Review 3
Matching
Complete the following using the terms listed.
a. certified public accountant
b. accounting process
c. asset
d. liability
e. owners’ equity
f. basic accounting equation
g. balance sheet
h. income statement
i. statement of cash flows
j. accrual accounting
k. public accountant
l. management accountant
m. GAAP
n. FASB
o. profitability ratio
p. International Accounting Standards Committee
q. leverage ratio
r. budget
____
____
____
____
1.
2.
3.
4.
____
____
5.
6.
____
____
____
7.
8.
9.
____ 10.
____ 11.
____ 12.
____ 13.
____ 14.
____ 15.
____ 16.
The basic relationship that states assets equal liabilities plus owners’ equity is called the _____.
The _____ is a statement of a firm's financial position on a particular date.
A financial record of a company's revenues, expenses, and profits over a period of time is called the _____.
_____ represents the owners’ initial investment in the business plus profits that were not paid out to owners
over time in the form of cash dividends.
A claim against a firm's assets by a creditor is a(n) _____.
The _____ provides investors and creditors with relevant information about a firm’s cash receipts and cash
payments for its operations, investments, and financing during an accounting period.
The accounting method that records revenues and expenses when they occur is called _____.
A(n) _____ is anything of value owned or leased by a business.
The procedure by which accountants convert data about individual transactions to financial statements is
called the _____.
A(n) _____ demonstrates his or her accounting knowledge by meeting state requirements for education and
experience, as well as successfully completing a number of rigorous tests in accounting theory and practice,
auditing, law, and taxes.
A(n) _____ provides accounting services to individuals and businesses for a fee.
A(n) _____ is employed by a business other than a public accounting firm.
Financial statements are prepared according to _____, whose principles encompass the conventions, rules,
and procedures for determining acceptable accounting practices at a particular time.
_____ is primarily responsible for evaluating, setting, or modifying the generally accepted accounting
principles.
_____ measures the extent to which a firm relies on debt financing.
An organization’s overall financial performance is measured by its _____, which evaluates the ability to
generate revenues in excess of operating costs and other expenses.
____ 17. A(n) _____ is a planning and controlling tool that reflects the firm’s expected sales revenues, operating
expenses, and cash receipts and outlays.
____ 18. The _____ was established to promote worldwide consistency in financial reporting practices.
Essay
19. Describe the three skills necessary for managerial success.
20. Describe competitive differentiation. What are some common sources?
21. List the steps involved in the decision-making process.
22. Define leadership. What are some traits found in many great leaders?
23. What is marketing? How does marketing go beyond selling?
24. Define utility and explain the types of utility created by the marketing function.
25. Discuss the evolution of the marketing concept through the marketing history eras.
26. Define the term target market.
27. What is accounting? What tasks do accountants perform?
28. Explain the differences between public accountants and management accountants.
29. Explain the basic accounting equation.
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 30. Management is the process of achieving ________ through people and other resources.
a. profits
b. status
c. organizational objectives
d. societal objectives
____ 31. Most top executives began their careers as which type of expert?
a. Technical
b. Financial
c. Human relations
d. Marketing
____ 32. ________ is a perception of marketplace needs and the methods an organization can use to satisfy them.
a. Vision
b. Strategic planning
c. Strategic management
d. The organizing function
____ 33. Vision should be ________ and ________.
a. rigid; focused
b. rigid; broad
c. focused; flexible
d. flexible; broad
____ 34. Senior management usually spends the majority of their time on ________ plans.
a. tactical
____ 35.
____ 36.
____ 37.
____ 38.
____ 39.
____ 40.
____ 41.
____ 42.
____ 43.
b. contingency
c. strategic
d. operational
Tactical planning is primarily the responsibility of ________.
a. top managers
b. middle managers
c. supervisory managers
d. the CEO
The first step in the decision-making process is to ________.
a. decide whether the manager is facing a programmed decision or a nonprogrammed
decision
b. identify the problem
c. develop alternatives
d. evaluate alternatives
________ is an organizational function and a set of processes for creating, communicating, and delivering
value to customers and for managing customer relationships in ways that benefit the organization and its
stakeholders.
a. Marketing
b. Market segmentation
c. Consumer behavior
d. Marketing research
A convenience store offers ________ utility by being open 24 hours each day.
a. place
b. form
c. time
d. ownership
The location of a coffee shop franchise in a mall creates ________ utility.
a. place
b. ownership
c. form
d. time
Which of the following is the first step in developing a marketing strategy?
a. Identify a target market.
b. Develop the right product.
c. Decide how to promote the product.
d. Implement the appropriate distribution system.
Ida works on creating ways to ensure that customers receive goods at the right time and correct location. Ida
is involved in her firm's ________ strategy.
a. pricing
b. promotion
c. distribution
d. product
Charlotte wants to purchase a new printer for her computer. She decides to stick with the brand she knows
because of her experience with its efficiency and reliability. This is an example of a(n) ________.
a. interpersonal determinant
b. personal determinant
c. buying behavior
d. recognition of a problem or opportunity
Approximately how much more does it cost to attract one new customer than to keep an existing one?
____ 44.
____ 45.
____ 46.
____ 47.
____ 48.
a. Twice as much
b. Three times as much
c. Five times as much
d. About the same
Professionals who are responsible for gathering, recording, reporting, and interpreting the financial
information of an organization are ________.
a. managers
b. statisticians
c. accountants
d. IRS agents
Ricardo is a loan officer for a bank and is reviewing the financial statements of a prospective borrower. As a
user of accounting information, Ricardo is most interested in using this information ________.
a. to make extension of credit decisions
b. to make an investment decision
c. in contract negotiations
d. to plan and control
Public accountants typically perform all of the following tasks for a business client EXCEPT ________.
a. developing the firm's marketing strategy
b. reviewing a firm's financial statements
c. tax planning
d. management consulting
Which of the following represents the basic accounting equation?
a. Assets + Liabilities = Owners’ Equity
b. Liabilities = Assets + Owners’ Equity
c. Assets = Liabilities + Owners’ Equity
d. Owners’ Equity - Liabilities = Assets
Which of the following statements is correct?
a. Budgets serve as a planning and control tool.
b. Budgets are limited to projecting cash inflows and outflows.
c. GAAP standards are used in budget development.
d. Budgets serve as the standard by which estimated performance is compared.
True/False
Indicate whether the statement is true or false.
____ 49. The principles of management apply to both Wal-Mart and United Way.
____ 50. One purpose of a company’s vision is to differentiate itself from its competitors.
____ 51. Vision is a skill found primarily in supervisory managers.
____ 52. CEOs who are dismissed are more likely to receive generous severance packages than those who resign.
____ 53. Tactical planning is the primary responsibility of middle managers and supervisors.
____ 54. Senior managers spend most of their time on strategic and long-range planning.
____ 55. Profit is still the sole exclusive objective for performance standards.
____ 56. Product innovation is a classic example of competitive differentiation.
____ 57. Great leaders share all of the same qualities.
____ 58. A significant business trend during the past decade has been the empowerment of employees.
____ 59. The most effective leadership style for a manager to adopt often depends on the organization's corporate
culture.
____ 60. Marketing is basically a form of selling.
____ 61. Throughout the marketing process, a successful organization focuses on building customer relationships.
____ 62. “Find a need and fill it” is the simplest explanation of the two elements of a marketing strategy.
____ 63. One of the most difficult areas of marketing decision making is pricing.
____ 64. Standardization works well for most goods and services in other countries.
____ 65. The first step in the consumer behavior process is the recognition of a problem or opportunity.
____ 66. Accounting is the language of business.
____ 67. Accountants play fundamental roles in not only business but also other aspects of society.
____ 68. Public accountants are typically employees of the firm for which they are providing services.
____ 69. Government accounting reports show the profit or loss of an organization.
____ 70. A firm has $10 million in assets and $5 million in owner's equity. Therefore, the firm must also have $5
million in liabilities.
Review 3
Answer Section
MATCHING
1. ANS:
OBJ:
2. ANS:
OBJ:
3. ANS:
OBJ:
4. ANS:
OBJ:
5. ANS:
OBJ:
6. ANS:
OBJ:
7. ANS:
OBJ:
8. ANS:
OBJ:
9. ANS:
OBJ:
10. ANS:
OBJ:
11. ANS:
OBJ:
12. ANS:
OBJ:
13. ANS:
OBJ:
14. ANS:
OBJ:
15. ANS:
OBJ:
16. ANS:
OBJ:
17. ANS:
OBJ:
18. ANS:
OBJ:
ESSAY
19. ANS:
F
TYPE: KN
G
TYPE: KN
H
TYPE: KN
E
TYPE: KN
D
TYPE: KN
I
TYPE: KN
J
TYPE: KN
C
TYPE: KN
B
TYPE: KN
A
TYPE: KN
K
TYPE: KN
L
TYPE: KN
M
TYPE: KN
N
TYPE: KN
Q
TYPE: KN
O
TYPE: KN
R
TYPE: KN
P
TYPE: KN
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
1
DIF:
AACSB Analytic
1
DIF:
AACSB Analytic
1
DIF:
AACSB Analytic
1
DIF:
AACSB Analytic
1
DIF:
AACSB Analytic
1
DIF:
AACSB Analytic
1
DIF:
AACSB Analytic
1
DIF:
AACSB Analytic
1
DIF:
AACSB Analytic
1
DIF:
AACSB Analytic
1
DIF:
AACSB Analytic
1
DIF:
AACSB Analytic
1
DIF:
AACSB Analytic
1
DIF:
AACSB Analytic
1
DIF:
AACSB Analytic
1
DIF:
AACSB Analytic
1
DIF:
AACSB Analytic
1
DIF:
AACSB Analytic
2
REF: p. 522
2
REF: p. 523
2
REF: p. 524
2
REF: p. 522
2
REF: p. 522
2
REF: p. 526
2
REF: p. 526
2
REF: p. 521
2
REF: p. 519
2
REF: p. 517
2
REF: p. 516
2
REF: p. 517
2
REF: p. 520
2
REF: p. 520
2
REF: p. 530
2
REF: p. 529
2
REF: p. 531
2
REF: p. 533
The three basic skills are human skills, technical skills, and conceptual skills. Human skills are needed at all
levels of management and allow managers to work effectively with and through people. These skills include
leadership, motivation, and communication. Technical skills are most critical for first-line supervisors since
they interact with non-managerial employees who must operate and explain machinery and computers.
Conceptual skills are particularly important for top management who must develop long-range plans for the
future. It allows them to see the overall importance of each function of the company.
PTS: 1
DIF: 3
REF: p. 256 | p. 257
OBJ: TYPE: KN
TOP: AACSB Communication
20. ANS:
Competitive differentiation is the unique combination of a company's abilities and approaches that sets it
apart from the competition. The common sources of competitive differentiation include product innovation,
technology, and employee motivation.
PTS: 1
DIF: 2
REF: p. 266
OBJ: TYPE: KN
TOP: AACSB Analytic
21. ANS:
The decision-making process begins when someone recognizes a problem or opportunity, develops potential
courses of action to solve the problem, evaluates the alternatives, selects and implements one of them, and
assesses the outcome of the decision.
PTS: 1
DIF: 2
REF: p. 268
OBJ: TYPE: KN
TOP: AACSB Analytic
22. ANS:
Leadership is defined as the ability to direct or inspire people to attain organizational goals. While great
leaders don't share all of the same qualities, there are three common traits that many share. These are empathy
(the ability to imagine oneself in another's position), self-awareness, and objectivity in dealing with others.
Other common traits found in great leaders include courage, the ability to inspire others, passion,
commitment, flexibility, innovation, and a willingness to experiment.
PTS: 1
DIF: 2
REF: p. 269
OBJ: TYPE: AP
TOP: AACSB Analytic
23. ANS:
Marketing is an organizational function and a set of processes for creating, communicating, and delivering
value to customers and for managing customer relationships in ways that benefit the organization and its
stakeholders. Marketing is more than just selling. Marketing is the process of discovering unmet customer
needs and continues with researching the potential market; producing a good or service capable of satisfying
the targeted customers; and promoting, pricing, and distributing that good or service. Throughout the entire
marketing process, a successful organization focuses on building customer relationships.
PTS: 1
DIF: 3
REF: p. 380 | p. 381
OBJ: TYPE: AP
TOP: AACSB Reflective Thinking
24. ANS:
The ability of a good or service to satisfy the wants and needs of customers is called utility. Marketing creates
time utility (making a product available when customers want to purchase it), place utility (having the product
available where customers want to purchase it), and ownership utility (the orderly transfer of goods and
services from the seller to the buyer).
PTS: 1
DIF: 2
TOP: AACSB Analytic
REF: p. 381
OBJ: TYPE: KN
25. ANS:
Initially, marketing was dominated by production, based on the notion that a good product will sell itself. This
idea gradually gave way to a sales orientation. The sales era was based on the idea that creative advertising
and selling will overcome customer resistance and convince them to buy. The sales era eventually gave way
to the marketing era. It was based on the philosophy that companies should find a customer need and fill it.
Recently, the marketing era has been transformed into the relationship era, based on the belief that long-term
relationships between producers and their customers lead to success.
PTS: 1
DIF: 3
REF: p. 382
OBJ: TYPE: KN
TOP: AACSB Analytic
26. ANS:
A target market (a subset of a market) is the group of potential customers toward whom the firm directs its
marketing efforts. Customer needs and wants vary considerably, and no single organization has the resources
to satisfy everyone. Organizations must carefully analyze potential target markets and then choose between
them.
PTS: 1
DIF: 2
REF: p. 388
OBJ: TYPE: KN
TOP: AACSB Analytic
27. ANS:
Accounting is the process of measuring, interpreting, and communicating financial information to enable
people inside and outside the organization to make informed decisions. Accountants gather, record, report,
and interpret financial information that describes the status and operation of an organization and aids in
decision making.
PTS: 1
DIF: 2
REF: p. 514 | p. 515
OBJ: TYPE: KN
TOP: AACSB Analytic
28. ANS:
A public accountant is an independent professional who provides accounting services to businesses and
individuals for a fee. These services include the preparation of tax statements, examinations of financial
statements, management consulting, and the design of accounting systems. Management accountants are
employed by businesses other than public accounting firms. They are responsible for collecting and recording
financial transactions, preparing financial statements, and interpreting financial statements.
PTS: 1
DIF: 2
REF: p. 516 | p. 517
OBJ: TYPE: KN
TOP: AACSB Analytic
29. ANS:
The basic accounting equation states that assets equal liabilities plus owners’ equity. Assets are anything of
value owned by the firm, and include tangible as well intangible assets. Liabilities and owners’ equity are
claims against the firm's assets. A liability is anything owed to creditors, while owners’ equity represents the
owners' initial investment in the business plus retained earnings that were not paid over time in dividends. The
basic accounting equation states that an increase in assets must be accompanied by an increase in either
liabilities or owners’ equity. Likewise, a decrease in assets must be accompanied by a decrease in either
liabilities or owners’ equity.
PTS: 1
OBJ: TYPE: AP
DIF: 3
REF: p. 522 | p. 523
TOP: AACSB Reflective Thinking
MULTIPLE CHOICE
30. ANS: C
PTS: 1
DIF: 1
REF: p. 254
OBJ:
31. ANS:
OBJ:
32. ANS:
OBJ:
33. ANS:
OBJ:
34. ANS:
OBJ:
35. ANS:
OBJ:
36. ANS:
OBJ:
37. ANS:
OBJ:
38. ANS:
OBJ:
39. ANS:
OBJ:
40. ANS:
OBJ:
41. ANS:
OBJ:
42. ANS:
OBJ:
43. ANS:
OBJ:
44. ANS:
OBJ:
45. ANS:
OBJ:
46. ANS:
OBJ:
47. ANS:
OBJ:
48. ANS:
OBJ:
TYPE: KN
A
TYPE: KN
A
TYPE: KN
C
TYPE: KN
C
TYPE: KN
B
TYPE: KN
B
TYPE: KN
A
TYPE: KN
C
TYPE: AP
A
TYPE: AP
A
TYPE: KN
C
TYPE: AP
B
TYPE: AP
C
TYPE: KN
C
TYPE: KN
A
TYPE: AP
A
TYPE: KN
C
TYPE: KN
A
TYPE: KN
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
AACSB Analytic
1
DIF: 2
AACSB Analytic
1
DIF: 1
AACSB Analytic
1
DIF: 3
AACSB Analytic
1
DIF: 2
AACSB Analytic
1
DIF: 2
AACSB Analytic
1
DIF: 2
AACSB Analytic
1
DIF: 1
AACSB Analytic
1
DIF: 1
AACSB Reflective Thinking
1
DIF: 1
AACSB Reflective Thinking
1
DIF: 1
AACSB Analytic
1
DIF: 2
AACSB Reflective Thinking
1
DIF: 2
AACSB Reflective Thinking
1
DIF: 3
AACSB Analytic
1
DIF: 1
AACSB Analytic
1
DIF: 1
AACSB Reflective Thinking
1
DIF: 1
AACSB Analytic
1
DIF: 2
AACSB Analytic
1
DIF: 1
AACSB Analytic
T
TYPE: AP
T
TYPE: KN
F
TYPE: KN
T
TYPE: KN
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
1
DIF: 2
AACSB Reflective Thinking
1
DIF: 2
AACSB Analytic
1
DIF: 2
AACSB Analytic
1
DIF: 2
AACSB Analytic
REF: p. 256
REF: p. 259
REF: p. 259
REF: p. 263
REF: p. 263
REF: p. 268
REF: p. 380
REF: p. 381
REF: p. 381
REF: p. 387
REF: p. 388
REF: p. 398
REF: p. 400
REF: p. 514
REF: p. 514
REF: p. 516
REF: p. 522
REF: p. 531
TRUE/FALSE
49. ANS:
OBJ:
50. ANS:
OBJ:
51. ANS:
OBJ:
52. ANS:
OBJ:
REF: p. 254
REF: p. 259
REF: p. 259
REF: p. 260
53. ANS:
OBJ:
54. ANS:
OBJ:
55. ANS:
OBJ:
56. ANS:
OBJ:
57. ANS:
OBJ:
58. ANS:
OBJ:
59. ANS:
OBJ:
60. ANS:
OBJ:
61. ANS:
OBJ:
62. ANS:
OBJ:
63. ANS:
OBJ:
64. ANS:
OBJ:
65. ANS:
OBJ:
66. ANS:
OBJ:
67. ANS:
OBJ:
68. ANS:
OBJ:
69. ANS:
OBJ:
70. ANS:
OBJ:
T
TYPE: KN
T
TYPE: KN
F
TYPE: KN
T
TYPE: KN
F
TYPE: KN
T
TYPE: KN
T
TYPE: KN
F
TYPE: KN
T
TYPE: KN
T
TYPE: KN
T
TYPE: KN
F
TYPE: KN
T
TYPE: KN
T
TYPE: KN
T
TYPE: KN
F
TYPE: KN
F
TYPE: KN
T
TYPE: AP
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
PTS:
TOP:
1
DIF: 1
AACSB Analytic
1
DIF: 1
AACSB Analytic
1
DIF: 3
AACSB Analytic
1
DIF: 2
AACSB Analytic
1
DIF: 1
AACSB Analytic
1
DIF: 1
AACSB Analytic
1
DIF: 1
AACSB Analytic
1
DIF: 1
AACSB Analytic
1
DIF: 1
AACSB Analytic
1
DIF: 2
AACSB Analytic
1
DIF: 2
AACSB Analytic
1
DIF: 1
AACSB Analytic
1
DIF: 1
AACSB Analytic
1
DIF: 1
AACSB Analytic
1
DIF: 1
AACSB Analytic
1
DIF: 1
AACSB Analytic
1
DIF: 2
AACSB Analytic
1
DIF: 2
AACSB Reflective Thinking
REF: p. 263
REF: p. 263
REF: p. 266
REF: p. 266
REF: p. 269
REF: p. 270
REF: p. 271
REF: p. 380
REF: p. 381
REF: p. 388
REF: p. 388
REF: p. 389
REF: p. 398 | p. 399
REF: p. 514
REF: p. 514
REF: p. 516
REF: p. 518
REF: p. 522