BUS100 Chapter 17

The method used to record and summarize accounting data into reports is called a:

Accounting system

What is the meaning of bonds payable?

Long-term liabilities that represent money lent to the firm that must be paid back

accounting

classifying, summarizing, interpreting, and reporting

Basic earnings per share is the ratio of net income after taxes to:

common stock shares outstanding

Revenue minues cost of goods sold is called

gross profit

Which financial statement reports the firm's financial operations over a particular period of time?

income statement

____________ are cash used in or provided by the firm's investment activities.

investments

The data are then transferred into categories in a ________________, so managers can find all the information about a single account in one place.

ledger

Stockholder's equity is the value of what stockholders' own in a firm minus ___________________

liabilities

A certified public accountant

must pass a series of exams and must follow GAAP in the United States

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

operating expenses

Financial accounting and managerial accounting differ in terms of who uses the information. Financial accounting provides information primarily for:

people outside of the organization

managerial accounting is concerned with:

preparing budgets, controlling, and measuring production costs

A ________________ accountant works for a single firm or agency and performs accounting functions for use in making decisions within that firm or agency.

private

Government and not-for-profit accounting involves working for organizations whose purpose is to serve:

rate-payers and taxpayers

bookkeeping

recording

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

Which of the following are inputs to the accounting system?

shipping documents and sales documents

Not-for-profit organizations need accounting professionals to:

show that their money is being spent properly, show their donors that their money is being spent, and show that their funds are well-managed

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

statement of cash flows

trial balance

summary of data in ledgers

The "bottom line" is:

the last line on the income statement and/or net income or loss after taxes

How many entries are required for each transaction in the ledgers?

two

Accounting Information

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

__________ assets are long-term assets like land, buildings, and equipment

fixed

An acid-test ratio between ________ and 1.0 is usually considered satisfactory but could also be a sign of some cash flow problems.

0.5

List the steps in the accounting cycle from beginning to end. Place the first step on top and list them down to the last step on the bottom.

1. Analyze source documents 2. Record transactions in journals 3. Transfer journal entries to a ledge 4. Take a trial balance 5. Prepare financial statements 6. Analyze financial statements

In order to be a certified management accountant a person must:

A professional accountant who has met certain educational and experience requirements, passed a qualifying exam, and been certified by the institute of certified management accountants.

The Financial Accounting ___________ __________ defines the generally accepted accounting principles.

Standards Board

Which of the following are considered users of managerial accounting information:

The Chief Financial Officer and department managers

What is the term given to a summary of all financial data to make certain the figures are correct and balanced?

Trial balance

Ratios used to measure the effectiveness of management in utilizing the assets that are available are called

activity ratios

The __________ _________ is the yearly statement of the firm's financial condition, progress, and expectations provided to stakeholders

annual report

What are the main types of financial ratios used in ratio analysis?

debt ratios, profitability ratios, activity ratios, and liquidity ratios

earnings per share can be either basic earnings per share or ______________ earnings per share

diluted

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

Liquidity

It's possible for a business to increase its sales and profits yet still suffer ___________ ____________ problems.

cash flow

The _________ of ____________ _____________ measures the cost of merchandise the firm sells or the materials and supplies used to manufacture them for sale

cost of goods sold

Which financial statement shows the firm's profit after costs, expenses, and taxes?

income statement

On a balance sheet, assets may include

intangible assets and tangible resources

What is the term for all resources that come into the firm from operating activities?

revenue

accounting cycle

series of six steps

A company that uses a capital account for owners equity is organized as a _________________ ____________ or a partnership.

sole proprietorship

Reviewing and evaluating records used to prepare a company's financial statements is referred to as:

auditing

Examples of profitability ratios include:

basic earnings per share, return on equity, and return on sales

the major activities of a firm shown on the statement of cash flows include:

financing, operations, and investments

Financial data from transaction documents are first recorded in a ______________

journal

The primary purpose of the Sarbanes-Oxley Act is one of:

oversight