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WorksheetsPOBF Unit 6
Total questions: 46
Worksheet time: 23mins
What is one of the main reasons why businesses need to keep accurate accounting records?
to follow procedures
to control expenses
to eliminate risks
to regulate taxes
Businesses would not be able to determine if they are meeting their financial goals without accurate:
production plans.
marketing plans.
accounting systems.
distribution systems.
Businesses use the information collected through the accounting process to prepare accurate:
balance sheets.
purchase orders.
inventory forms.
promissory notes.
Which of the following is a requirement for a good accounting system:
It should be updated annually.
It should provide needed information quickly.
It should eliminate the need for an accountant.
It should be replaced every two or three years.
The process of keeping the financial records of a business is known as
accounting
controlling
financing
bookeeping
Which of the following groups makes regular use of a business’s managerial accounting infor-mation:
Managers
Creditors
Customers
Investors
The overall purpose of accounting is to
maintain accurate reports
keep track of sales
compile the business’s expenses
control the finances of the business.
Accounting records for a business show that the week’s total sales revenues were $125,000. Cash sales accounted for $50,000 and credit sales, $75,000. This is an example of
classifying financial information
the cash accounting method
an income statement.
the accrual method of accounting.
A bank denies a business owner’s application for credit saying, “We feel that you would be un-able to make the monthly payments because of your other debts.” What financial report did the bank review?
Budget
Balance sheet
Income statement
Operating budget
Which of the following financial reports provides estimates of when, where, and how much money will come into and out of a business next year:
Balance sheet
Cash flow statement
Income statement
Bank statement
What accounting record would summarize a business’s profit or loss for a previous year?
Bank statement
Inventory record
Income statement
Balance sheet
Which of the following categories of information are found on a balance sheet:
Income, expenditures, profit
Assets, liabilities, owner’s equity
Assets, liabilities, margin
Revenues, expenses, profit
Which of the following makes comparisons of the financial conditions at multiple organizations possible:
Bookkeeping
Source documents
Accounting standards
Trial balance
Which of the following presents the first three steps in the accounting cycle in the correct order:
Post, analyze, and journalize
Analyze, post, and journalize
Analyze, journalize, and post
Post, journalize, and analyze
Which of the following is a true statement:
Bookkeeping is the same as accounting.
Bookkeeping does not use computers.
Bookkeeping is limited to information on sales.
Bookkeeping records business transactions.
What type of accounting method would most likely be used by a large business that has a large number of outstanding loans and customer charge accounts?
Check method
Cash method
COD method
Accrual method
What type of accounting method would most likely be used by a small business owner who does not offer credit?
Check method
Cash method
COD method
Accrual method
Checks, receipts, invoices, and purchase orders are examples of
financial statements
department ledgers
source documents.
accounting standards.
Two employees used a business’s computerized accounting system to change some records. They were able to steal $50,000 from the business because the accounting system lacked which of the following:
Protection from theft and fraud
An affordable price
A manual system as backup
Printed financial statements
For an accounting system to be useful to the business, the accounting information it contains must be
accurate and up to date.
approved by the chief executive officer.
posted by an accountant.
recorded using the accrual method.
Riley is an employee of the federal government who studies the financial reports of major busi-nesses in a specific industry. The government’s purpose in assigning this task to Riley is to
verify compliance with laws.
calculate the businesses’ income taxes.
analyze employment statistics.
identify trends in the industry.
A creditor is most likely to examine a business’s financial accounting records if the business is
applying for a bank loan.
selecting a new market.
using cash accounting.
complying with regulations.
Why are accurate accounting records important to a business?
They prevent any financial losses.
They show the business how it is doing
They increase the return on investments.
They give the business an image of success.
Which of the following is an Asset?
Rent Payable
Cash
Capital
Bank Loan
Which of the following is a Liability?
Rent Payable
Cash
Capital
Rent Receivable
A business has $57,500 in Liabilities and $20,000 in Owner’s Equity, how much are there in Assets?
35,500
$77,500
7,500
$82,500
An accounting device used to analyze transactions is called
T Account
Account System
Account Equation
Transactions
In the Accounting Equation which of the following statements are true
A debit in Assets increases while a debit Liabilities increases
A debit in Assets increases while a debit Liabilities decrease
A credit in Assets decreases while a credit in Owner’s Equity decreases.
A credit in Assets increases while a credit in Owner’s Equity increases.
A chronological record of the transactions, showing an explanation of each transaction, the accounts affected, whether those accounts are increased or decreased, and by what amount are the
Accounting System
General Journal
Accounting Process
Transaction Process
All monies owed to a firm by its customers are
Income
Net Worth
Accounts Receivable
Accounts Payable
The formula for the Accounting Equation is
Assets + Liabilities = Owners’ Equity
Assets + Liabilities + Owners’ Equity
Assets = Liabilities + Owners’ Equity
Assets = Liabilities - Owners’ Equity
Also known as stockholders’ (or shareholders’) equity, book value, and net worth.
Assets
Liabilities
Equity
Net Worth
The foundation for accounting; represents the relationship between assets, liabilities, and owners’ equity, is known as the
Accounting Equation
Earnings
Balance Statement
Worth
On an Income State if the Total Expenses were greater than the Cost of Goods Sold the outcome would be a
Net Income
Revenue
Net Loss
Net Profit
The role of finance in business often involves:
monitoring expenses.
paying employees.
buying supplies.
obtaining funds.
Assets a company already owns and can use to finance a new venture are called:
accounts payable.
dividends.
return on capital.
equity.
When businesses invest funds to expand, they are involved in the process of:
selling.
depreciation.
finance.
capitalism.
In any accounting document, the phrase “Less” means to
Invest
Do Not Equate
Deduct
Total
Which of the following is true
Net Worth = Owner's Equity
Net Income = Revenue
Capital = Assets
Gross Sales = Gross Profit
Using Illustration 6.02, what is the Net Worth for the Balance Sheet?
$3,100,000
$2,500,000
$100,000
$1,000,000
Using Illustration 6.02, what is the Net Income for the Income Statement?
$3,100,000
$2,500,000
$700,000
$400,000
Using Illustration 6.02, what is the Gross Profit on Sales for the Income Statement?
$3,100,000
$2,500,000
$700,000
$1,000,000
What is the Working Capital Ratio, if Current Assets are $350,000 and Current Liabilities are $275,000 and what is does the indicator represent?
1.27 ratio and is desirable
1.27 ratio and is insufficient
.78 ratio and is desirable
.78 ratio and is insufficient
If DIO = 182.5 days, DSO = 3.9 days, and DPO = 103.4 days, what is the Cash Conversion Cycle?
CCC = 182.5 - 3.9 + 103.4 = 282 days
CCC = 182.5 + 3.9 - 103.4 = 83 days
CCC = 182.5 + 3.9 + 103.4 = 289.8 days
CCC = 182.5 - 3.9 - 103.4 = 75.2 days
Cash Conversion Cycle is most effective with
Retail-type companies
Consulting businesses
Software companies
Insurance companies
Which measures how fast a company can convert cash on hand into even more cash on hand
Finance
Working Capital
Cash Conversion Cycle
Return on Capital
