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