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Exam 17: Understanding Accounting and Financial Information

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Question 61

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There are two major financial statements prepared at the completion of the accounting cycle: the journal and the ledger.

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Question 62

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What is the difference between a profit (net income after taxes) on an income statement and the cash balance reflected at the bottom of the statement of cash flows?

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The income statement will show:
· net re...

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Question 63

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As a first step in the accounting cycle, ________ involves the recording of business transactions.

The top managers of Pages and Pages Bookstores want to indicate to the firm's shareholders how effectively they have managed the company. Perhaps the most meaningful way to do this would be by reporting strong

An analysis of the statement of cash flows can help a firm prevent cash shortages.

A series of high-profile scandals in the early 2000s put the accounting profession under intense scrutiny.

One advantage of the double-entry method of bookkeeping is that it helps to identify mistakes made in recording financial transactions.

A firm's ________ reports the profit or loss for the firm over a specified time period.

Accounting provides information about the financial condition and operating performance of a firm.

The equipment a firm owns and the money it has in its bank account are considered assets.

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

When companies owe money to creditors, suppliers, and others, these outstanding amounts are recorded on the balance sheet as ________.

Brody has just finished working on the balance sheet, income statement, and statement of cash flows for his company. The next step in the accounting cycle involves

Because each business is unique, the accounting profession recognizes that the accounting principles followed by one company may need to be completely different from the accounting principles followed by another firm.

A bookkeeper's first task is to

Bob Stewart plans to visit his financial planner today to discuss investment strategy. As a young accountant, he knows he can afford to invest in a few riskier investments. Which of the following ratios will be an important measure of profitability for Bob?

Computerized accounting programs have eliminated the need to prepare a trial balance.

Kayla and Kingston run a shuttle service from Water Tower Place to Chicago O'Hare airport. Last month, they recorded the following: Kayla and Kingston's gross profit for the past month was

Terry is opening a small sports store in his town. At the advice of a friend who is a bookkeeper, he keeps the receipts of everything he purchases for the business in the bottom drawer of his desk, along with all other business expenses, such as his retail license, his rent expense, and insurance expense. You suggest that ________.

Company resources that are purchased with the intention that they will convert to cash within one year are