Ch 14 Intro to business

In using the accounting equation, if assets = $40,000 and liabilities = $30,000, then owner's equity is equal to ______.

$10,000

Which are considered to be the working areas of accounting?

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

____________ratios tell us how effectively management is turning over inventory.

Activity

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

False

_________ ratios measure a company's ability to turn assets into cash to pay its short-term debt.

Liquidity

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

Liquidity ratios Debt ratios Activity ratios Profitability ratios

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

Profitability ratios Debt ratios Liquidity ratios Activity ratios

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

Revenue

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

accounting

__________ are economic resources owned by a firm.

all revenue minus all expenses and taxes

The first step in the accounting cycle is to ______.

analyze source documents

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

assist managers inside the organization with their decision making

The key working areas of accounting include managerial accounting, financial accounting, tax accounting, government and nonprofit accounting, and ___________.

auditing

The statement of cash flows is a financial statement that shows ______.

cash receipts and disbursements

Which three activities are part of the function of accounting?

classifying financial transactions recording financial transactions interpreting financial transactions

Users of managerial accounting information include ______.

department managers the Chief Financial Officer

On a balance sheet, assets may include ______. (Select all that apply)

goodwill intangible resources tangible resources

The role of an auditor is to ______.

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

Managerial accounting is used to provide information ______.

inside the firm

What is another name for debts?

liabilities

The formula for the costs of goods sold is ______.

purchase price + freight charges + storage costs

Government and nonprofit accounting involves working for organizations whose purpose is to serve ______.

ratepayers taxpayers

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

small businesses

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

special interest groups taxpayers legislative bodies

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.

speed