商学导论Cha 11-15商学导论 课后练习 chap 15

True or False 1. Accounting is the summary and analysis of a firm’s financial condition. 2. Financial accounting is primarily used to help managers make decisions. 3. Bookkeeping is the recording of a firm’s financial transactions. 4. An accountant working for Microsoft, a publicly owned corporation, is an example of a public accountant. 5. The two primary financial statements for a firm are the balance sheet and the bookkeeping statement. 6. Inventory and accounts receivables are shown as fixed assets on a firm’s financial statements. 7. A balance sheet reports the book value of a firm’s assets, liabilities, and owner’s equity. 8. Firms are encouraged to design their financial ac­counting reports to best satisfy their managers’ need for information. 9. Independent auditors are sometimes tempted to certify questionable financial reports because the auditors usually sit on the board of directors of the firm. 10. The debt-to-equity ratio measures the liquidity of a firm. 11. Financial leverage represents the degree to which a firm uses borrowed funds to finance its assets. Multiple Choice 12. Publicly owned firms are required to periodically report their financial condition for existing or potential: a) suppliers. b) customers. c) employees. d) shareholders. e) unions. 13. The type of accounting performed for reporting purposes is referred to as: a) ratio analysis. b) financial accounting. c) managerial accounting. d) cost accounting. e) payroll accounting. 14. Which of the following groups are primarily concerned with the risk of default on a loan? a) owners b) certified public accountants c) creditors d) auditors e) stockholders 15. Firms use financial information developed by accountants to: a) support financial data. b) analyze job descriptions. c) support decisions. d) prepare job specifications. e) analyze working conditions. 16. Individuals who provide accounting services to a variety of firms for a fee are: a) master accountants. b) managerial accountants. c) internal auditors. d) corporate controllers. e) public accountants. 17. The type of accounting performed to provide infor­mation to help managers of the firm make deci­sions is referred to as: a) certified public accounting. b) external auditing. C) public accounting. d) government accounting. e) managerial accounting. 18. Which of the following financial statements summarizes a firm’s revenues, costs, and earnings for a specific period of time? a) balance sheet. b) income statement. c) cash budget. d) retained earnings statement. e) sources and uses of funds statement. 19. The statement that reports the book value of all as­sets, liabilities, and owner’s equity of firms at a given point in time is the: a) income statement. b) cash budget. c) profit and loss statement. d) revenue statement e) balance sheet. 20. A firm’s operating expenses are subtracted from gross profit to determine its: a) net sales. b) cost of goods sold. c) profit or loss. d) balance sheet. e) earnings before interest and taxes (EBIT). 21. The value of materials used in the production of goods that are then sold is called: a) net sales. b) cost of goods sold. c) sales return and allowances. d) gross profit e) net income. 22. Which of the following represents funds provided by the owners of a business? a) revenue. b) cost of goods sold. c) gross profit. d) net income. e) owner’s equity. 23. The firm’s assets are financed with its: a) cost of goods sold. b) earnings before interest and taxes. c) liabilities and owner’s equity. d) plant and equipment. e) net sales. 24. If a firm has $1,000 in assets and $300 in liabilities, the owner’s equity must be: a) $700. b) $333. c) $1,300. d) $3,000. e) $0.30. 25. Assets that will be converted into cash within one year are: a) fixed assets. b) current assets. c) plant and equipment. d) owner’s equity. e) liabilities. 26. A reduction in the value of the assets to reflect deterioration in assets over time is: a) cost of goods sold. b) gross profit. c) sales revenue. d) depreciation. e) owner’s equity. 27. In order to encourage board members to enforce proper financial disclosures: a) all board members should be certified public accountants or financial analysts. b) all board members should be outside members. c) board members should not be allowed to own the firm’s stock. d) all board members should be officers of the corporation. e) board members should not be able to sell the firm’s stock while serving on the board. 28. An evaluation of the relationship between financial statement variables is called: a) ratio analysis. b) asset turnover. c) cost of goods sold. d) operating expenses. e) gross profit. 29. All of the following are characteristics commonly used to classify financial ratios except for: a) revenue. b) liquidity. c) efficiency. d) leverage. e) profitability. 30. Which of the following categories of financial ratios measures how well management uses its assets to generate sales? a) liquidity. b) profitability. c) efficiency. d) financial leverage. e) sales leverage. 31. Long-term borrowing undertaken by a firm can be assessed through: a) liquidity ratios. b) profitability ratios. c) current ratios. d) efficiency ratios. e) leverage ratios. 32. A ratio that measures net income as a percentage of sales is the: a) net profit margin. b) leverage ratio. c) liquidity ratio. d) activity ratio. e) asset turnover. 33. A ratio that measures the firm’s dollar amount of profit relative to sales, assets, or equity is a(n): a) current ratio. b) liquidity ratio. c) profitability ratio. d) activity ratio. e) leverage ratio. 34. All of the following are limitations of ratio analysis except: a) the identification of a comparable firm. b) the firm operates in more than one industry. c) accounting practices may vary between firms. d) firms are too much alike. e) firms may have large seasonal swings in sales. 35. Any firm with foreign subsidiaries must consolidate the financial data from all subsidiaries when preparing its: a) mission statement b) foreign exchange. c) balance of payment. d) financial statements. e) domestic policy. 36. A U.S. firm will report the earnings of its foreign subsidiaries in: a) the currencies of the countries where the sub­sidiaries exist. b) U.S. dollars. c) units of the product sold. d) the consolidated balance sheet of the firm. e) the annual liquidity report.