Financial Management I

• Question 1

  0.2 out of 0.4 points

  	Match all words to their correct definition.
  	Question Correct Match Selected Match Accounting  D. The systematic and comprehensive recording and use of financial transactions and data pertaining to a business.  C. The process of identifying, measuring, analyzing, interpreting, and communicating financial information for the pursuit of an organization's goals. Managerial Accounting  C. The process of identifying, measuring, analyzing, interpreting, and communicating financial information for the pursuit of an organization's goals.  D. The systematic and comprehensive recording and use of financial transactions and data pertaining to a business. Financial Accounting  A. The analysis and reporting of financial transactions pertaining to a business. This involves the preparation of financial statements available for the benefit of owners, creditors, and other stakeholders.  A. The analysis and reporting of financial transactions pertaining to a business. This involves the preparation of financial statements available for the benefit of owners, creditors, and other stakeholders. Generally accepted accounting principles (GAAP in the United States)  B.  The standard framework of guidelines for financial accounting.  B.  The standard framework of guidelines for financial accounting.

• Question 2

  0 out of 0.4 points

  	Accounting principles are hard-and-fast rules.
  	Selected Answer:  True Correct Answer:  False Response Feedback: Accounting principles are guidelines which allow for some judgment to best reflect the varied operating environments of Companies.  The guidelines help ensure consistency, but differences occur and are generally disclosed in the notes in the financial statements. An example of this is depreciation -- there are multiple methods to reflect the use of a long term asset -- all of which are acceptable under GAAP.

• Question 3

  0.2 out of 0.4 points

  	Select all true statements related to accrual accounting.
  	The time of sale (or transfer of legal title) is usually considered the revenue-producing event.    Accounts receivables is debited/increased only once money is received. Correct Answers:   The time of sale (or transfer of legal title) is usually considered the revenue-producing event.    Accounts receivables is debited/increased before money exchanges hands.  Response Feedback: Most organizations use accrual (as opposed to cash) accounting. Income is recognized at the time of the sale/when legal title changes from the seller to the buyer.  (Which is not necessarily the same as when cash is exchanged). Accts Receivable is an asset that reflects money owed to a Company from its customers.   It is debited/increased BEFORE the cash is received.

• Question 4

  0.1 out of 0.4 points

  	Match each term with the appropriate meaning.
  	Question Correct Match Selected Match Balance Sheet  b.  A snapshot at a moment in time that indicates what is owned and "owed" by a company.  d.  A description of financial earnings for a period of time. Income Statement  d.  A description of financial earnings for a period of time.  c.  A recap of changes in the corporate checkbook. Statement of Cash Flow  c.  A recap of changes in the corporate checkbook.  b.  A snapshot at a moment in time that indicates what is owned and "owed" by a company. Form 10-K  a. An annual report required by the U.S. Securities and Exchange Commission (SEC) that gives a comprehensive summary of a company's  financial performance.  a. An annual report required by the U.S. Securities and Exchange Commission (SEC) that gives a comprehensive summary of a company's  financial performance.

• Question 5

  0 out of 0.4 points

  	Which two statements best demonstrate the use of Variance Trend Analysis?
  	Selected Answers:  [None Given] Correct Answers: b.  My current ratio has improved from 1.0% to 1.5%. d.  My sales are up 3 percent versus the same period the previous year. Response Feedback: Absolute (single data points) or purely qualitative statements are not examples of Variance Trend Analysis

• Question 6

  0 out of 0.4 points

  	Select the correct fundamental accounting equation:
  	Selected Answer:  [None Given] Correct Answer: a.  Assets = Liabilities + Equity

• Question 7

  0.4 out of 0.4 points

  	Which of the following are assets? * Refer to your Bookboon readings.
  	Accounts receivable   Equipment   Cash Correct Answers:   Accounts receivable   Equipment   Cash Response Feedback: Salaries payable and accounts payable are a liability because they represent amounts owed to 3rd parties (e.g. employees and suppliers).

• Question 8

  0.4 out of 0.4 points

  	Which of the following are liabilities?
  	Wages Payable   Taxes Payable   Long-term Debt Correct Answers:   Wages Payable   Taxes Payable   Long-term Debt Response Feedback: All are liabilities (debts) except for Accounts Receivable which is an asset and Retained Earnings which is an Equity account and represents amounts owed TO the company from its customers.

• Question 9

  0.4 out of 0.4 points

  	The General Ledger houses the organization's accounts. All entries are recorded in the General Journal. In order to record transactions correctly, identify the two transaction analysis rules. *Refer to your Bookboon readings.
  	Selected Answers:   Asset and Expense accounts increase with a debit and decrease with a credit.   Liability, Equity, and Revenue accounts increase with a credit and decrease with a debit.  Correct Answers:   Asset and Expense accounts increase with a debit and decrease with a credit.   Liability, Equity, and Revenue accounts increase with a credit and decrease with a debit.

• Question 10

  0.2 out of 0.4 points

  	Most businesses use a double-entry accounting system, where every transaction is recorded in more than one account. The first account is the debit account and the second is the credit account. To create a journal entry always begin by entering the title of the account that will be debited first, then enter the title of the account that will be credited and the amount.  Suppose your organization purchased materials to produce a product. In this case the organization purchased $3,000 of inventory on credit which will eventually be sold for $3,500. Complete the journal entry for this transaction using the drop down-list. Account Description Debit Credit [X] [Z]   [Y]   [A]
  	Selected Answer: Most businesses use a double-entry accounting system, where every transaction is recorded in more than one account. The first account is the debit account and the second is the credit account. To create a journal entry always begin by entering the title of the account that will be debited first, then enter the title of the account that will be credited and the amount.  Suppose your organization purchased materials to produce a product. In this case the organization purchased $3,000 of inventory on credit which will eventually be sold for $3,500. Complete the journal entry for this transaction using the drop down-list. Account Description Debit Credit  Accounts Receivable  $3,000    Accounts Payable    $3,500 Correct Answer: Most businesses use a double-entry accounting system, where every transaction is recorded in more than one account. The first account is the debit account and the second is the credit account. To create a journal entry always begin by entering the title of the account that will be debited first, then enter the title of the account that will be credited and the amount.  Suppose your organization purchased materials to produce a product. In this case the organization purchased $3,000 of inventory on credit which will eventually be sold for $3,500. Complete the journal entry for this transaction using the drop down-list. Account Description Debit Credit  Inventory  $3,000    Accounts Payable    $3,000 Response Feedback: The company now owns more materials, which causes us to debit/increase the inventory asset account at the $3,000 purchased cost.  Because it was bought on credit, the company now owes the supplier, which causes us to credit/increase the accounts payable liability account by the same $3,000.  Accounts receivable (amounts owed to the Company from the sale of goods/services to customers) and Sales Revenue (proceeds from the sales of goods/services to customers) are not affected by this transaction .  GAAP includes principles of conservatism and cost which require assets to be valued at historical cost — which is why we value the materials at acquired cost rather than anticipated selling price.