Ch 14 Reading Assignment

True or false: Revenue and sales are the same thing

false

The goal of double-entry bookkeeping is to ______.

make sure all transactions add up to the same amount

The ________ line is another name for net income after taxes.

bottom

Examples of fixed assets include ______

buildings and equipment

The ability to read, understand, and analyze accounting reports and financial statements is critical in understanding ______

business operations

What is the primary report given to the IRS by an organization?

tax return

A balance sheet reports on ______.

a firm's financial status on a specific date

Long-term assets like land, buildings, and equipment are referred to as _____ assets.

fixed

What are the three common liability accounts recorded on a balance sheet? -accounts receivable -notes payable -bonds payable -retained earnings -accounts payable

-notes payable -bonds payable -accounts payable

What are the key financial statements of a business? (Select all that apply) -income statement -annual report -balance sheet -statement of cash flows -trial balance

-income statement -balance sheet -statement of cash flows

What are the three major activities of a firm shown on the statement of cash flows? -depreciation -investments -operations -financing

-investments -operations -financing

In the process of selling goods or services, a business incurs operating expenses such as ______. (Select all that apply) -salaries -inventory -utilities -rent

-salaries -utilities -rent

What are two major purposes of accounting? -to provide economic predictions by which to guide the firm -to determine the strength of the firm's stakeholders -to report financial information to interested stakeholders -to help managers make well-informed decisions

-to report financial information to interested stakeholders -to help managers make well-informed decisions

The __________ ________ reports a firm's financial operations over a particular period of time, usually a year, a quarter of a year, or a month.

income statement

Which financial statement reports the firm's financial operations over a particular period of time, usually a year, a quarter of a year, or a month?

income statement

Which financial statement shows the firm's profit after costs, expenses, and taxes?

income statement

Assets, liabilities, and owners' equity are the major accounts listed on ______.

a balance sheet

What is considered to be the "language of business"?

accounting

A current bill that a company owes to others that is the result of buying merchandise on credit is called ______.

accounts payable

Match the common liability account with its correct description.

accounts payable- current liabilities that the company owes others notes payable- short- or long-term liabilities that the business promises to pay by a certain date bonds payable- long-term liabilities; money lent to the firm that must be paid back

The fundamental accounting equation is the basis for the ______.

balance sheet

Match the key financial statement with its correct description.

balance sheet matches- reports the firm's financial condition on a specific date income statement- summarizes revenues, cost of goods sold, and expenses for a specific period and highlights the total profit or loss during that period statement of cash flows- provides a summary of money coming into and going out of a firm

It's possible for a business to increase its sales and profits yet still suffer _______ _______ problems.

cash flow

The statement of cash flows is a financial statement that shows ______.

cash receipts and disbursements

Items that can or will be converted into cash within one year are called ________ assets.

current

Assets that can or will be converted into cash within one year are termed ______.

current assets

The definition of accounts payable is ______.

current liabilities involving money owed to others but not yet paid for

A company's ______ statements summarize all of the transactions that have occurred over a particular period.

financial

What type of information is reported by accounting to stakeholders?

financial

Management decision making is based on a firm's financial health and stability which are shown on the ______.

financial statements

Owners, creditors, and suppliers will be most interested in which type of accounting report?

financial statements

What type of assets are land, buildings, and equipment?

fixed assets

By its very design, the ______ offers one of the clearest possible pictures of the company's overall revenues and the costs incurred in generating those revenues.

income statement

Financial data from transaction documents are first recorded in a(n) _______. The data are then transferred into categories in a(n) _______, so managers can find all the information about a single account in one place.

journal; ledger

Financial transactions are first recorded in the ______ and then transferred, or posted to the ______.

journal; ledger

The bottom line is another name for ______.

net income or loss

Costs such as rent, salaries, utilities, and insurance are known as ______.

operating expenses

The statement of cash flows reports cash receipts and disbursements related to _______, investments, and financing.

operations

The major categories of the balance sheet are assets, liabilities, and ______.

owners' equity

Sales are one type of _______ that results from selling products to customers.

revenue

Revenue is defined as ______.

sales plus other money coming into the firm

The key financial statements of a business are the balance sheet, the income statement, and the ______.

statement of cash flows

How do cash flow problems usually start?

the firm uses up its credit

Double-entry bookkeeping requires that every transaction be recorded in ________ places.

two