BA 101 CH 17
If financial management is the heartbeat of competitive businesses, what keeps that heartbeat stable?
accounting information
What are retained earnings?
accumulated earnings not paid out to stockholders
_______ ratios tell us how effectively management is turning over inventory.
activitey
The ratios that measure the effectiveness of a firm's management in turning over inventory are called ______.
activity ratios
Net income is ______.
all revenue minus all expenses and taxes
The ________ ________ is the yearly statement of the firm's financial condition, progress, and expectations provided to stakeholders.
annual report
The ________ _________ is the yearly statement of the firm's financial condition, progress, and expectations provided to stakeholders.
annual report
Items of value owned by a firm are called ______.
assets
The information and analysis that comes from managerial accounting is used to ______.
assist managers inside the organization with their decision making
Reviewing and evaluating of records used to prepare a company's financial statements is referred to as _______ .
auditing
Reviewing and evaluating records used to prepare a company's financial statements is referred to as ______.
auditing
The key working areas of accounting include managerial accounting, financial accounting, tax accounting, government and nonprofit accounting, and _______ .
auditing
The key working areas of accounting include managerial accounting, financial accounting, tax accounting, government and nonprofit accounting, and _____________ .
auditing
Leverage or debt ratios measure the degree to which a firm relies on ______.
borrowed funds
The ability to read, understand, and analyze accounting reports and financial statements is critical in understanding ______.
business operations
It's possible for a business to increase its sales and profits yet still suffer ________ flow problems.
cash
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
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
Users of managerial accounting information include ______. (Select all that apply)
department managers the Chief Financial Officer
Return on _________ is net income after taxes divided by total owners' equity.
equity
A summary of all the financial transactions that have occurred over a particular period is referred to as a ______.
financial statement
Because they indicate a firm's financial health and stability, the use of ______ are key factors in management decision making.
financial statements
Which are considered to be the working areas of accounting? (Select all that apply)
government and not-for-profit accounting managerial accounting auditing financial accounting tax accounting
The ________ statement summarizes profit (or loss), costs, and expenses over a specific period, which may be a week, a month, or a year.
income
Which financial statement shows a firm's 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 is another name for debts?
liabilities
The current ratio is an example of a(n) ________ ratio that measures a company's ability to turn assets into cash to pay its short-term debts.
liquidity
What type of ratio measures a company's ability to turn assets into cash to pay its short-term debts?
liquidity ratio
Rent, salaries, supplies, utilities, and insurance are examples of ________ expenses that are general expenses.
operating
In operating a business, rent, salaries, supplies, utilities and insurance are all examples of ______.
operating expenses
The statement of cash flows reports cash receipts and disbursements related to _________ , investments, and financing.
operations
What is the difference between assets and liabilities?
owners' equity
What are the three major categories on the balance sheet?
owners' equity liabilities assets
Financial accounting and managerial accounting differ in terms of who uses the information. Financial accounting provides information primarily for ______.
people outside the organization
Jayleen works for her firm preparing and analyzing its financial statements. She would be called a(n) ______ accountant.
private
What type of ratios measure how effectively a firm is using its various resources to achieve profits?
profitability
Which type of accountant would be available to businesses or individuals on a fee basis?
public accountant
The formula for the costs of goods sold is ______.
purchase price + freight charges + storage costs
Government and nonprofit accounting involves working for organizations whose purpose is to serve ______. (Select all that apply)
ratepayers taxpayers
The assessment of a firm's financial condition and performance through calculations and interpretation of financial ratios developed from the firm's financial statements is called _______ analysis.
ratio
Which are steps in the accounting cycle? (Select all that apply)
record transaction in the journal prepare a trial balance analyze transactions
Accumulated earnings from the firm's profitable operations that are kept in the business and not paid out to stockholders in distributions of company profits are called _______ earnings.
retained
The monetary value of what a firm received for goods sold, services rendered, and other payments is termed ________ .
revenue
What is the term for all resources that come into the firm from operating activities?
revenue
The primary users of government and nonprofit accounting information are ______. (Select all that apply)
special interest groups legislative bodies taxpayers
Cash receipts and disbursements related to operations, investments, and financing are reported on the ______.
statement of cash flows
A _______ accountant is trained in tax law and is responsible for preparing tax returns or developing tax strategies.
tax
A _______ accountant is trained in tax law and is responsible for preparing tax returns.
tax
What type of accountant is most likely to develop strategies for a firm in dealing with the Internal Revenue Service?
tax accountant
Stockholders, or owners' equity represents ______.
the value of the business that belongs to owners
Return on equity is net income minus taxes divided by ______.
total owners' equity
In using the accounting equation, if assets = $40,000 and liabilities = $30,000, then owner's equity is equal to ______.
$10,000
What are some benefits of using computers for accounting purposes?
-It frees accountants' time for more important tasks. -Software can help if no strong accounting support is available. -Information can be posted from journals instantaneously.
The _______ ________ provides information about a company's financial status to company managers, owners, government agencies, and the general public.
Annual Report
_______ are economic resources owned by a firm.
Assets
_______ ratios measure the degree to which a firm relies on borrowed funds in its operations.
Debt
True or false: Financial accounting provides information to people inside of an organization, whereas managerial accounting provides information to people outside of an organization.
False
True or false: Gross profit is what a company shows on their income statement as the bottom line figure.
False
_________ accounting generates financial information for people outside the firm, while ________ accounting generates financial information for people inside the firm.
Financial , managerial
The principles, defined by FASB, that accountants must follow to assure that a firm's accounting information is accurate are abbreviated as ______.
GAAP
_______ and nonprofit accounting supports organizations whose purpose is not generating a profit, but serving ratepayers, taxpayers, and others according to a duly approved budget.
Government
________ and nonprofit accounting supports organizations whose purpose is not generating a profit, but serving ratepayers, taxpayers, and others according to a duly approved budget.
Government
What are four main types of financial ratios used in ratio analysis?
Liquidity ratios Activity ratios Profitability ratios Debt ratios
________ income after taxes is the last line on the income statement.
Net
________ ratios measure how effectively a firm is using its various resources to achieve profits.
Profitability
The _______ of ________ ________ measures the cost of merchandise the firm sells or the materials and supplies used to manufacture them for sale.
The costs of the goods sold
How do cash flow problems usually start?
The firm uses up its credit.
True or false: The Financial Accounting Standards Board defines the generally accepted accounting principles that accountants must follow.
True
Assets, liabilities, and owners' equity are the major accounts listed on ______.
a balance sheet
Recording, classifying, summarizing, and interpreting financial events in an organization is referred to as ______.
accounting
The relationship among assets, liabilities, and owners' equity is a fundamental concept in accounting known as the _______ equation.
accounting
Through the recording, classifying, summarizing, and interpretation of financial events in an organization, the function of ______ helps managers make good decisions about the firm's operations.
accounting