ch 14

13 November 2022
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43 test answers

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question
33) Which of the following terms refers to the comprehensive system for collecting, analyzing, and communicating financial information?
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accounting
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34) Which of the following terms refers to the recording of financial transactions?
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bookkeeping
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35) Which of the following terms refers to the examination of a company's accounting system to determine whether its financial reports fairly represent its operations?
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audit
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36) Which of the following terms refers to any economic resource that is expected to benefit a firm or individual who owns it?
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asset
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37) Which of the following terms refers to the amount of money that owners would receive if they sold all of a company's assets and paid all of its liabilities?
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owners' equity
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38) Which of the following refers to the financial statement detailing a firm's assets, liabilities, and owners' equity?
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balance sheet
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39) Which of the following describes assets such as land, building, and equipment?
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fixed assets
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40) Which of the following best describes depreciation?
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the process of reducing the value of fixed assets equally over time
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41) Which of the following describes assets such as patents and trademarks?
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intangible assets
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42) Which of the following terms refers to the amount paid for an existing business beyond the value of its other assets?
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goodwill
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43) Which of the following terms refers to the difference between operating income and income taxes?
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net income
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44) Which of the following ratios measures a firm's ability to meet its current debt obligations?
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short-term solvency ratio
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45) Which of the following ratios measures a firm's potential earnings?
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profitability ratio
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47) Which of the following ratios evaluates management's use of resources?
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activity ratio
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48) Which are the two major fields of accounting?
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financial and managerial
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50) Which of the following statements is true?
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As common practice, a union representative for the workers at a firm receives information from the firm's financial accounting system.
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51) Which of the following statements is true?
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As common practice, a sales representative for a firm receives information from the firm's managerial accounting system.
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52) Due to investor disgruntlement, Howard Industries needs to provide a complete review of its financial records in order to confirm that they have been conforming with generally accepted accounting principles. Which of the following processes does Howard Industries need to start?
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company-wide audit
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53) Which of the following refers to the rules and procedures governing the content and form of financial reports?
answer
generally accepted accounting principles
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54) Jose is a recent college graduate who has been hired for an entry-level professional position in the accounting department of a large corporation. Which of the following terms best describes Jose's capacity as an accountant?
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private accountant
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55) Which of the following describes a liability?
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a debt owed by a firm to an outside organization or individual
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56) Which of the following statements best describes the difference between current and long-term liabilities?
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Current liabilities are debts that are settled sooner than long-term debts.
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60) What distinguishes the two most commonly used categories of owners' equity?
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the source of the equity—investments versus earnings
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61) What are the major categories within an income statement?
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revenues, cost of revenues, operating expenses, and net income
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62) Which of the following is the difference between revenues and the cost of revenues?
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gross profit
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63) Which of the following best illustrates cash flow from operations?
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the revenue from selling bread at a local bakery
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64) Which of the following documents would most likely come from a planning strategy meeting?
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budget
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67) Which of the following terms refers to the formal recording and reporting of revenues in financial statements?
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revenue recognition
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68) Which of the following are the three categories on a company's cash flow statement?
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operating activities, investing activities, financing activities
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69) Financial statements that do not include interpretation and explanation by management are in violation of which GAAP principle?
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principle of full disclosure
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70) A large company specializing in bread baking has made its annual balance sheet available to its investors. Profits were slightly lower than expected this year. Which of the following items does NOT need to be included in this statement in order to fulfill the principle of full disclosure?
answer
The company is contemplating a merger with another major baking company.
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73) A local bakery is suddenly inundated with many more orders for wedding cakes than it has the physical capacity to make. Rather than turn away customers, the owner decides to rent another kitchen across town to fulfill all of the orders. But she needs to borrow money to pay for the rent and additional workers, the additional cost of which will be paid by the profits from the additional cakes. Which of the following ratios will be most affected by this decision?
answer
the bakery's short-term solvency ratio
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74) Which of the following bodies formulates the generally accepted accounting principles ?
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Financial Accounting Standards Board
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75) Which of the following bodies enforces accounting and auditing rules and procedures?
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Securities and Exchange Commission
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76) Which of the following statements is true?
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Forensic accounting is often used to investigate the misuse of government funds.
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77) Which of the following BEST describes a certified fraud examiner?
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a specialized forensic accountant concerned with issues of fraud
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78) Which of the following areas of the Certified Fraud Examiner (CFE) exam includes theories of fraud prevention?
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criminology and ethics
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79) Which of the following inequalities is always true?
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assets < owners' equity - liabilities
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80) Bennequin Manufacturing was a highly profitable firm five years ago but has since been severely declining in net revenue, even though the amount of business has held steady. Marlena has been hired as the new Chief Executive Officer to help turn things around for the company. She would like to understand what happened financially to the company in the past five years in order to start coming up with possible solutions. Which of the following documents would be most useful for her?
answer
balance sheets from the past five years
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81) Which of the following scenarios would most likely occur with a company that has reported disappointing earnings recently but still looks to be financially stable for quite some time?
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high long-term solvency ratio but low profitability ratio
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83) Which organization provides guidelines for ethical conduct for the accounting profession?
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AICPA
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84) Which of the following statements BEST describes the need for global accounting standards?
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The complexity of the global market increases the risk of unethical accounting behavior by allowing accountants to choose which national GAAP standards are best for their clients.
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85) Which of the following is NOT an unethical or illegal accounting action?
answer
maximizing the value of a company's intangible assets