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
QUESTION Which of the following could NOT be a marketable security? A) stocks B) bonds C) money market certificates D) notes payable E) government securities ANSWER Answer: D Explanation: D) Marketable securities are stocks, bonds, government securities, and money market certificates, which can be easily converted to cash. Notes payable is money owed on […]
Date: September 3rd, 2020
QUESTION Which of the following is TRUE of the Financial Accounting Standards Board (FASB)? A) It is a federal agency. B) It is regulated by the government. C) It delegates the primary responsibility for GAAP to the SEC. D) It is responsible for only two of the four generally accepted accounting principles. E) It establishes, […]
Date: September 3rd, 2020
QUESTION Which of the following is one of the organizations in which the authority for the GAAP rests? A) Securities and Exchange Commission B) Governmental Accounting Board of Standards C) Government Accountability Office D) Federal Accounting Board of Management E) Congress ANSWER Answer: A Explanation: A) The authority for the GAAP is with two […]
Date: September 3rd, 2020
QUESTION Suppose the total of all debits is less than the total of all credits in a double-entry bookkeeping journal. What must be the explanation for this? A) An error has occurred. B) There has been a profit for the day. C) There has been a loss for the day. D) GAAP standards were not […]
Date: September 3rd, 2020
