Business Chapter 17

tax

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

financial statement

A summary of all the financial transactions that have occurred over a particular period is referred to as a ______.

computerized accounting programs

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

speed

An advantage of the use of computers to maintain and compile accounting information is ______.

return on equity

An indirect measure of risk that tells us how much a firm earned for each dollar invested by its owners is called ______.

a balance sheet

Assets, liabilities, and owners' equity are the major accounts listed on ______

financial statements

Because they indicate a firm's financial health and stability, the use of ______ are key factors in management decision making

ratio analysis

Calculating and interpreting financial ratios developed from the firm's financial statements is called

small businesses

Cash flow analysis is especially important for which of the following?

statement of cash flows

Cash receipts and disbursements related to operations, investments, and financing are reported on the ______.

auditing

Fill in the blank question. The key working areas of accounting include managerial accounting, financial accounting, tax accounting, government and nonprofit accounting, and ________.

people outside the organization

Financial accounting and managerial accounting differ in terms of who uses the information. Financial accounting provides information primarily for ______.

Accounting Information

If financial management is the heartbeat of competitive businesses, what keeps that heartbeat stable?

debts a business owes to others

In accounting, liabilities refer to ______

operating expenses

In operating a business, rent, salaries, supplies, utilities and insurance are all examples of ______.

cash

It's possible for a business to increase its sales and profits yet still suffer ________ flow problems.

private

Jayleen works for her firm preparing and analyzing its financial statements. She would be called a(n) ______ accountant.

borrowed funds

Leverage or debt ratios measure the degree to which a firm relies on ______

inside the firm

Managerial accounting is used to provide information ______

intangible resources goodwill tangible resources

On a balance sheet, assets may include ______.

Accounting

Recording, classifying, summarizing, and interpreting financial events in an organization is referred to as ______

auditing

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

activity ratios

Since converting the firm's inventory to profits is a key function of management, firms use ______ to measure the effectiveness of management in utilizing the assets that are available.

annual report

Stakeholders who want to look at detailed financial information on whether a company is profitable, is able to pay its bills, and how much debt it owes will look at the firm's ______.

the value of the business that belongs to owners

Stockholders, or owners' equity represents ______.

annual report

The _______ ________ provides information about a company's financial status to company managers, owners, government agencies, and the general public.

income

The _______ statement summarizes profit (or loss), costs, and expenses over a specific period, which may be a week, a month, or a year.

retained earnings

The accumulated earnings from a company's profits that are reinvested into the business and not paid out to stockholders are called ______.

liquidity

The current ratio is an example of a(n) _________ ratio that measures a company's ability to turn assets into cash to pay its short-term debts.

liability

The debt a firm owes to others is called a(n) ______.

analyze source documents

The first step in the accounting cycle is to ______

purchase price + freight charges + storage costs

The formula for the costs of goods sold is ______.

assist managers inside the organization with their decision making

The information and analysis that comes from managerial accounting is used to ______.

taxpayers special interest groups legislative bodies

The primary users of government and nonprofit accounting information are ______.

GAAP

The principles, defined by FASB, that accountants must follow to assure that a firm's accounting information is accurate are abbreviated as ______

define generally accepted accounting principles

The purpose of the Financial Accounting Standards Board is to ______.

accounting

The relationship among assets, liabilities, and owners' equity is a fundamental concept in accounting known as the _______ equation.

review and evaluate a company's financial information

The role of an auditor is to ______

operations

The statement of cash flows reports cash receipts and disbursements related to _________, investments, and financing.

owners' equity

The value of what stockholders own in a firm minus any liabilities is called ______.

False

True or false: Gross profit is what a company shows on their income statement as the bottom line figure

Activity ratios Liquidity ratios Debt ratios Profitability ratios

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

accumulated earnings not paid out to stockholders

What are retained earnings?

It frees accountants' time for more important tasks. Information can be posted from journals instantaneously. Software can help if no strong accounting support is available.

What are some benefits of using computers for accounting purposes?

liabilities assets owners' equity

What are the three major categories on the balance sheet?

accounting

What is considered to be the "language of business"?

owners' equity

What is the difference between assets and liabilities?

Revenue

What is the term for all resources that come into the firm from operating activities?

cost of goods sold

What term describes the cost of merchandise the firm sells?

tax accountant

What type of accountant is most likely to develop strategies for a firm in dealing with the Internal Revenue Service?

Liquidity ratio

What type of ratio measures a company's ability to turn assets into cash to pay its short-term debts?

profitability

What type of ratios measure how effectively a firm is using its various resources to achieve profits?

Leverage

What type of ratios measure the degree to which a firm relies on borrowed funds in its operations?

government and not-for-profit accounting managerial accounting financial accounting auditing tax accounting

Which are considered to be the working areas of accounting?

prepare a trial balance analyze transactions record transaction in the journal

Which are steps in the accounting cycle?

income statement

Which financial statement shows a firm's bottom line—its profit (or loss) after costs, expenses, and taxes for a specific period?

interpreting financial transactions classifying financial transactions recording financial transactions

Which three activities are part of the function of accounting?

assets owners' equity liabilities

Which three components make up the fundamental accounting equation?

public accountant

Which type of accountant would be available to businesses or individuals on a fee basis?

Revenue

__ is the monetary value of what a company received for goods sold, services rendered, and all other payments to the firm

assets

_______ are economic resources owned by a firm.

profitability

_______ ratios measure how effectively a firm is using its various resources to achieve profits.

activity

_______ ratios tell us how effectively management is turning over inventory.

net

________ income after taxes is the last line on the income statement.

financial, managerial

_________ accounting generates financial information for people outside the firm, while ______ accounting generates financial information for people inside the firm.

government

_________ and nonprofit accounting supports organizations whose purpose is not generating a profit, but serving ratepayers, taxpayers, and others according to a duly approved budget.