Accounting
What are the three functions of an accounting system?
1. Analyze transactions 2. Handle routine bookkeeping tasks 3. Structure info so it can be used to evaluate health & performance of a business
In the Balanced Scorecard, what are the two types of service-after-sale process measures?
1. Billing and collection of payments 2. Warranties and customer service
Average Collection Period
365 / AR Turnover Average # of days that elapse between sale and cash collection
Number of Days' Sales in Inventory
365 / Inventory Turnover Average # of days of sales that can be made using only the supply of inventory on hand
What is revenue?
A measure of economic value created
What is the FASB?
A private group that establishes GAAP in the United States
What is a 1099-INT?
A report from your bank stating how much interest you earned during the year
Inventory Turnover
COGS/Average Inventory Measure of efficiency with which inventory is managed
Which ONE of the following is NOT currently part of Swift Transportation's efforts to control fuel costs? Maintaining a fuel efficient fleet Use of derivative-type financial instruments Fuel surcharges Purchase of fuel in bulk
Derivative type financial instruments
What are Swift's four measures and who is evaluated by them?
Driver turnover (executive in charge of driver retention) Average miles per unit per day (sales/maintenance) Days from pickup to cash (schedulers, billing and AR clerks) Percent of fuel used from company docks (schedulers, drivers, and drivers' director)
Times Interest Earned
EBIT/ interest expense Indicator of company's ability to meet interest payments
Which ONE of the following is NOT one of the three new areas of performance measurement that are supplementing traditional financial measures in the Balanced Scorecard? Internal processes, learning and growth, customers, & economic value added
Economic value added
T of F: In times of DEFLATION, AVERAGE COST results in the highest ending INVENTORY.
False
What can you do if you disagree with the social activist mission statement of Ben & Jerry's
Invest somewhere else
What is the Entity Concept?
It requires that a business owner's personal financial transactions are kept separate and distinct from the owner's business transactions
Price-Earnings Ratio
Market Value of Shares/Net Income Growth Potential, Earnings Stability, & Management Capabilities
What are the four basic filing status choices in the US?
Married filing jointly or separately, head of household, single
Return on Equity
Net Income / Average Stockholders' Equity Amount of profit earned per dollar of investment
Return on Sales
Net Income/Sales Amount of profit earned per dollar of sales
Before 1992, how did companies such as General Motors account for retiree healthcare benefits?
Pay-as-you-go accounting
What are the essential elements of decision making? How does accounting fit into the process?
Problem identification, accumulation and analysis of facts, consideration of alternative courses of action, formulation of a judgment, and action. Accounting assists by providing and interpreting many of the facts (the financial data) to be considered in making decisions.
In the Balanced Scorecard, in what three employee-related measures should a company track performance?
Productivity, retention, and satisfaction
Dupont
ROE=(NI/S)(S/A)(A/E)
What is the largest asset category for a bank?
Receivables
How do accounting standards impact the cost of capital?
Reduce information risk
Fixed Asset Turnover
Sales / Average Fixed Assets # of dollars in sales generated by FA
AR Turnover
Sales Revenue / Average AR How fast a company collects its AR
Asset Turnover
Sales/Total Assets Efficiency
Which ONE of the following words is NOT part of the standard definition of "accounting": Decisions, Financial, Service, Useful, Quantitative
Service
What portion of the shipping market has Swift Transportation decided to target? In other words, what is Swift's competitive strategy?
Service-sensitive customers in short-to-medium haul traffic lanes.
What is Swift's growth strategy?
Strengthen core carrier relationships, pursue strategic acquisitions, and exploit private fleet outsourcing,
In the Ramona and Kay example, why is their Adjusted Gross Income (AGI) only $83,000 when their total income is $91,000?
Subtraction for IRA contributions
What are the key elements in Swift's relationship with its drivers?
Swift believes its innovative driver-training programs, driver compensation, regionalized operations, driver tracking and late-model equipment provide important incentives to attract and retain qualified drivers.
T of F: In times of INFLATION, FIFO results in the highest INCOME TAXES.
True
T or F: In times of DEFLATION, FIFO results in the lowest ending INVENTORY.
True
T or F: In times of INFLATION, LIFO results in the lowest INCOME TAXES.
True
T or F: In times of INFLATION, LIFO results in the lowest ending INVENTORY.
True
When are revenues recognized?
When they are earned (NOT when cash is received).
Current Ratio
current assets/current liabilities (liquidity)
Debt to Equity Ratio
total liabilities/stockholders equity # of dollars of borrowing for each dollar of equity
Debt Ratio
total liabilities/total assets Leverage
A good mission statement is specific enough to identify what types of activities a company should focus on as well as
what things a company should not do.