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Exam 12: The Role of Accounting in Business

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Question 21

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Examining both its debt-to-equity and interest coverage,its _____ ratios may show that a company is heading for financial trouble.

A) profit margin
B) financial condition
C) management efficiency
D) industrial strength

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Question 22

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The _____ sets down the Code of Professional Ethics for accountants.

A) International Accounting Standards Board (IASB)
B) American Institute of Certified Public Accountants (AICPA)
C) Public Company Accounting Oversight Board (PCAOB)
D) Financial Accounting Standards Board (FASB)

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Question 23

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_____ is the selling price per unit minus the variable cost per unit.

Rather than record sales and purchases made on credit,your statement of _____ tells you where your cash came from and where it went.

The _____ ratio may suggest that inventory is moving quickly even though the rate of turnover is slowing.

_____ is another word for revenues.

Interest coverage equals interest expense divided by operating income.

Cash flows from _____ activities are derived from the day-to-day operations of your main line of business.

All of the following appear in the financial statements prepared by accountants except _____.

A _____ is a company that makes a profit by selling goods.

The current ratio shows the relationship between a company's current assets and its current liability.

_____ analysis expresses each item on the income statement as a percentage of a specified base (usually sales) .

In the summer of 2001,executives at Enron manipulated accounting reports to make the energy company look better off financially than it really was.

Your _____ shows organizational sales,expenses,and profit.

Bakersfield, Smith, and Babble LLC is a midsized accounting firm in New England. In order to project an image as a full service company, each partner specializes in a different field of accounting. Bakersfield provides information and analysis to business owners in order to help them operate their companies. Smith’s job is to furnish information to individuals and groups both inside and outside organizations to help them assess their firms’ financial performances. Babble is primarily responsible for preparing financial statements for business owners, managers, and investors and other users, such as creditors and government agencies. -Babble spends his time in financial accounting.

Its debt-to-equity ratio shows a company's ability to pay interest on its debts from its operating income.

Accounting is a _____ profession.

Which of the following groups is typically not interested in financial accounting information?

If a company arranges to pay later rather than in cash for materials and other expenses,its accountant must set up accounts _____.

A vertical income statement shows income for more than one year.