Chapter 17 Accounting

Stakeholders who want to look at detailed financial information on the financial condition, progress, and expectations of a company will look at

an annual report

In the fundamental accounting equation: ___ = liabilities + owner's equity

assets

Reviewing and evaluating records used to prepare a company's financial statements is referred to as

auditing

The ___ ___ reports a firm's financial condition on a specific date, whereas the ___ ____ summarizes revenues, costs, and expenses for a specific period

balance sheet income statement

a type of long term liability that represents money lent to the firm that they must pay back is called a(an)

bond payable

The ___ line is another name for net income after taxes

bottom

It's possible for a business to increases its sales and profits yet still suffer ___ ___ problems

cash flow

Earnings per share is profit earned by a company for each share of outstanding ___ ____

common stock

___ assets are items that can or will be converted into cash within one year

current

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

financial statement

A company's net sales minus cost of goods sold is called

gross profit

1.accounting 2.bookkeeping 3.accounting cycle 4.trial balance

1. classifying, summarizing, interpreting, and reporting 2. recording 3. series of six steps 4. summary of data in ledgers

Revenue is the monetary value of what a firm received for

1. interests earned 2. services rendered 3. goods sold

Which are the advantages of using of computers to maintain and compile accounting information?

1.Handle large amounts of data 2. Speed

The key working areas of accounting include

1.auditing 2.government and not-for-profit accounting 3. tax accounting 4. managerial accounting 5. financial accounting

___ income after taxes is the last line on the income statement

Net income aka net earnings net profit

___ payable can be either short term or long term liabilities that a business promises to repay by a certain date

Notes payable

What is the difference between assets and liabilities?

Owner's equity

Two examples of account software packages are

Peach Tree and Quickbooks

Examples of fixed assets include

buildings and equipment

The ___ of ____ ____ measures the cost of merchandise the firm sells or the materials and supplies used to manufacture them for sale

cost of goods sold

The three profitability performance ratios are

earnings per share (EPS) returns on sales and return on equity

Assets may include

economic resources tangible and intangible resources NOT bonds payable

Accounting provides ___ statements that are critical to understanding the health of a business.

financial

____ ratios measure the degree to which a firm relies on borrowed funds in its operations

leverage ratios

___accounting programs post information from journals instantaneously so that financial information is readily available.

computerized

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

journal; ledger

An accountants' time is freed up to do more important tasks such as financial analysis due the assistance provided by using:

computerized accounting programs

Which of the following are considered users of mangaerial accounting informationa

Chief informational officer Department managers

Which of the following are inputs to the accounting system?

shipping documents sales documents

The statements of cash flows reports cash receipts and disbursements related to ___, investments, and financing.

operations

A company that uses a capital account for owners equity is organized as a sole ___ or a partnership

proprietorship

What are the main types of financial ratios used in ratio analysis?

Profitability ratios Liquidity ratios Debt ratios Activity ratios

What type of long term assets have no real physical form but do have value?

intangible assets

Which ratio is the cost of goods sold divided by the average inventory?

inventory turnover

Depreciation is considered a type of

operating expense

The principles that accountants must follow in order to assure that a firm's accounting information is accurate are abbreviates as:

GAAP General Accepted Accounting Principles

Which of the following are considered disciplines within the accounting profession

tax accounting managerial accounting financial accounting

List the steps in the accounting cycle from beginning to end

1. Analyze source documents (sales slips, travel records, etc.) 2. Record transactions in journals 3. Transfer (post) journal entries to ledger 4. Take a trial balance 5. Prepare financial statements 6. Analyze financial statements

Managerial accounting is concerned with:

1. measuring production costs 2. preparing budgets 3. controlling

Which of the following are major accounts on the balance sheet?

Assets Liabilities owner's equity

The Red Cross is a non-profit which would most likely require the services of which type of accountant?

Public or Private accountant

Which legislation prohibits accounting firms from providing consulting services to companies they audit?

The Saxbarnes-Oxley Act

Which financial statement reports the firm's financial operations over a particular period of time?

income statement

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

Income statement

A certified public accountant

must follow GAAP in the US must pass a series of exams

Which of the following would be shown on an income statement?

net income cost of goods sold operating expenses revenue NOT liabilities nor assets

The bottom line is

net income or loss after taxes the last line on the income statement

Rent, salaries, supplies, utilities, and insurance are examples of ___ expenses that are general expenses

operating

A ___ accountant is trained in tax law and is responsible for preparing tax returns or developing tax strategies

tax

The primary users of government and not-for-profit accounting information are:

1. legislative bodies 2. citizens 3. special interest groups

In order to be a certified management accountant a person must:

1. pass a qualifying exam 2. meet the educational requirement 3. be certified by the Institute of Certified Management Accountants

Recording, classifying, summarizing, and interpreting financial events in an organization is called

accounting