QUESTION The accounting process begins with assessing the firm’s financial condition using ratio analysis. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: The last phase of the accounting process is to assess the firm’s financial condition using ratio analysis. The accounting process begins by collecting the results of bookkeeping—that is, […]
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.
QUESTION One of the major types of financial statement is a liability report. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Types of financial statements include balance sheets, income statements, and statements of cash flows.
QUESTION Assets may include unsold merchandise a company has on hand. Indicate whether the statement is true or false. ANSWER Answer: TRUE Explanation: Assets include cash on hand, accounts receivable, marketable securities, and merchandise inventory.
QUESTION The U. S. government’s fiscal year begins on July 1 and ends on June 30. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: The U.S. government’s fiscal year begins on October 1 and ends on September 30.
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.
