BUS1050 Chapter 17: Understanding Accounting and Financial Information
What are some benefits of using computers for accounting purposes?
-Information can be posted from journals instantaneously. -Computers can handle large amounts of financial information. -Software can help if no strong accounting support is available.
The ___________ ____________ provides information about a company's financial status to company managers, owners, government agencies, and the general public.
annual report
Basic earnings per share is the ratio of net _______ after taxes to the number of common stock shares outstanding.
income
The ________ statement shows all of a firm's revenues, costs, and whether it made a profit or loss during a specific period.
income
On a balance sheet, assets may include:
intangible resources, tangible resources
Accounting is needed for __________ organizations as well as for profit-seeking firms.
nonprofit
The statement of cash flows reports cash receipts and disbursements related to __________, investments, and financing.
operations
Financial accounting and managerial accounting differ in terms of who uses the information. Financial accounting provides information primarily for:
people outside the organization
An accounting system includes inputs, _______, and outputs.
processing
Financial ________ such as income statements and balance sheets indicate a firm's financial health and stability.
statements
The major categories on the balance sheet include which of the following? -Cash balance -Liabilities -Owners' equity -Assets
Liabilities, Owners' equity, Assets
The ratios that measure the effectiveness of a firm's management in using the assets that are available are called:
activity ratios
revenue minus cost of goods sold is called ___________ ___________.
gross profit
The three profitability performance ratios are:
return on sales, return on equity, earnings per share
The principles, defined by FASB, that accountants must follow to assure that a firm's accounting information is accurate are abbreviated as:
GAAP
Which of the following is considered to be a part of accounting?
Interpreting financial transactions, classifying financial transactions, and recording financial transactions
The formula for the cost of goods sold is:
Purchase price + freight charges + storage costs
An advantage of the use of computers to maintain and compile accounting information is:
Speed
Accounting: ___a_____. Bookkeeping: ____b_____. Accounting cycle: ____c_____. Trial balance: ______d______.
a: Classifying, summarizing, interpreting, and reporting. b: Recording. c: Series of six steps. d: Summary of data in ledgers.
List the steps in the accounting cycle from beginning to end. Place the first step on top and list them down to the last step on the bottom.
1. Analyze source documents. 2. Record transactions in journals. 3. Transfer journal entries to a ledger. 4. Take a trial balance. 5. Prepare financial statements. 6. Analyze financial statements.
If financial management is the heartbeat of competitive business, what keeps that heartbeat stable?
Accounting information
The financial statement that reports a firm's financial condition at a specific time is the:
balance sheet
Operating expenses include which of the following?
utilities, rent, supplies