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50 Cards in this Set
- Front
- Back
1. The purpose of an audit is to ensure that financial statements have been prepared according to
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Generally accepted accounting principles
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2. The information provided by managerial accounting is of most benefit to a firm's
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Managers.
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3. ALL of the following are classified as fixed assets except
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computers held for resale.
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4. The mortgage on prudential Insurance's local facility will be paid off over the next 30 years. The majority of this mortgage would be classified on Prudential's balance sheet as a
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Long-term liability.
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5. A____ is a summary of a firm's revenues and expenses during a specified accounting period, such as a year.
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Income statement.
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6. Intel decides to issue new stock in order to build a new facility and expand its operations. The receipt of cash from this stock issue would appear in the _____section of the statement of cash flows.
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Financing
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7. As the accountant for Marston Retail Stores, you must calculate the current ratio for the firm's last accounting period.
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1.5
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8. All of the activities concerned with obtaining money and using it effectively are called.
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financial Management.
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9. Money that will be used for one year or less is called
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short-term financing
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Slater Co. has very old computers and manufacturing equipment and knows its needs to upgrade them or risk losing much of its business. Slater does not have the money to purchase the computers, so it will most likely need
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Long-term financing
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11. Maria has been asked by top management to develop financing______ that the company will achieve over the next one-to ten year period.
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Goals
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12. Each year Caliente, Inc, follows a budgeting process, The first step is always to look at the previous year's budget and see if anything need to be updated. Caliente uses _____budgeting.
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Traditional
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13. John Martin and Bob Johnston want to start a small manufacturing business. To obtain the financing they need, they decide to sell stock to their friends. The sale of stock is
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Equity Capital.
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14. in seeking financing to satisfy his short-term needs, jerry discovered that.
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short-term financing is usually easier to obtain than long-term financing.
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15. Melissa feels confident about obtaining short term financing for her art gallery because, like many companies, She has a
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Close working relationship with a lender.
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16. Short term financing not backed by collateral is called
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unsecured financing
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17.____ is short-term promissory notes with no collateral that are issued by large corporations.
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Commercial paper.
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18. A firm that specializes in buying other firm's
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financing
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19. During 2009, bedford technology sold common stock for the first time to whoever wanted to buy it. this was the ____ for bedford.
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Initial public offering
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20. What right do most common stockholders have that most preferred stockholders do not have?
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Voting rights
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21. A ___ is an agreement that gives a business the right to temporarily use real estate, equipment, or other assets that belong to someone else.
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Lease
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22. A promissory note that requires a borrower to repay funds in installments is called a
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Term-loan agreement.
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23.___ Accounting is the process of systematically determining how much money a company owes the internal revenue service.
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False
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24. It is not necessary to audit a firm's financial statements if the firm has used generally accepted accounting principles.
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False
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25. Without the audit function and GAAP, there would be very little oversight or supervision of corporate accounting practices.
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True
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26. The three primary financial reports are the income statement, the balance sheet, and the statement of cash flows.
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True
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27. Most of a firm's proprietary accounting information is reported to the general public in the firm's annual report.
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False
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28. While a firm's managers are the primary users of accounting information, lenders, suppliers. stockholders, and government agenices are also interested in a firm's accounting information.
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True
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29. A private accountant is an accountant whose service may be hired on a fee basic by individuals or business firms.
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False
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30. A person who wishes to practice accounting as a CPA must pass an exam prepared by the American Institute of Certified Public Accountant.
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False
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31. According to the accounting equation, cash, inventory, equipment, and real estate are classified as owners' equity.
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False
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32. The statement of financial position is also known as the balance sheet.
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True
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33. The process of apportioning the cost of a fixed asset over the period during which it will be used is known as depreciation.
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True
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34.the statement of financial position presents the business firm's assets, liabilities, and owners' equity accounts at the end of an accounting period, such as on December 31, where as the income statement summarizes operations during a specified accounting period.
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True
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35.the total dollar amount of all goods and service sold during the accounting period is called net sales.
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False
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36. The cost of goods sold equals beginning inventory plus net purchases minus ending inventory.
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True
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37. Managers often compare financial and accounting data for previous accounting periods and for competing firms.
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False
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38. Poor financial management is one of the major reasons why firms file for bankruptcy.
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True
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39. The first step in building a budget is to identify sources of debt financing.
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False
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40. When constructing budgets, most managers begin with departmental budgets that are then combined into a company- wide budget.
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True
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41. Equity capital generally provides the greatest part of a firm's financing.
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False
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42. A firm with questionable credit should expect to pay the prime interest rate minus 2 percent.
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False
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43.Long-term loans and the sales of corporate bonds are common sources of equity financing.
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False
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44. The distribution of a corporation's earnings to the stockholders is called paying a dividend.
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True
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45. The most basic form of corporate ownership is common stock.
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True
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46. If a firm's earnings should drop below the interest cost of borrowed money the return on owners' equity will increase.
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False
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47. it is not necessary to give most lenders a current business plan or andited financial statements when requesting a long-term business loan.
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False
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48. Bonds that are secured by various assets of the issuing corporation are called debenture bonds.
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False
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49. Bonds that can be exchanged for a specified number of shares of common stock are called convertible bonds.
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True
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50. In order to repay some corporate bonds, a firm may be required to deposit a specified sum of the money each year until the bond's maturity in a sinking fund.
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True
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