.The store's current ratio = 1.25.The store's acid-test ratio = .92

The current ratio is a good indicator of the degree to which a firm relies on borrowed funds in its operations.

Accounting is not important for nonprofit organizations since financial data is not critical to their success.

FIFO and LIFO are two common methods used to compute the depreciation of tangible assets.

The _____ account on the Balance Sheet shows profits that the firm has reinvested in the company.

Preferred Pet Care,Inc. ,has recorded the following on its income statement for the period ending,December 31,2012: The return on sales = 34%.This return is outstanding and there is no need to compare this return to competitors in the veterinary services industry.

In the current economic climate,banks are remaining very conservative in their lending practices.Peak Performance Sporting Goods is seeking a loan for expansion.As a loan officer for the local bank,you calculate the acid-test ratio for Peak Performance Sporting Goods.Using the information below,you determine Peak Performance's acid-test ratio = _____.

Juliet has found that her small business needs a better way to maintain accounting records and analyze business opportunities.Currently,she uses a manual accounting system.These days,any off-the-shelf accounting package available at a local software retailer should do an excellent job of meeting her firm's accounting needs.

Peak Performance Sporting Goods Company has just applied for a bank loan in order to expand the business.Using the most recent Balance Sheet data provided by the company owner,you calculate that the company's current ratio is 2.5.In your presentation to the company boss,you remark: