BA 101 Accounting and Financial Statements

Which are considered to be the working areas of accounting

1) Financial accounting 2) auditing 3) tax accounting 4) Government and not-for-profit accounting 5) managerial accounting

what are some benefits of using computers for accounting purpose

1) it frees accountant's time for more important tasks 2) software can help if no strong accounting support is available 3) information can be posted from journals instantaneously

The first step in the accounting cycle is to

analyze source documents

What term describes the cost of merchandise the firm sells

cost of goods sold

In accounting, liabilities refer to

debts a business owes to others

On a balance sheet, assets may include

intangible resources, tangible resources, goodwill

liquidity ratio

measure a company's ability to turn assets into cash to pay its short term debt

leverage ratio

measures the degree to which a firm relies on borrowed funds in its operations

In operations a business, rent, salaries, supplies, utilities and insurance are all examples of

operations expenses

Cash flow analysis is especially important for which of the following

small businesses

What an annual report

A yearly statement of a firms financial condition, progress and expectations

Net income or loss is

all revenue minus all expenses and taxes

If financial management is the heartbeat of competitive businesses, what keeps that heartbeat stable

accounting information

Items of value owned by a firm are called

assets

Stakeholders who want to look at detailed financial information on wether a company is profitable, is able to pay its bills, and how much debt it owes will look at the firm's

annual report

Leverage or debt ratios measure the degree to which a firm relies on

borrowed funds

Which financial statement shows a firm bottom line-its profit (or loss) after costs, expenses, and taxes for a specific period?

income statement

Managerial accounting is used to provide information

inside the firm

What type of ration measures a company's ability to turn assets into cash to pay its short term debts

liquidity ration

The debTt a firm owes to others is called

liability

Cash receipts and disbursements related to operations, investments, and financing are reported on the

statement of cash flows

The best way to understand a firm's financial health and stability is to look at its

Financial Statement

The formula for the costs of goods sold is

Purchase price + freight charges + storage costs

What type of accounting is most likely to develop strategies for a firm in dealing with the Internal Revenue Service

Tax accountant

Operating expenses include which of the following

Utilities, supplies, rent

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

Calculating and interpreting financial ratio developed from the firm's financial statement is called

ratio analysis

Recording, classifying, summarizing, and interpreting financial events in an organization is referred to as

accounting

What is considered to be the "language of business

accounting

An accountant's time is freed up to do more important tasks such as financial analysis due to the assistance provided by using

computerized accounting programs

The assessment of a firm's financial condition and performance through calculations and interpretation of financial rations develop from the firm's financial statement is called

ration analysis

The relationship among assets, liabilities, and owners' equity is a fundamental concept in accounting known as the

accounting equation

Reviewing and evaluating of records used to prepare a company's financial statement is referred to as

auditing

An indirect measure of risk that tells us how much a firm earned for each dollar invested by its owners is called

return on equity

The monetary value of what a firm received for goods sold, services rendered, and other payments is termed

revenue

The role of an auditor is to

review and evaluate a company's financial information

An advantage of the use of computers to maintain and compile accounting information is

speed

In using the accounting equation, if assets= $40,000 and liabilities = $30,000 then owner's equity is equal to

$10,000

List the steps in the accounting cycle from beginning to end.

1)Analyze source documents 2) record transactions in journals 3) transfer journal entries to a ledger 4) take a trial balance 5) prepare financial statements 6) analyze financial statements

The ability to read, understand, and analyze accounting report and financial statement is critical in understanding

Market Fluctuations

What are the 3 major categories on the balance sheet

Owners' equity, Assets, Liabilities