Deck 3: Choosing Accounting Software

Question 1

Tables are usually better than graphs in displaying trends in large amounts of data.

Answer 1

False

Question 2

Which of the following is not a recommended practice when using graphs to present quantitative data?

A) Starting the vertical axis at zero
B) Make the physical (visual) representation of a quantity be proportional to its numerical value
C) Use selective enhancements to draw the user's eye to good news and away from bad news
D) Maximize the ratio of "data" to "ink"

Answer 2

C

Question 3

Which of the following is not one of the four basic financial statements?

A) Statement of risky assets
B) Statement of cash flows
C) Statement of changes in equity
D) Balance sheet

Answer 3

A

Question 4

You would expect to find the account "Income tax expense" in which of the following places in the financial statements?

A) In the balance sheet
B) In the income statement
C) In the statement of changes in shareholders' equity
D) In a cash flow statement prepared using the indirect method

Question 5

The account "prepaid rent" would appear on which financial statement?

A) Balance sheet, as an asset
B) Balance sheet, as a liability
C) Income statement, as an expense

Question 6

The account "unearned revenue" would appear on which financial statement?

A) Balance sheet, as an asset
B) Balance sheet, as a liability
C) Income statement, as a revenue

Question 7

You would expect to find the account "consulting revenue" in which of the following places in the financial statements?

A) In the balance sheet
B) In the income statement
C) In the statement of changes in shareholders' equity
D) In a cash flow statement prepared using the indirect method

Question 8

You would expect to find the account "land" in which of the following places in the financial statements?

A) In the balance sheet
B) In the income statement
C) In the statement of changes in shareholders' equity
D) In a cash flow statement prepared using the indirect method

Question 9

You would expect to find the term "operating cash flows" in which of the following places in the financial statements?

A) In the balance sheet
B) In the income statement
C) In the statement of changes in shareholders' equity
D) In a cash flow statement prepared using the indirect method

Question 10

Which of the following would cause net income on the accrual basis to be different than (either higher or lower) ""cash provided by operating activities"" on the statement of cash flows?

A) Accrued interest earned on a certificate of deposit
B) Paid a cash dividend to the stockholders
C) Purchased a certificate of deposit for cash
D) Purchased land for cash

Question 11

Which of the following items would be shown in the statement of comprehensive income, but not as part of ""net income""?

A) Sales
B) Gains from holding long-term securities that increased in value during the year
C) Losses on the sale of land
D) Interest income

Question 12

Which of the following items would normally not be seen in a statement of changes in shareholders' equity?

A) Land
B) Net comprehensive income or loss
C) Dividends
D) New issues of common stock

Question 13

Which of the following is not one of the categories of cash flow on a statement of cash flows?

A) Operating cash flows
B) Producing cash flows
C) Investing cash flows
D) Financing cash flows

Question 14

Limitations of financial statements, as discussed in the text, include

A) The statements are usually not the most timely source of information.
B) Financial statements focus on the information needed by owners, and not other users, such as workers.
C) Financial statements are often highly summarized.
D) All of the above

Question 15

All of the following are common internal reports except

A) Budgets
B) Performance reports
C) Variance reports
D) Statements of comprehensive income

Question 16

Which of the following is one of the four basic financial statements?

A) Balance sheet
B) Statement of changes in accounts receivable
C) Statement of owners' liquidity
D) Auditors' report

Question 17

Which of the following is a recommended practice when using graphs to present quantitative data?

A) Use the brightest available colors to draw the user's eye to good news and away from bad news
B) Use pie charts to show trends in data
C) Start the vertical axis at zero
D) Use three-dimensional effects to make the visual appearance of numbers larger than their numerical values

Question 18

The income statement shows revenues, expenses, and net owners' equity.

Question 19

You would not expect to find the account "cash dividends paid" on the balance sheet.

Question 20

When writing business reports, it is good practice to use long, impressive words, rather than short, ordinary ones.

Question 21

An example of a sentence using the active voice is ""The company sold 20,000 cars last week.""

Question 22

The ""management discussion and analysis"" section of an SEC filing is an example of a prose report.

Question 23

Tables are usually better than graphs in presenting precise values for numbers.

Question 24

Effects of changes in the assumptions of pension plans are typically part of the computation of ""other comprehensive income,"" but not ""net income.""

Question 25

Effects of changes in the market price of securities that the company is holding for short-term trading purposes affect ""other comprehensive income"" but not net income.

Question 26

A cash flow statement prepared using the indirect method will usually show the amounts of cash a company received from customers, paid to suppliers, and paid to employees.

Question 27

A cash flow statement prepared using the direct method will reconcile net income with the cash flow from operations.

Question 28

Financial statements prepared under generally accepted accounting principles are meant to compute the market value of the company as of the balance sheet date.

Question 29

One limitation of financial statements is that financial statements show information about the past, while the users may be interested in the future.

Question 30

A budget is an example of a common internal report.

Question 31

A budget is an example of a common external report.

Question 32

All of the following are bad practices in preparing graphs, except

A) Selectivity (presenting graphs of only accounts with good news)
B) Data distortion
C) Selective enhancements
D) Showing data variation, not design variation

Question 33

Which of the following is not a recommended practice in making clear tables?

A) Eliminating excessive lines
B) Rounding numbers to two significant digits
C) Always listing items alphabetically
D) Providing summary data