Question 1

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.)
-Inventory

Accepted Answer

Inventory is classified as an asset because it represents goods that a company holds for the purpose of sale in the ordinary course of business, or materials that will be used to produce goods for sale.

Question 2

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.)
-Research and development expense

Accepted Answer

Research and development expense is classified as an expense because it represents the costs associated with the research and development activities of a company during a specific period. These costs are not capitalized but are expensed as incurred, reflecting the consumption of economic benefits in generating revenues.

Question 3

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.)
-Retained earnings

Accepted Answer

Retained earnings represent the cumulative amount of net income earned by a company that is retained within the company rather than distributed to shareholders as dividends. This makes it a component of shareholders' equity on the balance sheet.

Question 4

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.)
-Long-term notes payable

Accepted Answer

Long-term notes payable are classified as liabilities on a company's balance sheet because they represent money that the company owes to creditors that is due beyond one year.

Question 5

Provided is a list of important users of accounting information. Also provided are descriptions of a major need for accounting information that may be experienced by the various users. Identify the one user group that is most likely to have the need described. (Choices may be used more than once.)
-profitability of the company based upon the tax authorities

Accepted Answer

The government is most interested in the profitability of a company for tax purposes, as they use this information to determine the amount of tax the company should pay.

Question 6

Provided is a list of important users of accounting information. Also provided are descriptions of a major need for accounting information that may be experienced by the various users. Identify the one user group that is most likely to have the need described. (Choices may be used more than once.)
-prospects for getting a raise this year

Accepted Answer

Employees are most likely to be interested in the prospects for getting a raise this year as it directly affects their income and financial planning.

Question 7

Match each statement to the item listed below.
-cash flows directly related to earning income

Accepted Answer

Cash flows from operating activities are directly related to earning income, as they include transactions and events that enter into the determination of net income.

Question 8

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.)
-Net sales

Accepted Answer

Net sales are classified as revenues, which represent the total income generated from the sale of goods or services before any expenses are subtracted.

Question 9

Provided is a list of important users of accounting information. Also provided are descriptions of a major need for accounting information that may be experienced by the various users. Identify the one user group that is most likely to have the need described. (Choices may be used more than once.)
-ability of the company to pay its debts as they become due

Accepted Answer

Suppliers and bankers are particularly interested in a company's ability to pay its debts as they become due because this directly affects their financial relationships with the company. Suppliers need to know if they will be paid for goods or services provided, and bankers need to assess the risk associated with lending money.

Question 10

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.)
-Interest income

Accepted Answer

Interest income is classified as a revenue because it represents earnings generated from the company's investments or other interest-bearing accounts.

Question 11

Provided is a list of important users of accounting information. Also provided are descriptions of a major need for accounting information that may be experienced by the various users. Identify the one user group that is most likely to have the need described. (Choices may be used more than once.)
-company's labour rate agreed to on the last contract

Accepted Answer

Labour unions require accounting information to negotiate wages, benefits, and working conditions on behalf of their members. Knowing the company's labor rate agreed to in the last contract helps them in these negotiations.

Question 12

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.)
-Unearned revenue

Accepted Answer

Unearned revenue is classified as a liability because it represents money received by a company for goods or services that have yet to be provided. It's an obligation the company has to its customers.

Question 13

Provided is a list of important users of accounting information. Also provided are descriptions of a major need for accounting information that may be experienced by the various users. Identify the one user group that is most likely to have the need described. (Choices may be used more than once.)
-exact amount of profit on each product of the company

Accepted Answer

Management is most likely to need detailed information about the exact amount of profit on each product of the company to make informed decisions about pricing, production, and strategy.

Question 14

Provided is a list of important users of accounting information. Also provided are descriptions of a major need for accounting information that may be experienced by the various users. Identify the one user group that is most likely to have the need described. (Choices may be used more than once.)
-prospects for future dividend payments

Accepted Answer

Investors are most interested in the prospects for future dividend payments as this directly affects their return on investment. They use accounting information to assess the financial health and profitability of a company, which in turn influences their decisions on buying, holding, or selling stock.

Question 15

Match each statement to the item listed below.
-cash flows related to obtaining capital for the company

Accepted Answer

Cash flows related to obtaining capital for the company are classified as cash flows from financing activities. This includes transactions involving debt, equity, and dividends.

Question 16

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.)
-Cash

Accepted Answer

Cash is considered an asset because it represents a resource owned by the company that has economic value and can be used to meet its financial obligations.

Question 17

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.)
-Accounts receivable

Accepted Answer

Accounts receivable are considered assets because they represent money owed to the company by its customers for goods or services delivered but not yet paid for.

Question 18

Provided is a list of important users of accounting information. Also provided are descriptions of a major need for accounting information that may be experienced by the various users. Identify the one user group that is most likely to have the need described. (Choices may be used more than once.)
-effectiveness of the last advertising campaign

Accepted Answer

Management is most likely to be interested in the effectiveness of the last advertising campaign as it directly relates to the company's marketing strategies and operational decisions.

Question 19

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.)
-Common shares

Accepted Answer

Common shares are a part of shareholders' equity, representing the ownership interest of the shareholders in the company.

Question 20

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.)
-Patents

Accepted Answer

Patents are considered intangible assets on a company's balance sheet.

Quiz 1: Accounting and the Financial Statements

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.) -Inventory

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.) -Research and development expense

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.) -Retained earnings

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.) -Long-term notes payable

Match each statement to the item listed below. -cash flows directly related to earning income

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.) -Net sales

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.) -Interest income

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.) -Unearned revenue

Match each statement to the item listed below. -cash flows related to obtaining capital for the company

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.) -Cash

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.) -Accounts receivable

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.) -Common shares

Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.) -Patents