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Exam 15: Using Management and Accounting Information

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Question 61

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Maddie is the CEO of Stevenson,Ross,and Warner (SRW) ,a regional accounting firm.SRW offers services in most areas of accounting,including auditing and consulting services.The firm must follow the GAAP rules,just like any other accounting firm.If there are information gaps that are not addressed and resolved by the firm,SRW could be considered a violator of the Sarbanes-Oxley Act.Maddie understands what must be done and wants every employee of the firm to understand that they have to follow all the rules and regulations.Like any other industry,accounting is a competitive industry and employees of accounting firms must be productive,progressive,and well trained. -Refer to Stevenson,Ross,and Warner.One of SRW's clients is ABC Electronics.SRW develops ABC Electronics' statements and reports for ABC's stockholders,financial analysts,and bankers.These services can be classified as which of the following?

A) Non-accounting services
B) Tax accounting
C) Financial accounting
D) Managerial accounting
E) Cost accounting

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Question 62

Multiple Choice

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During the year Comer,Inc.,had $200,000 in goods available for sale.At the end of the accounting period it had an ending inventory of $40,000.The cost of goods sold by Comer was therefore

A) $200,000.
B) $160,000.
C) $40,000.
D) $20,000.
E) $10,000.

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Question 63

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Resources that a firm owns are classified as assets.

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

Owners' equity is the dollar value that remains after the total liabilities of a business are subtracted from its total assets.

The financial statement that provides information about a firm's operating,investing,and financing activities during an accounting period is the

Ultra Big Corporation,Inc.is preparing its annual report for shareholders.The statement of cash flows,which is included in the report,shows that the company sold one million shares of stock but repurchased half a million of those shares.It also shows that the company issued a ten-cent per share dividend.Where would this information be found on the statement of cash flows?

While chief executives and financial officers are currently not subject to criminal penalties,they are required to certify periodic financial reports.

Sam invests $5,000 of his own money in his new auto detailing business.He then obtains a loan and builds a small workshop in his backyard for $10,000.At this point assets are ____,liabilities are ____,and owners' equity is ____.

What are the differences between managerial accounting and financial accounting? From a career standpoint,which type do you prefer and why?

Data are always in numerical form.

The total dollar amount of all goods and services sold during the accounting period is called net sales.

Alexa's First Job ​Alexa 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.Alexa accepted the job. Once Alexa 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 knowledge.They did not even know the different financial ratios that someone could use to understand the financial standing of a company.Alexa knows it will be a challenge to keep everyone on the same page when it comes to numbers and reports. -Refer to Alexa's First Job.If the owners did not recognize the term "statement of financial position," Alexa could use which of the following more common terms?

According to the Sarbanes-Oxley Act,the FTC is required to establish a full-time,five-member federal oversight board that will police the accounting industry.

All of the following are current assets except

During a recent board meeting of GHJ,Inc.,the directors had a heated argument about adopting a decision support system to assist with filtering out irrelevant information from relevant information.Jack argued that the system would be too expensive and their current income level could not justify the expense.Jorge argued that the system would free up time wasted on sorting spam,junk mail,and irrelevant mail such as bank notices from statements and therefore improve profits.Carol argued that the current email system already did these things and if bank notices were not wanted,that could be addressed at the bank's site and did not require investing in additional software.Henry said the system could do these things and more: it could be used to run "what if" scenarios.He said it could compile relevant data on competitors pricing or the costs of proposed projects and use data collected on targeted subjects to vary the "what if" scenarios with other variables.Which of the following was not a benefit of using the decision support system discussed by the board of directors?

The debts of a business are called its liabilities.

Winshare Art Company has issued only common stock.Currently it has 10,000 shares outstanding.The value of the stock is shown as $20 per share.In addition,$100,000 of Winshare's earnings have been reinvested in the business since it was founded.What is Winshare's total owners' equity?

Extreme Sports,a bicycle,ATV,and motorbike retailer,buys its inventory on credit.Before Extreme pays for this merchandise in 60 days,the money owed is classified on its balance sheet as a(n)

According to the accountant for Michael's Floral Supply,the firm's assets are $124,000 and its liabilities are $31,000.Which of the following statements is correct?