100% CORRECT ANSWERS|LATEST
The director of a marathon race wants to assign the cost of having police officers along the
race route to manage crowd control. Which consideration is an appropriate cost driver? -
ANSWER The number of race participants and spectators.
What has had the most significant impact on accounting practices? -
ANSWER Information technology
Which users would have a primary concern with an organization's ability to provide
healthcare benefits? - ANSWER Employees
What does accounting focus on? - ANSWER The impact a business's activities on its
overall financial performance.
Which report summarizes cash collections and cash expenditures from operating, investing,
and financing activities over a period of time? - ANSWER Statement of cash flows
Which benefit does a corporation gain by following Generally Accepted Accounting
Principles (GAAP)? - ANSWER An increase in its comparability to other companies.
Which body regulates a certified public accounting firm's audit practices when the firm is
auditing a large publicly traded company? - ANSWER The Public Company
Accounting Oversight Board (PCAOB)
1
,What two items of information are revealed on the balance sheet? -
ANSWER Ownership and Debt
Which term is defined as the residual interest in the net assets of a company? -
ANSWER Owners' equity
A corporation has a total liabilities of $300 million, total owners' equity of $100 million, and
current assets of $50 million. What is the value of the firm's long-term assets? (Liabilities
+Assets) - ANSWER $350 Million
Which situation should result in revenue recognition on the income statement for the year
ending 12/31/14 if the firm is using accrual-basis accounting? - ANSWER In 2014, a
company provides services to a customer for which cash will be collected the next year
(2015).
Which category on the statement of cash flows summarizes cash receipts and payments to
owners and creditors of the company? - ANSWER Cash flows from financing
activities
Where would an investor find a summary of a company's significant accounting policies? -
ANSWER In the notes to financial statements
Reliable - ANSWER Information that can be verified
Relevant - ANSWER Information having to do with the matter at hand.
Material - ANSWER Information that is important enough to make a difference.
Conservatism - ANSWER Information related to recognizing losses as they occur.
2
, Which assurance does an external audit report provide for its readers? -
ANSWER The company's financial statements fairly reflect its financial position
Order the steps in the decision cycle from first to last: - ANSWER Prepare financial
statements, analyze financial statements, gather information, make decision, and implement
decision
Partial financial information for a company is as follows:
Current assets $36,543
Total assets $58,719
Current liabilities $24,824
Total liabilities $48,561
Stockholders' equity $10,158 Sales$46,997
Net Income $3,761
Market value of shares $41,316
What is the price-earnings (PE) ratio for this company?
(Hint: Market value of shares/net income) - ANSWER 11.0
What does it mean if a company has a debt ratio of 101.5%? - ANSWER The
company has 1.5% more total liabilities than total assets.
What is consistent with a continual decline in gross profit if the firm's cost of goods sold
remains the same? - ANSWER Continual decrease in sales
Which two cash flow adequacy ratios represent a cash cow? - ANSWER 6,991/5,486
and 5,220/1,875
3
The director of a marathon race wants to assign the cost of having police officers along the
race route to manage crowd control. Which consideration is an appropriate cost driver? -
ANSWER The number of race participants and spectators.
What has had the most significant impact on accounting practices? -
ANSWER Information technology
Which users would have a primary concern with an organization's ability to provide
healthcare benefits? - ANSWER Employees
What does accounting focus on? - ANSWER The impact a business's activities on its
overall financial performance.
Which report summarizes cash collections and cash expenditures from operating, investing,
and financing activities over a period of time? - ANSWER Statement of cash flows
Which benefit does a corporation gain by following Generally Accepted Accounting
Principles (GAAP)? - ANSWER An increase in its comparability to other companies.
Which body regulates a certified public accounting firm's audit practices when the firm is
auditing a large publicly traded company? - ANSWER The Public Company
Accounting Oversight Board (PCAOB)
1
,What two items of information are revealed on the balance sheet? -
ANSWER Ownership and Debt
Which term is defined as the residual interest in the net assets of a company? -
ANSWER Owners' equity
A corporation has a total liabilities of $300 million, total owners' equity of $100 million, and
current assets of $50 million. What is the value of the firm's long-term assets? (Liabilities
+Assets) - ANSWER $350 Million
Which situation should result in revenue recognition on the income statement for the year
ending 12/31/14 if the firm is using accrual-basis accounting? - ANSWER In 2014, a
company provides services to a customer for which cash will be collected the next year
(2015).
Which category on the statement of cash flows summarizes cash receipts and payments to
owners and creditors of the company? - ANSWER Cash flows from financing
activities
Where would an investor find a summary of a company's significant accounting policies? -
ANSWER In the notes to financial statements
Reliable - ANSWER Information that can be verified
Relevant - ANSWER Information having to do with the matter at hand.
Material - ANSWER Information that is important enough to make a difference.
Conservatism - ANSWER Information related to recognizing losses as they occur.
2
, Which assurance does an external audit report provide for its readers? -
ANSWER The company's financial statements fairly reflect its financial position
Order the steps in the decision cycle from first to last: - ANSWER Prepare financial
statements, analyze financial statements, gather information, make decision, and implement
decision
Partial financial information for a company is as follows:
Current assets $36,543
Total assets $58,719
Current liabilities $24,824
Total liabilities $48,561
Stockholders' equity $10,158 Sales$46,997
Net Income $3,761
Market value of shares $41,316
What is the price-earnings (PE) ratio for this company?
(Hint: Market value of shares/net income) - ANSWER 11.0
What does it mean if a company has a debt ratio of 101.5%? - ANSWER The
company has 1.5% more total liabilities than total assets.
What is consistent with a continual decline in gross profit if the firm's cost of goods sold
remains the same? - ANSWER Continual decrease in sales
Which two cash flow adequacy ratios represent a cash cow? - ANSWER 6,991/5,486
and 5,220/1,875
3
