Intro to business Final study guide

What are some good investment choices to save for a wedding 2 years away?

24 month CD, Money market shares,. GE bonds (18 month), Savings account, Short term junk bonds.

the ____ ____ is the yearly statement of the firms financial condition, progress, and expectations provided to stakeholders

Annual report

Elyse combines her planned predictions into one large plan that will cover all the revenues and expenses for the firm

Create the operational/ master budget

Once a stock exchange agrees to list a company, the firm can be assured that it will always be listed by that exchange. (T/F)

False

Tony is conducting a team building workshop

No

Record financial data is an example of which step in the accounting cycle?

Record transactions in journals

If paid, dividends come from any profits remaining after the firm has paid taxes. The company cannot deduct dividends as an expense of doing business. (T/F)

True

The three important financial statements prepared by accountants are

balance sheet, income statement, and statement of cash flows.

All of the following are factors that led to the poor financial condition of the Bakery Barn, except

he started baking cookies for other companies.

Stocks offering investors a high dividend yield are called

income stocks.

Financial ___ include buying and selling goods

transactions

Trading internationally by using money appears easy and almost effortless, but the fact is there is a very complex banking system that makes it happen. (T/F)

True

A direct payment is a preauthorized electronic payment. (T/F)

True

A savings account is also known as a time deposit. (T/F)

True

After buying 200 shares of common stock in Epic Electronics for $20 per share, Rashad later sold the same shares for $25 per share. Rashad's capital gain on the total transaction is:

$1,000.

Separate purchasing receipts from sales documents is an example of which step in the accounting cycle

Analyze source documents

Bakery Barn eventually started to gross sales over $1 million. If the company were to seek out a loan, what would be its major source of information to determine if Bakery Barn were actually profitable?

Bakery Barn's financial statements

Accounts receivable, land, long-term liabilities, owners equity and patents are in which financial statment?

Balance sheet

Elyse is comparing her real cash flows to her predicted ones. She then analyzes how to cut several expenses for Ballerina Princess

Establishing financial controls to see whether the firm is achieving its goals

Jane is developing new market strategies to increase sales in the southwest region of Italy

No

Jason is preparing the financial statements for the fourth quarter

No

Prepare income statement is an example of which step in the accounting cycle?

Prepare the financial statements

Summarize data in the ledgers is an example of which step in the accounting cycle?

Take a trial balance

Celeste is planning out when the firm will pay its bond payment

Yes

Evaluate profit/loss of the firm is an example of which step in the accounting cycle?

Analyze financial statements

Put the steps in the accounting cycle in order from 1st to last

Analyze source documents Record transactions in journals transfer journal entries to ledger Take a trial balance Prepare the financial statements Analyze the financial statements

The ___ measures the cost of merchandise the firm sells or the cost of raw materials and supplies it used in producing items for resale.

Cost of goods sold

Elyse determines her planned expenditures for the major items in the firm, and then tries to plan the cash flow for the next year. this is an example of which step of the forecasting process?

Create the capital and cash budget

Elyse takes the predictions of cash needed in the upcoming year and then develops a strategic plan of how to obtain this cash. this is an example of which step of the forecasting process?

Develop financial plan

The U.S. government's lack of regulation alone caused the banking crisis and collapse of banks that had been in business for several decades. (T/F)

False

What is the major disadvantage of Mr. Boyd using credit cards to secure credit for his business?

Finance charges

The key working areas of accounting include

Financial, auditing, government and not for profit , managerial and tax accounting

list the forecasting steps in order

Forecast the firms short term and long term finanacial needs Develop financial plan create the capital and cash budgets Create the operating/ master budget establishing financial controls to see whether the firm is achieving its goals

what were some major contributors to the banking crisis of 2008

Glass-Stegall, CRA, MBSs, Loose loans, Variable rates, and borrowers

Revenues, costs of goods sold, advertising expense, insurance expense, and income tax are in which financial statement?

Income

Which one of the following methods is least likely to help Mr. Boyd manage his daily cash requirements?

Make credit available to keep current customers happy

Laynah is researching an alternative to warehousing by using a JIT inventory system

No

Elyse tries to predict how much cash Ballerina Princess will need in the next year .She then tries to determine how much cash the firm will need beyond this year is an example of which step in the forecasting process:?

Planned expenditures

Andrea invests $5,000 in five Epic Electronics bonds that mature in 10 years. Unexpectedly just the week after she invests, she has the opportunity to work abroad, which she has always wanted to do, but she needs cash. Which of the following most likely applies to Andrea?

She may immediately sell the bonds but it is unclear how much money they will sell for.

Shelley is the Chairman of the Federal Reserve. She is in charge of making decisions for the Fed that will impact the economy in the country, and she must make her decisions from current market data. An economy that is growing too fast could be detrimental as it could lead to high inflation and devaluing of the currency, but an economy that is sluggish will cause unemployment to rise. Shelley is faced with a current unemployment rate of 4.7%. This rate, coupled with an inflation rate over the last year of 5.4%, causes Shelley to take action. The Fed is currently offering a discount rate of 1.8%, and the market interest rate on one-year investments is averaging 2.3%. After meeting with the president, Shelley learns that the administration does not want to raise taxes, as it fears this could hurt its public image in the year prior to elections. The president has been making frequent public statements that the economy has been doing very well the past couple years and the dollar has been strong. As the president is shying away from using fiscal policy to slow the economy, it is now up to you to use monetary policy. Shelley should

Slow the economy

Which of the following are considered disciplines within the accounting profession

Tax, managerial, financial accounting

What are the advantages of issuing stock from the issuing companies perspective?

The value of stock doesn't have to be repaid, Dividends do not have to paid unless the board of directors agrees to this payout, The firm could buy back the stock in the future

Which one of the following is the most widely used source of short-term funding that Mr. Boyd (and other small business owners) would use to operate their business?

Trade credit

Jesse is in the process of estimating the revenues and expenses for the next quarter

Yes

John is seeking alternate and creative ways to pay the firm's bills

Yes

Karla is determining if the finances of the company are correct and in order

Yes

Neil is analyzing the funds for the organization and determining whether bonuses should be paid out to employees

Yes

Nick is evaluating some different options to help the company secure funding for a major equipment purchase

Yes

Steve is looking for strategies that would help the firm reduce its taxes

Yes

Tim is giving top management his opinion on financial matters that will impact the firm

Yes

All of the following things helped turn the Bakery Barn into a profitable company, except

appointing himself as CEO.

Accountants not only provide financial information to the firm, they

assist in interpreting that information.

Debt financing is essentially

borrowing money.

Net change in cash and cash balance are in which financial statement?

cash flow

The Securities and Exchange Commission developed ________ to halt trading in the stock market for a short time when the market has experienced a dramatic decrease in prices.

circuit breakers

What is the meaning of accounts payable

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

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

financial

One action Shelley could take in order to slow the economy would be to:

increase the discount rate.

In order to slow the economy the chairman of the Fed should:

increase the reserve requirement.

what were some non-major contributors to the banking crisis of 2008

individual investors, EFTs, FDIC, TARP

Bonds have to be paid back plus

interest

Marshall Manufacturing plans to issue $100 million of common stock. The firm will likely rely on the advice and assistance of a(n)

investment banker.

Bank loan of 20 months, bond, stock are examples of ___term financing

long

Accounting is for ____ and profit organizations as well

non-profit

Rent, depreciation, and salaries are examples of

operating expenses.

Some analysts refer to ___________ stocks as issues that sell for less than $2 (others say for less than $5).

penny

The reports and financial statements prepared by accountants

provide information that can be used by decision makers both inside and outside the organization.

A(n) __________ provides accounting services to individuals or firms on a fee basis.

public accountant

Jim Hopson is an accountant who works for a number of businesses as a consultant. He has helped to design an accounting system, provides accounting services, and has analyzed the financial strength of many of his clients. Jim is working as a

public accountant.

To slow the economy the Fed could take action to:

sell bonds through open-market operations.

Trade credit, line of credit, commercial paper and bank loan of 10 months are examples of ___ term financing

short

Not for profit organizations need accounting professionals to

show donors how money is being spent,

One dramatic move the Fed could take to slow the economy would be to:

take money out of circulation.

The accounting profession follows generally accepted accounting principles as defined by

the FASB (Financial Accounting Standards Board).

Maggie owns 10% or 50,000 common shares of a small biotech company. Although she has enjoyed a lot of control, Maggie realizes that in order for the firm to acquire the funds to grow in a recessionary economy, it will need to issue more stock. Unless she and others exercise preemptive rights,

the new issue will dilute her ownership.

Stockholders are entitled to

vote(s) for the board of directors.

Bonds sold at a ________ sell for less than face value.

Discount

What are the disadvantages of issuing stock from the issuing companies perspective?

Dividends are paid from net profit after taxes, the common stockholder has one vote per share for the board of directors, keeping stockholders happy can affect management decisions

Both preferred stocks and bonds represent funding sources that require repayment to investors. (T/F)

False

High start-up costs cause online banks, such as E*Trade Bank, to have higher operating costs than traditional banks. (T/F)

False

Post individual transactions into a single account is an example of which step in the accounting cycle?

Transfer journal entries to ledger

What are some good investment choices to save for retirement?

Treasury note 60 month, Johnson & Johnson stock, DOW ETF, Energy sector mutual fund, General electric bond 25 years.

(T/F) The financial accounting standards board defines the generally accepted accounting principles that accountants must follow

True

As nonprofit institutions, credit unions enjoy an exemption from federal income taxes. (T/F)

True

Investment bankers are in the business of underwriting securities. They profit from purchasing the new stock offering of a corporation at a discount, and then selling those shares of stock to the public at the market price. (T/F)

True

Lower fees and better interest rates motivate customers to open accounts with online banks. However, the lack of personal service and concern for information security encourages some customers to return to a traditional bank. (T/F)

True

operations, ___ financing

investments

The debt a firm owes to others is called

liability