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1 | |
The government uses accounting information to: |
| | A) | Evaluate credit worthiness |
| | B) | Evaluate performance |
| | C) | Plan, control and motivate employees |
| | D) | Verify taxes owed and approve new stock issues |
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2 | |
A journal is where transactions are recorded chronologically. |
| | A) | True |
| | B) | False |
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3 | |
Place the steps of the accounting cycle in correct order.I. Classify transaction totals in a ledger
II. Record transactions in the journal
III. Summarize data into financial statements |
| | A) | II, III, I |
| | B) | II, I, III |
| | C) | I, II, III |
| | D) | III, II, I |
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4 | |
Accounts receivable, cash and depreciation of equipment are typical: |
| | A) | Journal accounts |
| | B) | Types of financial statements |
| | C) | Ledger accounts |
| | D) | None of the above |
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5 | |
A ______ is a snapshot of what the business owns at a certain point in time. |
| | A) | Income statement |
| | B) | Cash flow statement |
| | C) | Statement of financial position |
| | D) | Changes in owner's equity statement |
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6 | |
| Net sales | $197,000 | | COGS | 123,000 | | Gross margin on sales | $ 74,000 | | Total selling expenses | 21,500 | | Total operating expenses | 32,800 | | Net operating margin | 41,200 | | Interest expense | 2, 750 | | Net income before taxes | $38, 450 |
The above is an example of a: |
| | A) | Statement of changes in financial position |
| | B) | Statement of profit and loss |
| | C) | Statement of financial position |
| | D) | None of the above |
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7 | |
Cara Blumell is starting a small catering business and will have very few transactions. What accounting method would be most appropriate for her business? |
| | A) | None as her business has few transactions |
| | B) | Outsourcing all of the business' transactions |
| | C) | Multi-journal system |
| | D) | One-book system |
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8 | |
How might an owner successfully introduce a computerized accounting system into his/her business? |
| | A) | Use the new system to compensate for poor bookkeeping |
| | B) | Involve the employees in the decision and purchase of the computer |
| | C) | Quickly install the new system and let the bugs work themselves out |
| | D) | All of the above |
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9 | |
Short-term financial planning consists of preparing pro forma financial statements. |
| | A) | True |
| | B) | False |
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10 | |
This method of estimating future return for capital investments involves projecting the number of years required for the investment to pay for itself. |
| | A) | Present value method |
| | B) | Rate-of-return method |
| | C) | Payback method |
| | D) | Projection method |
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10 | |
This method of estimating future return for capital investments involves projecting the number of years required for the investment to pay for itself. |
| | A) | Present value method |
| | B) | Rate-of-return method |
| | C) | Payback method |
| | D) | Projection method |
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11 | |
The 3 long-term financial planning decisions are: |
| | A) | The capacity decision, the capital investment decision and the expansion decision |
| | B) | The payback decision, the present value decision, the rate-of-return decision |
| | C) | The capacity decision, the present value decision, the expansion decision |
| | D) | The payback decision, the capital investment decision, the present value decision |
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12 | |
Use the payback method to calculate how long it will take for the following investment to pay for itself:Total cost of equipment: $60,000
Depreciable life of equipment : 6 years
Average annual profit of equipment: $10,000 |
| | A) | 6 years |
| | B) | 12 years |
| | C) | 2 years |
| | D) | 3 years |
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13 | |
Don Wilks is facing a cash shortage in the operation of his grocery warehouse. How might he improve the cash position of his business? |
| | A) | Reduce the time taken to pay accounts receivable |
| | B) | Increase time taken to sell inventory |
| | C) | Decrease time taken to receive payment for inventory |
| | D) | All of the above |
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14 | |
Given the following information, calculate gross margin.Sales: $200,000
Net Profit: 40,000
COGS: 60,000
Owner's Equity: 30,000 |
| | A) | $110,000 |
| | B) | -$20,000 |
| | C) | $40,000 |
| | D) | $140,000 |
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15 | |
What is the advantage of debit cards over credit use for a small business? |
| | A) | Quick repayment and reduction of accounts receivable |
| | B) | Customers are more likely to be loyal to the business |
| | C) | A and B |
| | D) | None of the above |
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2003 McGraw-Hill Higher Education