Question 1

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?

Accepted Answer

B) Private accountants are hired by individual businesses to perform day-to-day activities.

Question 2

Which of the following describes assets such as patents and trademarks?

Accepted Answer

C) Intangible assets are nonphysical items that still have monetary value attached to them.

Question 3

Which of the following statements is True?

Accepted Answer

B) The managerial accounting system is concerned with internal users.

Question 4

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?

Accepted Answer

B) An audit examines a company's accounting information system to determine whether financial reports reliably represent its operations.

Question 5

Which of the following terms refers to the amount paid for an existing business beyond the value of its other assets?

Accepted Answer

A) Goodwill is the intangible value of the expectation that a company will continue to do business wisely.

Question 6

What distinguishes the two most commonly used categories of owners' equity?

Accepted Answer

C) Paid-in capital is additional money invested by owners; retained earnings are net profits kept by a firm rather than paid out as dividend payments to stockholders.

Question 7

Which of the following ratios measures a firm's potential earnings?

Accepted Answer

C) This ratio is calculated by dividing net income by the number of common shares of stock.

Question 8

Which are the two major fields of accounting?

Accepted Answer

B) The two fields of accounting can be classified according to the users they serve; it is convenient and accurate to classify users as those outside the company and those inside the company.

Question 9

Which of the following statements best describes the difference between current and long-term liabilities?

Accepted Answer

C) Current liabilities include accounts payable: unpaid bills to suppliers for materials as well as wages and taxes that must be paid in the coming year. Long-term liabilities are debts that are not due for at least a year.

Question 10

Which of the following ratios evaluates management's use of resources?

Accepted Answer

C) The activity ratio is used to compare relative efficiencies between similar companies.

Question 11

How much profit does a company which has a total of $5 million invested by its owners and $4 million in liabilities need to make in order to have an assets-to-liabilities ratio of 2:1?

Accepted Answer

D) (profits + investment - liabilities)/liabilities = 2

Question 12

A company's owners invested $10,000 total into the company, which made a profit of $3,500 last year. Its total liabilities are currently at $7,000. What is the value of the total assets of this company?

Accepted Answer

C) 6500 = (10,000 + 3500) - 7000

Question 13

Which of the following terms refers to the difference between operating income and income taxes ?

Accepted Answer

B) Net income is operating income minus taxes.

Question 14

Which of the following ratios measures a firm's ability to meet its current debt obligations?

Accepted Answer

A) The short-term solvency ratio is calculated by dividing current assets by current liabilities.

Question 15

Which of the following describes a liability?

Accepted Answer

B) All debts owed to others are liabilities.

Question 16

Which of the following refers to the rules and procedures governing the content and form of financial reports?

Accepted Answer

E) GAAP is formulated by the Financial Accounting Standards Board (FASB) of the AICPA and should be used to determine whether a firm has controls to prevent errors and fraud.

Question 17

Bennequin Accounting has been hired by XYZ Manufacturing to help plan its merger with ABC Distribution. Which of the following terms best describes the capacity for which Bennequin has been hired?

Accepted Answer

E) In this capacity, private accountants help management make decisions.

Question 18

A company has an assets-to-liabilities ratio of 3:2 and total assets worth $6 million. What is its owners' equity?

Accepted Answer

B) assets/(assets - owners' equity) = 3/2

Question 19

ABC Company has a net income of $5 million. ABC's number of outstanding shares of stock is 3,870,000 shares. What is the company's earnings per share?

Accepted Answer

A) Earnings per share = Net Income/Number of Common Shares Outstanding; therefore, in this scenario, $5,000,000/3,870,000 = $1.29.

Question 20

Which of the following statements is True?

Accepted Answer

A) The financial accounting system is concerned with external users, such as unions.

Quiz 14: The Role of Accountants and Accounting Information

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?

Which of the following describes assets such as patents and trademarks?

Which of the following statements is True?

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?

Which of the following terms refers to the amount paid for an existing business beyond the value of its other assets?

What distinguishes the two most commonly used categories of owners' equity?

Which of the following ratios measures a firm's potential earnings?

Which are the two major fields of accounting?

Which of the following statements best describes the difference between current and long-term liabilities?

Which of the following ratios evaluates management's use of resources?

How much profit does a company which has a total of $5 million invested by its owners and $4 million in liabilities need to make in order to have an assets-to-liabilities ratio of 2:1?

A company's owners invested $10,000 total into the company, which made a profit of $3,500 last year. Its total liabilities are currently at $7,000. What is the value of the total assets of this company?

Which of the following terms refers to the difference between operating income and income taxes ?

Which of the following ratios measures a firm's ability to meet its current debt obligations?

Which of the following describes a liability?

Which of the following refers to the rules and procedures governing the content and form of financial reports?

Bennequin Accounting has been hired by XYZ Manufacturing to help plan its merger with ABC Distribution. Which of the following terms best describes the capacity for which Bennequin has been hired?

A company has an assets-to-liabilities ratio of 3:2 and total assets worth $6 million. What is its owners' equity?

ABC Company has a net income of $5 million. ABC's number of outstanding shares of stock is 3,870,000 shares. What is the company's earnings per share?

Which of the following statements is True?