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Exam 17: Understanding Accounting and Financial Information

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Question 151

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Brand names such as Coca-Cola and McDonald's are examples of intangible assets.

A) True
B) False

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Question 152

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Prattville Manufacturing has applied for a short-term loan with the First National Bank.The loan officers of the bank are likely to look carefully at Prattville's liquidity ratios before they decide to grant the loan.

A) True
B) False

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Question 153

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Rents,salaries,utilities and insurance are examples of operating expenses.

Jamal is an accountant employed full-time by The Barkley Company.Jamal is an example of a public accountant.

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

Banks are likely to request a firm's balance sheet when determining whether or not to loan money to the firm.However,banks would have little interest in the firm's income statement since it covers a short period of time.

Before starting his landscape business,Andrew took a marketing class at the local Community College.He decided that his time would be better utilized in this class because if he could learn to sell his services well,the revenues and profits would follow.Your assessment of his plan might include which of the following:

Financial accounting and managerial accounting are similar in that they both provide information intended primarily for people inside the organization.

A loan officer at Southwest Bank is considering a loan application from Preferred Pet Care,Inc.He is concerned about the company's ability to make payments on the loan.The loan officer is likely to be interested in Preferred Pet Care's statement of cash flows.

The most liquid asset is:

A balance sheet lists assets in order of their ______________.

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

McCartney Consulting Group is a management-consulting firm that provides its expertise to businesses that employ its services.Since it does not hold an inventory of goods or produce any goods itself:

If the goal of a business is to pay lower taxes on its income during an inflationary period,it is likely to use the FIFO inventory costing method.

The value of resources the firm owns,minus the amount of money the firm owes to others = ___________.

The Barkley Company will refer to its income statements to determine whether it was profitable,or,whether it lost money over the past year.

Taylor Casual,a chain of retail clothing stores,wants to assure investors and other outsiders that its financial statements are accurate.One way to do so would be to hire a public accounting firm to:

During periods of rising prices,firms that want to report more attractive profits would tend to favor the FIFO technique of inventory valuation.

Explain the difference between current,fixed,and intangible assets.Give two examples of each of these different types of assets.

April works in the accounting department at Henson's Tire & Auto.She is concerned that the company has been placing too many orders for office supplies and wants to look at all of the transactions involving the purchase of office supplies for the past several months.April can find such information by looking at the supplies account in the: