Question 1

Identify the three key financial statements that corporations are required to prepare, and describe the type of information found on each.

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Question 2

Allison Robards is the owner of Backstreet Books, a small eclectic-style bookstore in a bustling college town. Allison prides herself in selecting hard to find books and magazines that her clientele enjoy. Recently, Allison is experiencing a cash flow shortage, and she is concerned that she may be purchasing too many copies of each title. Having recently completed a business class, you suggest to Allison that she calculate the ______________ ratio for her store, and then compare it to other stores in her industry.

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Question 3

Thoroughly describe each of six parts of the accounting cycle.

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Question 4

Bob Stewart plans to visit his financial planner today to discuss investment strategy. As a young accountant, he knows he can afford to invest in a few riskier investments. Which of the following ratios will be an important measure of profitability for Bob?

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Question 5

Explain the difference between current, fixed, and intangible assets. Give two examples of each of these different types of assets.

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Question 6

Explain the differences between managerial and financial accounting, and give examples of the types of problems and issues examined by each of these areas of accounting.

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Question 7

Identify and explain the differences between LIFO and FIFO inventory valuation methods. What would be the difference in gross margin using FIFO versus LIFO?

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Question 8

As a recent college graduate with a degree in accounting, Jeff is helping a newly formed construction company set up its accounting system. Although the company had purchased accounting software, Jeff wants to make certain that future reports will distinguish between current liabilities and long-term liabilities. In the future, he will need to know the amount of total current liabilities in order to ____________________.

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Question 9

You have just calculated the acid-test ratio for Peak Performance Sporting Goods [acid test ratio = 1.0]. As a loan officer for the local bank, you are called into your boss's office to interpret the results of this ratio. Which of the following statements best reflects an understanding of these results?

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Question 10

The top managers of Highbrow Bookstores want to indicate to the firm's shareholders how effectively they have managed the company. Perhaps the most meaningful way to do this would be by reporting strong:

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Question 11

We would expect the inventory turnover ratio for a ski shop to be _______ than the turnover for a convenience store.

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Question 12

Peak Performance Sporting Goods Company has reported net income after taxes = $3,750,000, with 18,250,000 shares outstanding. Basic Earning per Share for Peak Performance = _________.

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Question 13

As a bank loan officer, you are considering a loan application by Peak Performance Sporting Goods. The company has provided you with the following information:  Peak Performance's debt to owners' equity ratio (rounded to the nearest tenth of a percent) is:

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Question 14

What is ratio analysis? Explain the four different types of ratios and how each is used.

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Question 15

Explain the meaning of the fundamental accounting equation and its relation to the balance sheet. If it is helpful, create an example using numbers.

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Question 16

Marshall McBride inherited $10,000 from his Great Aunt Martha. He invested $5,000 in a new, risky start-up venture, 10th Generation, Inc., and the other $5,000 in Major Chemicals, Inc., a well-known chemical company that's been around for years. Today, his financial planner called to inform him that the Return on equity on 10th Generation = 6.28%; and, Return on equity on Major Chemicals = 10.50%. Which of the following facts is important information for Marshall McBride?

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Question 17

What is the difference between a journal and a ledger? How are journals and ledgers incorporated into the accounting cycle?

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Question 18

Discuss the role of an independent auditor. Provide information about the types of accounting activities they perform and the recent laws that have emerged to help guide them as they do their job.

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Question 19

Zoey was asked by the company controller to determine if the company could borrow more money for an expansion project. When she calculated a leverage ratio, she determined that the company already had 1.5 times as much debt as equity. Do you agree with her assessment that the company should back off with borrowing more funds at this time?

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Question 20

Peak Performance Sporting Goods Company continues to perform well in spite of an economic recession. Company executives credit this to the strong partnerships it enjoys with category killer and large discount chains. Last week Peak Performance reported basic EPS [earnings per share] = $.80/share. If the firm has 4,000,000 shares outstanding, net income after taxes for the same period = ______.

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Quiz 17: Understanding Accounting and Financial Information