QUESTION Which of the following is an example of an allowance? A) a dividend paid to a single investor B) a full refund given to a customer who returned his malfunctioning stereo C) a store discount given to a customer who purchased a chipped mirror D) a price paid for producing a certain amount of […]
Date: September 3rd, 2020
QUESTION Which of the following tracks incoming and outgoing money and shows how the firm got and used money? A) the balance sheet B) the income statement C) the statement of cash flows D) the retained earnings report E) the owners’ equity statement ANSWER Answer: C Explanation: C) The statement of cash flows indicates […]
Date: September 3rd, 2020
QUESTION Procter & Gamble just released its latest income statement. What is the statement most likely to be used for? A) determining what P&G is worth B) determining whether P&G is profitable C) determining P&G’s tax liability D) determining P&G’s owners’ equity E) determining whether P&G should sell assets ANSWER Answer: B Explanation: B) […]
Date: September 3rd, 2020
QUESTION Which of the following represents the accounting equation? A) liabilities = assets + owners’ equity B) owners’ equity = assets + liabilities C) assets = liabilities + owners’ equity D) assets = liabilities – owners’ equity E) assets = owners’ equity – liabilities ANSWER Answer: C Explanation: C) The accounting equation is: assets […]
Date: September 3rd, 2020
QUESTION Current assets divided by which of the following gives the current ratio? A) current liabilities B) net income C) gross profit D) operating expenses E) fixed assets ANSWER Answer: A Explanation: A) The current ratio is calculated by dividing current assets by current liabilities.
Date: September 3rd, 2020
QUESTION What is the accounting equation used to determine? A) whether ledgers are balanced B) tax liability C) a firm’s income D) what a firm is worth E) a firm’s profits ANSWER Answer: D Explanation: D) The accounting equation balances the company’s assets against its liabilities and owners’ equity, showing what the firm is […]
Date: September 3rd, 2020
QUESTION Which of the following has to be accounted for to arrive at net sales figures for an income statement? A) refunds to customers B) owners’ equity C) cost of goods sold D) administrative expenses E) gross profit ANSWER Answer: A Explanation: A) After gross sales, the net sales must be adjusted by accounting […]
Date: September 3rd, 2020
QUESTION What are assets? A) items of immediate value B) what a company owes C) the amount of investment plus earnings D) periodic reports of a firm’s worth E) notes payable ANSWER Answer: A Explanation: A) Assets are what a company has of value that are either cash or can be easily liquidated (converted […]
Date: September 3rd, 2020
QUESTION As a potential lender, why is First State Finances interested in the level of owners’ equity at Chesapeake Zoo? A) It represents sales revenue that could be used to pay off loans. B) Owners’ equity represents easily liquidatable assets. C) It is a predictor of the firm’s profitability in the future. D) It represents […]
Date: September 3rd, 2020
QUESTION Which of the following is NOT a type of asset? A) current B) fixed C) intangible D) owners’ equity E) goodwill ANSWER Answer: D Explanation: D) Assets are of three types: current, fixed, and intangible (goodwill). Owners’ equity is NOT a type of asset; it is, rather, the value of a firm if […]
Date: September 3rd, 2020
