Quiz Ch 14 BA 1301

public accountants

Independent accountants whoserve organizations and individuals on a fee basis

current liabilities

accounts payable, notes payable, accrued expenses, taxes payable, current portion of long-term debt

_____ are bills that have accumulated and must be paid at a specified future date within the year although no bill has been received by the firm.

accured expenses

certified public accounta

an accountant whohas completed an approved bachelor's degree programand pass a test prepared by the American Institute ofCPAs (AICPA)

A(n) _____ is a yearly document that describes a firm's financial status and usually discusses a firm's financial activities during the past year and its prospects for the future.

annual report

Haley Optics manufactures lenses used in cameras, binoculars, and scientific equipment. It had sales of $300,000 during the last quarter. It depreciated assets during the year by $20,000. The Earnings before interest and taxes was calculated to be $120,000. On an income statement, an accountant would classify the remaining $160,000 as:

cost of goods sold

liquidity ratios

current ratio, acid test, net working capital

debt ratios

debt to equity

Sullins Cleaning Service has purchased a new pressure washer for $18,000. Sullins Cleaning is allowed to charge a portion of the company's cost during its useful life against the profits it generates. This practice is called:

depreciation

The acceptable turnover ratio is:

different for each industry

generally

ensure accuracy and consistency

Profitability ratios measure how well a firm uses its assets.

false

The $350 charged to the homeowner for electrical work performed one month ago is an example of a note receivable.

false

Managerial accounting provides all of the following financial information EXCEPT:

income statements

cloud based services

internet and cloud technology continueto disrupt many industries, including accounting

By dividing cost of goods sold by the average inventory to measure the speed with which inventory moves through the firm and is turned into sales, the _____ ratio is calculated.

inventory turnover

activity ratios

inventory turnover

For which of the following assets would a wholesale company use depreciation?

its warehouses

automations

manual gathering and inputting of informationcan be an inefficient and sometimes inaccurate process.

profitable ratios

net profit margin, return on equity, earnings per share

Which of the following is NOT really a financial ratio though it is often used to measure a firm's overall liquidity?

net working capital

What type of expense would be shown on an income statement when the owner of a dirt racing track promoted an upcoming race by purchasing advertising time on a local radio station?

operating

basic accounting procedures

- Developed in the late 15th century by an Italianmonk, Brother Luca Pacioli. - He defined three main accounting elements asassets, liabilities, and owners' equity - Assets−Liabilities=Owners' Equity - Computers changed how data is entered,organized and analyzed.

the income statement

- Income statement summarizes the firm's revenuesand expenses and shows its total profit or lossover a period of time. - Revenues - Expenses = profit(loss) - The tricks are in the definintions.

the balance sheet

- It is for a specific point in time. (end of month?) - Assets listed in order of Liquidity (close to cash) - Liabilities listed short term to long term - Owner's Equity is Assets - Liabilities

analyzing financial statements

- Ratio Analysis involves calculating and interpreting financial ratios using data taken from the firm's financial statements in order to assess its condition and performance

reshaping the accounting environment

- We focus on big-name scandals in the late 1990sand 2000s - An epidemic of accounting irregularities is alsotaking place in the wider corporate arena. - In 2002, the Sarbanes-Oxley Act (commonlyreferred to as SOX) went into effect - has anything really changed?

the statement of cash flows

- because cash is king - statement of cash flow, a summary of the money flowing into and out of a firm

trends in accounting

- cloud based services - automation -staffing challenges

current assets

Cash, Marketable securities, accountsreceivable, notes receivable, inventory

_____ is the process of distributing the original cost of a long-term asset over the years of its useful life.

Depreciation

private accountants

serve one particular organization

staffing challenges

the challenge of hiring the right staff to usethese new tools intensifies

accounting

the process of collecting, recording,classifying, summarizing, reporting, and analyzingfinancial activities.

All publicly held companies must include a statement of cash flows in their financial reports to stockholders.

true

The postage stamps and petty cash in the architect's drawer as well as his drawing table, his office furniture, and money owed to him by clients are all examples of assets.

true