Class 8
Net income or loss is:
all revenue minus all expenses and taxes
The first step in the accounting cycle is to ______.
analyze source documents
what the key financial statement of business?
balance sheet, income statement, and statement of cash flows
revenue transactions
business and its customers
The ability to read, understand, and analyze accounting reports and financial statements is critical in understanding ______. a. investment markets b. tax laws c. market fluctuations d. business operations
business operations
An accountant's time is freed up to do more important tasks such as financial analysis due to the assistance provided by using ______. the accounting cycle double-entry accounting computerized accounting programs a trial balance
computerized accounting programs
What term describes the cost of merchandise the firm sells?
cost of goods sold
variable costs
costs that vary with the quantity of output produced
In accounting, liabilities refer to____
debts a business owes to others
whose profit is it if the the company gives it to the owners?
divided to stockholders; income to partners or a sole proprietor
A summary of all the financial transactions that have occurred over a particular period is referred to as a ______. annual report journal entry financial statement tax return
financial statement
What are the questions outside users are interested in, in financial accounting?
is the organization profitable? is it able to pay its bills? how much debt does it owe?
______ income after taxes is the last line on the income statement.
net
whose profit is it if the company "reinvests" the income?
retained earnings
Owner's Equity
the owner's claims (what they actually own) of the stuff
income statement
the story of transactions over a specific time period
Accounting Progression
1. Analyze source documents 2. Record transactions in journals 3. Transfer journal entries to ledger 4. Take a trial balance 5. Prepare financial statements 6. Analyze financial statements
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. Analyze source documents, Take a trial balance, Prepare financial statements, Analyze financial statements, Transfer journal entries to a ledge, Record transactions in journals
1. Analyze source documents 2. Record transactions in journals 3. Transfer journal entries to a ledge 4. Take a trial balance 5. Prepare financial statements 6. Analyze financial statements
the accounting system
Inputs (accounting documents) --> Processing --> Outputs (financial statements)
Managerial Accounting
Provides information and analysis to managers inside the organization to assist them in decision making.
accounting
Recording, classifying, summarizing, and interpreting financial events in an organization is referred to as ______.
revenue
The monetary value of what a firm received for goods sold, services rendered, and other payments is termed _____.
Financial Statements
a summary of all the financial transactions that have occurred over a particular period
What is considered to be the "language of business"?
accounting
The relationship among assets, liabilities, and owners' equity is a fundamental concept in accounting known as the _______ equation.
accounting (equation)
Items of value owned by a firm are called ______.
assets
What are the three major categories on the balance sheet?
assets liabilities owners' equity
Which three components make up the fundamental accounting equation?
assets owners' equity liabilities
The statement of cash flows is a financial statement that shows ______.
cash receipts and disbursements
The best way to understand a firm's financial health and stability is to look at its ______.
financial statements (rather than the tax returns)
On a balance sheet, assets may include ______.
goodwill tangible resources intangible resources
Which financial statement shows a firm's bottom line—its profit (or loss) after costs, expenses, and taxes for a specific period?
income statement
The formula for the costs of goods sold is ______.
purchase price + freight charges + storage costs
The assessment of a firm's financial condition and performance through calculations and interpretation of financial ratios developed from the firm's financial statements is called ____ analysis.
ratio
What is the term for all resources that come into the firm from operating activities? a. net sales b. gross sales c. profit d. revenue
revenue
Cash flow analysis is especially important for which of the following?
small businesses
An advantage of the use of computers to maintain and compile accounting information is ______.
speed
Cash receipts and disbursements related to operations, investments, and financing are reported on the ______.
statement of cash flows
Operating expenses include which of the following?
supplies utilities rent
Balance Sheet: Liabilities
the debt claims against the stuff
net income is also profit (loss)
the difference between revenue and expense
accounting
the recording, classifying, summarizing, and interpreting of financial events and transactions in an organization to provide interested parties needed financial information
Balance Sheet Assets
the value of the stuff the organization controls
expense transactions
Business and its suppliers - such as resources, people and capital
fixed costs
Costs that do not vary with the quantity of output produced
True or false: Gross profit is what a company shows on their income statement as the bottom line figure.
False; Net income is what a company shows on their income statement as the bottom line figure.
Financial Accounting
Financial information and analyses are generated for people primarily outside the organization.
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
annual report
a yearly statement of the financial condition, progress, and expectations of the firm
Through the recording, classifying, summarizing, and interpretation of financial events in an organization, the function of ______ helps managers make good decisions about the firm's operations. a. investing b. management c. accounting d. finance
accounting