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Exam 17: Understanding Accounting and Financial Information

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Question 131

Multiple Choice

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We would expect the inventory turnover ratio for a ski shop to be _______ than the turnover for a convenience store.

A) higher
B) more meaningful
C) lower
D) less helpful

E) All of the above
F) A) and B)

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Question 132

True/False

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Recent accounting scandals raised serious questions about the legitimacy of an accounting firm performing both auditing and consulting work for the same company.

A) True
B) False

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Question 133

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A firm's annual report is a yearly statement of the financial condition,progress,and expectations of the organization during one year.

Profitability ratios are often used to measure management's earnings performance.

The accounting profession follows generally accepted accounting principles as defined by __________________.

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

The inventory turnover ratio measures the speed of inventory moving through the firm and its conversion into sales.

Earnings per share,return on sales,and return on equity are examples of:

The U.S.government is a user of a firm's accounting information.

In the Connecting with Small Business box titled,"LIFO or FIFO?" the passage explained that accounting for profits may differ,depending upon ___________________.

At the time the Jepson Plumbing Supply prepared its financial statements,it had several customers who bought goods over the past three months on its "90 days same as cash" credit plan.These customers had not yet paid their bills,but they have good credit ratings and Jepson is confident that they will make their payments on time.The amount these credit customers owe would show up as part of the:

The Internal Revenue Service is responsible for establishing accounting standards used by accountants working in government accounting.

Jasmine is categorizing journal entries in order to post to the _______.

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.

A comparison of bookkeeping and accounting indicates that:

The sole purpose of accounting is to help managers evaluate the financial condition of the firm so that they may make better pricing decisions.

Debts that are due in one year or less are classified on the Balance Sheet as:

A hospital emergency room serves several patients from a ten car pile-up on the local interstate.Most of the victims require bandages,antibiotics,foot and arm casts,topical ointments,and pain pills.These items are part of the costs of good sold for the hospital emergency room.

As U.S.firms focus on cost cutting in order to stay competitive with producers in low-wage countries,they will rely on __________ to create strategies to help reduce costs.

During a period of rising prices,the FIFO technique of inventory valuation will result in a lower net income figure than would the LIFO technique.