Accounting

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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.


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