QUESTION The inventory turnover ratio can be used to measure a company’s efficiency. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: The inventory turnover ratio consists of costs of goods sold in one year divided by the average value of the inventory. If this figure is high, it indicates that […]
QUESTION Ratio analysis can be used to compare a company with other similar companies. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Ratio analysis can be used to analyze a firm’s performance to its stated objectives and to compare it to similar firms.
QUESTION What is the most common use that the federal government makes of a firm’s accounting information? A) to evaluate the company’s financial health and credit rating B) to see whether the firm is profitable C) to ensure that appropriate tax revenues are collected D) to plan and guide the firm E) to monitor how […]
QUESTION What is the term given to the recording of a firm’s financial transactions? A) accounting B) bookkeeping C) auditing D) balancing E) forecasting ANSWER Answer: B Explanation: B) Bookkeeping is basically the recording of a firm’s financial transactions.
QUESTION Return on owners’ equity is also called profit margin. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Return on owners’ equity is also called return on investment (ROI). Return on sales is also called profit margin.
QUESTION Carlos is a managerial accountant for the Procade Paper Products firm. Which of the following would he NOT be responsible for? A) preparing budgets B) analyzing the costs of production and marketing C) determining whether departments are staying within their budgets D) supplying financial analyses to stockholders and creditors E) evaluating the impact of […]
QUESTION Which of the following is one of the two major categories of accounting? A) financial accounting B) market accounting C) personnel accounting D) government accounting E) regulatory accounting ANSWER Answer: A Explanation: A) Accounting is divided into two major categories: managerial accounting and financial accounting.
QUESTION An income statement must factor in the cost of goods sold. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: In an income statement, cost of goods sold must be subtracted from sales in order to obtain net profit.
QUESTION Certified management accountants are accountants who have met certain requirements of education and experience. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Certified management accountants are accountants who have passed a two-day examination, held by the Institute of Management Accountants, that tests their knowledge of managerial accounting and business.
QUESTION A balance sheet shows the profit and loss for a particular time period. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: A balance sheet shows the firm’s assets and liabilities. An income statement shows the net profit and loss for a particular time period.
