QUESTION The debt to owners’ equity ratio measures the extent to which a company uses debt to finance its operations. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: The debt to owners’ ratio consists of total liabilities divided by owners’ equity. If it is high, it means liabilities are too […]
QUESTION Which of the following occurred as a direct result of a specific high-profile accounting scandal? A) the beginning of forensic accounting B) the beginning of independent audits C) the enactment of the Sarbanes-Oxley Act of 2002 D) the creation of the Government Accountability Office E) the rise of not-for-profit accounting ANSWER Answer: C […]
QUESTION Return on assets is net income divided by net sales. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Return on assets is net income divided by total assets. Net income divided by net sales is return on sales.
QUESTION Which of the following is NOT one of the roles of the Government Accountability Office? A) examining matters relating to the receipt and payment of public funds B) confronting waste and abuse within public sectors C) ensuring correct billing practices for government welfare programs D) confronting fraud within public sectors E) performing specialized accounting […]
QUESTION The acid-test (or quick) ratio consists of current assets divided by current liabilities. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: The current ratio consists of current assets divided by current liabilities.
QUESTION As an accountant for a large nonprofit organization, Carter knows that one of his chief responsibilities is to provide financial transparency. What is meant by financial transparency? A) giving stakeholders an accurate picture of what is happening to their money B) determining whether an organization is staying within its budget C) evaluating a client’s […]
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 American accounting standards are becoming the basis for a global set of standards. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: The SEC now allows some large American companies to use the international accounting standards, established by the International Accounting Standards Board. The purpose of this and other moves […]
QUESTION In double-entry bookkeeping, each entry is recorded as twice as much the original amount. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: With double-entry bookkeeping, the same entry is recorded twice but as both a credit and a debit. The total of all debits must equal the total of […]
QUESTION Financial reports may be issued by a company at any time of the year. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Financial reports may be done monthly, quarterly, semiannually, or yearly as an annual report.
