QUESTION Which of the following, if true, does NOT strengthen the case that Aardvark needs to hire a full-time financial manager? A) The company needs its cash flow to be continuously monitored. B) The company needs to determine how to market its products so as to reach the largest number of customers. C) The company […]
QUESTION Which of the following, if true, strengthens the case that Streeter & Sons is profitable? A) The company’s sales revenue is low relative to its cost of goods sold. B) The company’s cost of goods sold is low relative to its sales revenue. C) The company has had the same number of customers for […]
QUESTION Which of the following questions about the current state of Streeter & Sons would a balance sheet NOT be able to help answer? A) Is it a good time for the business to grow? B) Can the company survive a season of low revenues? C) Does the company have too many employees? D) Can […]
QUESTION Which of the following, if true, does NOT strengthen the case for Aardvark closely monitoring its cash flow? A) The company needs to make sure it is not spending too much. B) The company needs to make sure it is generating enough revenue. C) The company needs to make sure its employees perform well. […]
QUESTION Which of the following questions is LEAST relevant to a financial manager as he or she develops a financial forecast for Aardvark? A) What are the future plans of the company? B) What is the current state of the local economy? C) What is the future state of the local economy likely to be? […]
QUESTION Which of the following, if true, strengthens the case that an income statement would show Streeter & Sons where its problems lie? A) The company does not have enough shareholders. B) The company’s expenses are too high. C) The company’s owners’ equity is too low. D) The company needs to hire more service specialists. […]
QUESTION Which of the following, if true, weakens the case that more than one type of financial statement should be examined in order to determine a company’s financial health? A) Nowadays, many companies burnish their balance sheet by claiming inflated figures for goodwill. B) An income statement from one year may be radically different from […]
QUESTION If fixed assets are assets that are held for a long time, and a certain company has had goodwill for all of its years in business, then should its goodwill be considered a fixed asset? What will be an ideal response? ANSWER Answer: Fixed assets are TANGIBLE assets that are held onto for […]
QUESTION How does the cost of goods sold affect the gross profit as calculated in an income statement? A) It helps to predict what future profits will be. B) It increases the gross profits. C) It is figured into operating expenses. D) It does not affect the gross profits. E) It is subtracted from net […]
QUESTION What is the importance of owners’ equity in accounting? What will be an ideal response? ANSWER Answer: Owners’ equity is considered important because it is used to indicate a company’s financial strength and stability. Before making loans to a company, for example, lenders want to know the amount of owners’ equity in it. […]