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C213 FINAL EXAM: ACCOUNTING FOR
DECISION MAKERS QUESTIONS AND
ANSWERS
What does accounting focus on?
Correct answer: The impact a business's activities have on its
overall financial performance
Which report summarizes cash collections and cash expenditures from operating, investing, and financing activities over a period of time?
Correct answer: Statement of cash flows
Which users would have a primary concern with an organization's ability to provide healthcare benefits?
Correct answer: Employees
Which body regulates a certified public accounting firm's audit practices when the firm is auditing a large publicly traded company?
Correct answer: The Public Company Accounting Oversight
Board (PCAOB)
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What has had the most significant impact on accounting practices?
Correct answer: Information technology
What two items of information are revealed on the balance sheet? Choose 2 answers
Correct answer: Ownership. Debt
Which term is defined as the residual interest in the net assets of a company?
Correct answer: Owners' equity
A corporation has total liabilities of $300 million, total owners' equity of $100 million, and current assets of $50 million. What is the value of the firm's long-term assets?
Correct answer: $350 million
Which situation should result in revenue recognition on the income statement for the year ending 12/31/14 if the firm is using accrual-basis accounting?
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Correct answer: In 2014, a company provides services to a
customer for which cash will be collected the next year (2015).
Which category on the statement of cash flows summarizes cash receipts and payments to owners and creditors of the company?
Correct answer: Cash flows from financing activities
Where would an investor find a summary of a company's significant accounting policies?
Correct answer: In the notes to financial statements
Which assurance does an external audit report provide for its readers?
Correct answer: The company's financial statements fairly
reflect its financial position
Reliable
Correct answer: Information that can be verified
Relevant
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Correct answer: Information having to do with the matter at
hand
Material
Correct answer: Information that is important enough to make a
difference
Conservatism
Correct answer: Information related to recognizing losses as
they occur
What are steps in the decision cycle?
Correct answer: 1 Prepare financial statements. 2 Analyze
financial statements. 3 Gather information. 4 Make decision. 5 Implement decision.
Partial financial information for a company is as follows:
Current assets $36,543 Total assets $58,719 Current liabilities $24,824 Total liabilities $48,561 Stockholders' equity $10,158 Sales $46,997 Net Income $ 3,761 Market value of shares $41,316 What is the price-earnings (PE) ratio for this company?