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Exam 17: Understanding Accounting and Financial Information

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Question 191

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A bookkeeper's first task is to record the firm's transactions in a journal.

A) True
B) False

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Question 192

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

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Question 193

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According to generally accepted accounting principles (GAAP),a firm must use the inventory valuation method that most accurately reflects the actual movement of goods through its inventory.

The Balance Sheet,the Statement of Cash Flows,and the ______________ are three key financial statements prepared by accountants.

During a period of rising prices,if a firm desires to report a low gross profit figure in hopes of reducing their income tax liability,the firm will use the __________ inventory valuation method.

Backstreet Books,a small eclectic bookstore in a bustling college town wants to open another store at the west end of campus.Allison Robards,the store owner,plans to visit her banker in the hopes of obtaining additional financing.In preparation for her visit,the banker asks her for the following information: Calculate the debt to equity ratio for Backstreet Books.

The accounting book that provides all the information about a single account in one place is called the ledger.

A statement of cash flows summarizes a company's cash receipts and cash payments over a period of time.

An extremely high inventory turnover ratio may represent lost sales due to holding inadequate stocks of merchandise.

Marissa is taking her first course in accounting this semester.One of the first things she learns is that "revenue" and "net income" mean the same thing.

Green Living Construction Company installs solar panels in large newly constructed buildings.The company employs several expert installers who work on a full-time basis.Although the installers work everyday,the company pays them at the end of the month,for the previous month's work.Employee salaries are recorded as ___________ on Green Living's Balance Sheet.

Cash revenues from the sale of new cars at Pete's Auto Emporium would be listed as a cash inflow from operations on Pete's statement of cash flows.

Courtney McRae started the Row-Your-Boat paddle boat and row boat business at a nearby lake resort.She wanted to combine her accounting degree with her love of the outdoors and fishing.One of her first business purchases was a computerized accounting system.She learned in her college classes that a good software system will eliminate accounting cycle steps and the time it takes for her to interpret the results.As she put it,"It should make the decisions for me!"

During a period of rising prices,using FIFO (first in,first out) inventory valuation method will result in ________ net income figures than would LIFO (last in,first out) .

Costas Calendar Company's Statement of Cash Flows showed the following activities for the year ended December 31,2010: The year end cash balance for this firm is:

The best way for a firm to avoid serious cash flow problems is to sustain a rapid growth in sales.

Peak Performance Sporting Goods Company competes with several other firms in the retail industry for important visibility and retail space in large stores.The company's chief financial officer knows that in order to attract investors,the company must demonstrate growth,and its management must outperform the competition.The CFO continuously watches __________________ because these are key to measuring growth.

The statement of cash flows shows a firm's revenues,costs of goods sold,expenses,and net income.

Depreciation is a systematic write-off of the cost of a tangible asset that is listed on __________.

Benjamin works in the accounting department for a textbook publishing firm preparing budgets and reporting production costs.He is a: