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 […]
Date: September 3rd, 2020
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 […]
Date: September 3rd, 2020
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. […]
Date: September 3rd, 2020
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? […]
Date: September 3rd, 2020
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. […]
Date: September 3rd, 2020
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 […]
Date: September 3rd, 2020
QUESTION Which of the following points out a flaw in Kershner’s reasoning? A) Kershner is not accounting for all of the possible sources of revenue for the company. B) Kershner is not including owners’ equity as part of sales revenue. C) Income statements are not as important as balance sheets in determining a company’s fiscal […]
Date: September 3rd, 2020
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 […]
Date: September 3rd, 2020
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. […]
Date: September 3rd, 2020
QUESTION Thom is an accountant at Merco Products. Merco has decided to put a priority on paying off short-term debt to ensure its continued financial health. Which of the following types of ratio analyses is Thom most likely to do to further this goal? A) an activity ratio B) a debt-to-owners’-equity ratio C) a liquidity […]
Date: September 3rd, 2020
