BUS1050 Chapter 17: Understanding Accounting and Financial Information

What are some benefits of using computers for accounting purposes?

-Information can be posted from journals instantaneously. -Computers can handle large amounts of financial information. -Software can help if no strong accounting support is available.

The ___________ ____________ provides information about a company's financial status to company managers, owners, government agencies, and the general public.

annual report

Basic earnings per share is the ratio of net _______ after taxes to the number of common stock shares outstanding.

income

The ________ statement shows all of a firm's revenues, costs, and whether it made a profit or loss during a specific period.

income

On a balance sheet, assets may include:

intangible resources, tangible resources

Accounting is needed for __________ organizations as well as for profit-seeking firms.

nonprofit

The statement of cash flows reports cash receipts and disbursements related to __________, investments, and financing.

operations

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

people outside the organization

An accounting system includes inputs, _______, and outputs.

processing

Financial ________ such as income statements and balance sheets indicate a firm's financial health and stability.

statements

The major categories on the balance sheet include which of the following? -Cash balance -Liabilities -Owners' equity -Assets

Liabilities, Owners' equity, Assets

The ratios that measure the effectiveness of a firm's management in using the assets that are available are called:

activity ratios

revenue minus cost of goods sold is called ___________ ___________.

gross profit

The three profitability performance ratios are:

return on sales, return on equity, earnings per share

The principles, defined by FASB, that accountants must follow to assure that a firm's accounting information is accurate are abbreviated as:

GAAP

Which of the following is considered to be a part of accounting?

Interpreting financial transactions, classifying financial transactions, and recording financial transactions

The formula for the cost of goods sold is:

Purchase price + freight charges + storage costs

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

Speed

Accounting: ___a_____. Bookkeeping: ____b_____. Accounting cycle: ____c_____. Trial balance: ______d______.

a: Classifying, summarizing, interpreting, and reporting. b: Recording. c: Series of six steps. d: Summary of data in ledgers.

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 ledger. 4. Take a trial balance. 5. Prepare financial statements. 6. Analyze financial statements.

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

Accounting information

The financial statement that reports a firm's financial condition at a specific time is the:

balance sheet

Operating expenses include which of the following?

utilities, rent, supplies