accounting

Some students don't understand why the Income Statement and the Statement of Cash Flows aren't the exact same. If you had to help explain it to them, which of the following reasons might you give?

Statement of Cash Flows presents cash inflows and outflows; the Income Statement presents a summary of the revenues and expenses for a specific period of time

Generally Accepted Accounting Principles (GAAP) are the rules by which all U.S. companies must follow when preparing financial statements. Who is responsible for setting GAAP?

The Financial Accounting Standards Board (FASB) sets the rules for all companies and the Securities and Exchange Commission (SEC) sets and enforces rules for publicly-traded companies

Justin works for a private equity company thinking about acquiring a new athletic apparel retail store. He's interested in knowing the company's gross margin, so he tracks down its most recent annual report and finds the following numbers: • Total Revenue: $30,000,000 • Cost of Goods Sold: $25,000,000 • Average Assets: $20,000,000 • Net Income: $8,000,000 What is the gross margin for the apparel company?

The gross margin is 16.7%. The company made roughly $. 17 for every $1.00 in sales

Berenice was doing a quick audit of the balance sheet from her parents' family business. She saw that the assets total $10,000, the liabilities total $4,000, and the owner's equity balance was $5,000. Because Berenice took BUS 101, she knew which of the following was true?

There was a mistake: the assets total should equal the sum of the liabilities and owner's equity

In order to be useful to managers, managerial accounting reports should possess all of the following characteristics except...

Be prepared in accordance with generally accepted accounting principles

In your Financial Accounting class, you will learn which specific accounts are considered to be "assets," "liabilities," or "owner's equity." However, from our conversations during our Finance lectures and our Accounting lectures, we already know that loans from a bank would be classified as what?

Liabilities

In the context of accounting, three key objectives of internal controls include:

1. Safeguarding assets; 2. Accurate business information; 3. Compliance with laws and regulations

Zara, a retail clothing store known as being a leader of the fast fashion trends, changes its inventory about every few weeks. This strategy keeps customers coming back to its stores frequently to see the new apparel items. Erin was curious to know how frequently Zara's inventory is turned over, so she tracked down the company's financial statements and found the following information:

26 - inventory is turned over about every 2 weeks

Hiroki and Riley start a new Japanese mochi company offering innovative mochi flavors in bite-sized frozen treats. The mochi can be purchased in the frozen foods section of grocery stores in the U.S., Japan, and the U.K. Their accountant drafts their financial statements, listing some of the numbers in U.S. dollars, some in Japanese yen, and some in U.K. pounds. Which GAAP fundamental did the accountant violate?

Monetary Unit Principle

Let's say we have the following information: Sales $50,000 Cash $25.000 Variable costs $30,000 Fixed costs $20,000 Rent expense $10,000 Using this information, what is the Contribution Margin?

$20,000