POFB UNIT 6

Which of the following is a key component of managing working capital:

Cash conversion cycle

Cash method

Cash method is where receipts are recorded during the period they are received, and expenses are recorded in the period in which they are actually paid

Managerial Accounting

Controlling everything in the inside of the organization and making sure everything is going smoothly

What accounting tell a business?

If they are creating profit or losing profit

Every month you should calculate how profitable your business is by filling out theses two financial documents?

Income statement and balance sheet

What's more important for a business, income statements or balance sheets?

Income statements are telling you was your profit and what your cost and expense are

What does Days Payable Outstanding do?

Involves the company's payment of it bills or AP

Which of the following is a requirement for a good accounting system:

It should provide needed information quickly

What is finance?

Money and how to use it to achieve a goal

Which of the following doesn't go on a balance sheet?

Net Profit

The role of finance in a business often involves:

Obtaining funds

What happens to a business if they don't do any accounting?

They would writing checks, making deposits,and filing taxes for nothing

The three main sections of a income statement are revenues, expenses, and net income.

True

You need the AR and AP at the beginning and end of a period

True

The process of keeping the financial records of a business is known as

accounting

Businesses would not be able to determine if they are meeting their financial goals without accurate:

accounting systems

Money the business owes is known as

accounts payable

Money owed to the business is known as

accounts receivable

For an accounting system to be useful to the business, the accounting information it must contain

accurate and up to date

Businesses use the information collected through the accounting process to prepare accurate:

balance sheets

Determining which projects a business should invest in is known as

capital budgeting

The overall purpose of accounting is to

control the finances of the business

Assets a company already owns and can use to finance a new venture are called

equity

Assets a company already owns and can use to finance a new venture are called:

equity

When businesses invest funds to expand, they are involved in the process of:

finance

3 types of accounting

financial accounting,Management accounting, Tax accounting

Accounting is often called the _____language of business

language

Which of the following groups makes regular use of a business's managerial accounting

managers

Finance is the business function that involves managing

money

The finance function would definitely be involved in a decision regarding

new business projects and strategies

What does Days Sales Outstanding do?

number of days to collects sales and AP

Accounting is distinct from finance because it main focus is on

record keeping actives

Why are accurate accounting records important to a business?

they show the business how it is doing

What is one of the main reasons why businesses need tp keep accurate accounting records

to control expenses

A company's current balance of assets and liabilities falls under the focus of

working capital management

Maybe you're not good at accounting or even if you have a poor understanding of it, the main thing that you can do is keep your financial records well organized. Give two examples why?

-Taxes purposes -To get your bills accents

Accrual method

Accrual method is when they recognizes expenses when incurred and revenue when earned rather when payment is made or received

What does Days inventory outstanding do?

Addresses how many days it takes to sell inventory

Which of the following categories of information are found on a balance sheet;

Assets, liabilities, owner's equity

DSO

Average AR/Revenue per day

DIO

Average inventory/Cost of Goods Sold (COGS) per day

DPO

Average/COGS per day

What is the Days Sales Outstanding equation?

Avg AR/ Revenue per day

What do you use to calculate CCC for the quarter in question

Balance sheet

How do you calculate CCC

CCC=DIO+DSO-DPO

CCC

DIO+DSO-DPO

What are the key components of the CCC cycle

DSO, DIO, DPO

What is DIO?

Days Inventory Outstanding

If you were going to invest (buy stock) in a company, would you rather look at their financial accounting records or their managerial accounting records? why?

Financial accounting records because it will tell a company's financial health and it will help me to determine if they want to invest in the company

GAAP

Generally Accepted Accounting Principles and it means that your report financial statements in a consistent manner and maintain clear and it is important because the objective is reporting practice throughout the organization

What is the Cash Conversion Cycle?

How fast a company can make money

What is Capital Investment Decisions?

How investments will be financed

Which of the following is a capital investment decision:

How to finance investments

who usually coordinate the accounting procedure in a business?

The CPA or financial manager

What are the governing bodies offer authority/guidance on each type of accounting method?

The Financial Accounting Standards Board (FASB)

What 3 accounting practices have been developed in the last decades?

The activity-based-costing, the balanced scorecard and bottleneck accounting were developed over the past couple decades