ACCT Quizzes

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Why is the cost of the pizza party for our lemonade stand not considered an asset?

??

Stockholder's, the owners of a corporation, hold _____ claim on the firm.

?? ? answer choices a residual the sole

Which of the following is a 'stock'?

???

OWNER'S EQUITY =

Assets - Liabilities

Which of the following is a benefit of debt relative to equity?

Lower cost of capital

Balance Sheet

at a given point in time; indicates the financial position [end of a fiscal quarter or year] assets are presented in order of liquidity liabilities are presented in order of maturity

Which of the following documents is a primary source of accounting data (assets, liabilities, equity, revenues, expenses)?

bond indenture

A bill of lading is a document issued by a(n) __________.

carrier

a bill of lading is a document issued by a(n):

carrier

SOURCES OF FINANCING (in order of preferrence)

1. Through INTERNAL funds (earned capital) 2. Through CREDITORS (borrowing from debtholders) ~ "mezzanine financing" ~ 3. Through EQUITY investors (funds from shareholders) ^^ this order is called the "pecking order hypothesis"

2 Primary Categories of Equity

1. contributed capital 2. retained earnings

Nature of business

1. obtain CAPITAL 2. to make INVESTMENT 3. to generate a positive FUTURE RETURN

Which of the following is NOT a benefit of debt relative to equity?

Debt covenants increase opportunities

Which of the following indicates the capital structure of the firm?

Debt-to-equity ratio

Companies tend to issue new equity shares when their stock price is LOW.

FALSE

Companies tend to issue new equity shares when their stock price is low.

FALSE

Which of the following excel formulas determines how much you will have in 5 years if you invest $10,000 at 4% annual interest, compounded semiannually?

FV (2%, 10, 0, -10000)

Retained earnings represent an asset to the firm.

False

Which of the following accounts does not arise from the supplier-customer interaction?

Goodwill

In our in-class exercise during Meeting #2, which company had the largest ROI?

J's Lemonade Stand

Which of the following documents is not a primary source of accounting data (assets, liabilities, equity, revenues, expenses)?

Shareholder agreement

Which of the following is NOT a cash outflow a company promises to make when it issues a bond?

debt covenants

Which of the following indicates the capital structure of a firm?

debt-to-equity ratio

Which of the following documents is a primary source of accounting data (assets, liabilities, equity, revenues, expenses)?

employment contracts

______ is primarily designed for users external to the firm.

financial accounting

Mezzanine Financing

funds for plant expansion, marketing expenditures, working capital, and product or service improvements (debt-equity hybrid)

Which of the following is not a primary source of accounting data (assets, liabilities, equity, revenues, expenses)?

independent auditor's report AND shareholder agreement

Corporate Finance

informs CAPITAL acquisition

Managerial Accounting

informs INVESTMENT decisions

which of the following documents is a primary source of accounting data (assets, liabilities,equity, revenues, expenses)?

lease agreement

ASSETS =

liabilities + stockholders equity

which of the following IS a benefit of debt relative to equity?

lower cost of capital

2 types of accounting

managerial: primarily for decision makers WITHIN the company. (internal users only) (LOOKS FORWARD) financial: for decision makers OUTSIDE the company. (LOOKS BACKWARDS) (EXTERNAL users: quarterly reports & statements)

Financial Accounting

measure the RETURNS

Income Statement

measures the firm's performance over a period of time. [for the year ending in dec 31, 2017] compares REVENUES to EXPENSES

More than half of CEO compensation is now comprised of

stock options

More than half of CEO compensation is now comprised of _______.

stock options

Equity refers to:

the ownership stake. (residual claim) what the owner's have a claim to.

For what fundamental purpose do we keep records?

to help make business decisions


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