BA 101 Accounting and Financial Statements
Which are considered to be the working areas of accounting
1) Financial accounting 2) auditing 3) tax accounting 4) Government and not-for-profit accounting 5) managerial accounting
what are some benefits of using computers for accounting purpose
1) it frees accountant's time for more important tasks 2) software can help if no strong accounting support is available 3) information can be posted from journals instantaneously
The first step in the accounting cycle is to
analyze source documents
What term describes the cost of merchandise the firm sells
cost of goods sold
In accounting, liabilities refer to
debts a business owes to others
On a balance sheet, assets may include
intangible resources, tangible resources, goodwill
liquidity ratio
measure a company's ability to turn assets into cash to pay its short term debt
leverage ratio
measures the degree to which a firm relies on borrowed funds in its operations
In operations a business, rent, salaries, supplies, utilities and insurance are all examples of
operations expenses
Cash flow analysis is especially important for which of the following
small businesses
What an annual report
A yearly statement of a firms financial condition, progress and expectations
Net income or loss is
all revenue minus all expenses and taxes
If financial management is the heartbeat of competitive businesses, what keeps that heartbeat stable
accounting information
Items of value owned by a firm are called
assets
Stakeholders who want to look at detailed financial information on wether a company is profitable, is able to pay its bills, and how much debt it owes will look at the firm's
annual report
Leverage or debt ratios measure the degree to which a firm relies on
borrowed funds
Which financial statement shows a firm bottom line-its profit (or loss) after costs, expenses, and taxes for a specific period?
income statement
Managerial accounting is used to provide information
inside the firm
What type of ration measures a company's ability to turn assets into cash to pay its short term debts
liquidity ration
The debTt a firm owes to others is called
liability
Cash receipts and disbursements related to operations, investments, and financing are reported on the
statement of cash flows
The best way to understand a firm's financial health and stability is to look at its
Financial Statement
The formula for the costs of goods sold is
Purchase price + freight charges + storage costs
What type of accounting is most likely to develop strategies for a firm in dealing with the Internal Revenue Service
Tax accountant
Operating expenses include which of the following
Utilities, supplies, rent
assets, liabilities and owners' equity are the major accounts listed on
a balance sheet
The income statement shows
a firm's profit (or loss) after costs, expenses, and taxes
Calculating and interpreting financial ratio developed from the firm's financial statement is called
ratio analysis
Recording, classifying, summarizing, and interpreting financial events in an organization is referred to as
accounting
What is considered to be the "language of business
accounting
An accountant's time is freed up to do more important tasks such as financial analysis due to the assistance provided by using
computerized accounting programs
The assessment of a firm's financial condition and performance through calculations and interpretation of financial rations develop from the firm's financial statement is called
ration analysis
The relationship among assets, liabilities, and owners' equity is a fundamental concept in accounting known as the
accounting equation
Reviewing and evaluating of records used to prepare a company's financial statement is referred to as
auditing
An indirect measure of risk that tells us how much a firm earned for each dollar invested by its owners is called
return on equity
The monetary value of what a firm received for goods sold, services rendered, and other payments is termed
revenue
The role of an auditor is to
review and evaluate a company's financial information
An advantage of the use of computers to maintain and compile accounting information is
speed
In using the accounting equation, if assets= $40,000 and liabilities = $30,000 then owner's equity is equal to
$10,000
List the steps in the accounting cycle from beginning to end.
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
The ability to read, understand, and analyze accounting report and financial statement is critical in understanding
Market Fluctuations
What are the 3 major categories on the balance sheet
Owners' equity, Assets, Liabilities