Financial Accounting & Commercial Banking – Introduction To Business
This quiz is about financial accounting, commercial banking, fraudulent entries, financial misconduct, forensic, credit union, unpaid financial obligations, accrued expenses, current assets, debenture, stocks, bonds, brokerage firm.
_____ accounting involves analyzing financial documents in search of fraudulent entries or financial misconduct.
Management
Forensic – correct
Tax
Financial
Money is a medium of exchange.
True – correct
False
A credit union is owned and controlled by the government.
True
False – correct
An account that represents all unpaid financial obligations incurred by an organization is called
accounts payable.
long-term liabilities.
accrued expenses. – correct
current assets.
_____ bonds are best described as a sequence of small bond issues of progressively longer maturity.
Serial – correct
Debenture
Secured
Junk
A nonbanking financial institution that buys and sells stocks, bonds, and other securities for its customers is called a
thrift bank.
credit union.
brokerage firm. – correct
finance company.
_____ analysis refers to calculations that measure an organization’s financial health.
Ratio – correct
Specific
General
Cash-flow
The balance sheet presents a “snapshot” of an organization’s financial position at a given moment.
True – correct
False
Which of the following equations is used to calculate return on equity?
return on equity = net income/total assets
the return on equity = net income/sales
return on equity = net income/owners’ equity – correct
return on equity = assets + liabilities
Which of the following types of accountants has titles such as controller, tax accountant, and internal auditor?
noncertified accountants
private accountants – correct
forensic accountants
certified public accountants
A company’s financial obligations to short-term creditors, which must be repaid within one year, are called its
net profit.
current assets.
accounts payable.
current liabilities. – correct
A(n) _____ underwrites new issues of securities for corporations, states, and municipalities needed to raise money in the capital markets.
certified public accountant
certified management accountant
private accountant
investment banker – correct
Which of the following is an arrangement by which a bank agrees to lend a specified amount of money to an organization upon request?
a floating-rate bond
a lockbox
a trade credit
a line of credit – correct
_____ allow consumers to perform an ever-widening array of financial transactions from their personal or work computers.
Automated teller machines
Credit card terminals
Online banking services – correct
Magnetic stripe readers
_____ includes the owners’ contributions to a company along with income earned by the company and retained to finance continued growth and product development.
Owner’s liability
Revenue
Owner’s equity – correct
Owner’s assets
_____ is a written promise from one company to another to pay a certain amount of money. .
Secured bond
Certificate of deposit
Trade credit
Commercial paper – correct
Which of the following statements is true of bonds?
They denote a firm’s current liabilities.
They are the same as preferred stock.
The bonds can be defaulted without penalty.
They must be repaid according to the terms set in the indenture. – correct
Profitability ratios measure
the performance of the firm relative to others on a per-share basis.
the speed with which a company can turn its short-term assets into cash to pay off its short-term debts.
how efficiently a firm uses its assets to generate sales.
how much operating income or net income a firm is able to generate relative to its assets, equity, and sales. – correct
Serial bonds are a sequence of small bond issues of progressively longer maturity.
True – correct
False
The Federal Reserve Board controls the amount of money available in the economy
by printing new currency notes.
through monetary policy. – correct
by issuing credit cards.
by levying heavy taxes.
The _____, an asset utilization ratio, indicates how many times a firm collects its accounts receivable in one year.
inventory turnover
accounts payable
asset turnover
receivable turnover – correct
Open market operations refer to decisions to
regulate income tax rates for the open market.
buy or sell U.S. Treasury bills and other investments in the open market. – correct
issue savings accounts and certificates of deposit in the open market.
set a credit limit for the credit cards.
Cash, investments, accounts receivable, and inventory are
long-term assets.
long-term liabilities.
current assets. – correct
retained earnings.
_____ are savings accounts that guarantee a depositor a set interest rate over a specified interval of time as long as the funds are not withdrawn prematurely.
Checking accounts
Certificates of deposits – correct
Demand deposits
Money market accounts
The Federal Reserve Board was established by Congress in 1913 to
regulate corporate money laundering.
facilitate global monetary cooperation.
regulate the banking industry. – correct
provide benefits to retirees and the unemployed.
Which of the following statements is true of junk bonds?
They have low inherent risks.
They offer relatively high rates of interest. – correct
They are short-term liabilities.
They are a sequence of small bond issues of progressively longer maturity.
Which of the following types of marketable securities are the safest?
certificate of deposit
U.S Treasury bills – correct
commericial paper
cash deposits
New issues of stocks and bonds are sold directly to the public and to institutions in what is known as the primary market.
True – correct
False
The _____ Act limits the types of assets commercial banks can buy; the amount of capital they must maintain; and the use of derivative instruments such as options, futures, and structured investment products.
Celler-Kefauver
Glass-Steagall
Sarbanes-Oxley
Dodd-Frank – correct
The oldest and largest of all financial institutions are
savings and loans associations.
insurance companies.
credit unions.
commercial banks. – correct
_____ ratios provide information about how much debt an organization is using relative to other sources of capital, such as owners’ equity.
Debt utilization – correct
Asset utilization
Receivables turnover
Quick
_____ accounts are similar to interest-bearing checking accounts, but with more restrictions.
Money market – correct
Savings
Current
Certificates of deposit
A debit card
provides a hard “paper trail.”
allows cardholders to pay for transactions at a later date.
offers a purchase “grace period.”
looks like a credit card but works like a check. – correct
_____ are businesses that protect their clients against financial losses from certain specified risks in exchange for a fee, called a premium.
Insurance companies – correct
Mutual savings banks
Investment banks
Finance companies
_____ ratios compare current assets to current liabilities to indicate the speed with which a company can turn its assets into cash to meet debts as they fall due.
Profitability
Current
Debt
Liquidity – correct
Corporations usually employ _____ to help sell their securities in the primary market.
investment banking firms – correct
stock brokers
commercial banks
Asset utilization ratios measure
how much income a firm generates relative to its assets, equity, and sales.
how well a firm uses its assets to generate each $1 of sales. – correct
the speed with which a company can turn its short-term assets into cash to pay off its short-term debts.
the performance of the firm relative to others on a per-share basis.
The _____ Act required firms to be more rigorous in their accounting and reporting practices.
Williams
Glass-Steagall
Sarbanes-Oxley – correct
Celler-Kefauver
The _____ presents a snapshot of an organization’s financial position at a given moment.
net income
profit margin
statement of cash flows
balance sheet – correct
The principal value of a budget lies in its
evaluation of the firm’s performance.
purpose of control over expenditures.
breakdown of cash inflows and outflows. – correct
forecast of income and expenses over a period of time.
Employees of a local school conduct their financial transactions through a financial institution, which is also owned by them. This financial institution is most likely to be a(n)
insurance company.
savings and loan association.
credit union. – correct
federal bank.
_____ are marketable securities that are short-term debt obligations sold by the U.S. government to raise money.
Commercial certificates of deposits
U.S. Treasury bills – correct
Trade credits
Secured loans
Double-entry bookkeeping is a system of recording and classifying business transactions
in all accounts including those that do not maintain the accounting equation.
by the amount of the transaction.
in the same account.
in separate accounts in order to balance the accounting equation. – correct
The _____ insures individual bank accounts.
National Credit Union Administration
Federal Savings and Loan Insurance Corporation
Federal Deposit Insurance Corporation – correct
The Federal Reserve Board
The over-the-counter securities market
does not have a central location. – correct
is similar to organized stock exchanges.
accounts for the least total dollar value of all of the secondary markets.
does not trade corporate bonds.
Working capital management refers to
managing short-term assets and liabilities. – correct
financing internal projects.
managing long-term liabilities.
managing long-term assets.
The _____ rate is the interest rate commercial banks charge their best customers for short-term loans.
credit
factor
over-the-counter
Prime – correct
An income statement shows
an organization’s profitability over a period of time. – correct
how much income each employee earned.
a company’s assets, liabilities, and equity.
a company’s variable costs at a particular point in time.
_____ is the total amount of money received from the sale of goods or services, as well as from other business activities such as the rental of property and investments.
Profit
Revenue – correct
Expense
Net income
A finance company that buys other companies’ accounts receivable for less than they are worth and assumes the responsibility for collecting the debt is known as a
conciliator.
brokerage.
factor. – correct
lockbox.