Quiz 9

1. Scenario: If retained earnings increase, it is most likely because _____

• Operating expenses decreased.

• Net income exceeded dividends paid.

• The company reduced its debt.

• The company issued more shares.

2. Scenario: A ledger differs from a journal in that it _____

• Contains detailed source documents.

• Is only used for financial statements.

• Summarizes all journal entries by account.

• Records every business transaction twice.

3. Scenario: Which software is commonly used for small business accounting?

• • Microsoft Dynamics.

• • Oracle Financials.

• • QuickBooks.

• • SAP.

4. Scenario: Which of the following best describes the purpose of double-entry bookkeeping?

• • To automatically classify transactions into ledgers.

• • To ensure accuracy by recording transactions in two different accounts.

• • To reduce the time needed for preparing financial statements.

• • To simplify record-keeping.

5. Scenario: Which ratio measures a company's ability to meet short-term financial obligations?

• • Activity Ratio.

• • Leverage Ratio.

• • Liquidity Ratio.

• • Profitability Ratio.

6. Scenario: How should an unpaid utility bill be classified in the ledger?

• • Liability.

• • Asset.

• • Expense.

• • Retained Earnings.

7. Scenario: During the accounting cycle, which step follows recording transactions in journals?

• • Taking a trial balance.

• • Analyzing financial statements.

• • Posting journal entries into ledgers.

• • Preparing the financial statements.

8. Scenario: The use of computerized accounting systems helps businesses primarily by ________.

• • Eliminating the need for trial balances.

• • Automating managerial decision-making.

• • Ensuring instant updates and remote access to data.

• • Reducing the cost of preparing financial statements.

9/ Managerial accounting focuses primarily on_____

• • Complying with government regulations.

• • Auditing financial statements.

• • Providing information for internal decision-making.

• • Preparing tax returns.

10/ If a company’s acid-test ratio is below 1, it indicates that_____

• • The company has more liabilities than equity.

• • The company is highly profitable.

• • The company may struggle to meet short-term obligations.

• • The company has strong liquidity.