Chapter 13 - Small Business Accounting: Projecting and Evaluating Performance

_____ refers to the ability of a business to survive adverse financial events.

Financial strength

Which of the following accounting functions focuses the most on automatically calculating and accumulating depreciation?

Fixed asset accounting

Breakeven point is the point at which:

Total costs equal gross revenue.

The difference between assets and liabilities of a business is called its:

owners' equity.

The difference between an actual and budgeted revenue or cost is called:

variance.

To perform _____ analyses, only cash flows are considered.

net present value

Which of the following concepts assume that information flows from the income statement through the statement of retained earnings, the statement of owners' equity to the balance sheet?

Articulate concept

Which of the following is a statement of what a business owns, what it owes to others, and how much value the owners have invested in it?

Balance sheet

The value of current assets divided by current liabilities is called:

Current ratio.

_____ is the idea that it is cheaper (per item) to make many of an item than few.

Economy of scale

Which of the following is true of typical accounting functions used in businesses?

Inventory accounting facilitates maintenance of appropriate levels of inventory and aids in calculation of appropriate stocking and reorder levels.

Which of the following is true of managerial accounting?

It is forward-looking in nature.

Which of the following is a disadvantage of a computerized accounting system?

It produces financial reports that meet legal requirements.

Which of the following accounting functions ensures that the employment taxes are kept current?

Payroll records

Larry owns a successful business called Super Car-Hire. He plans to sell it to Bob. Bob assumes that he can keep up the high revenues if he can plan and execute the mission of the business well. Which of the following basic accounting concepts is reflected in Bob's assumption?

The going concern expectation

An accounting method that is specifically intended to be used for planning, directing, and controlling a business is called:

managerial accounting.

Regular and systematic reduction in income that transfers asset value to expense over time is called _____.

depreciation

Which of the following statements is true regarding the balance sheet?

it's values are considered as historical values.

The _____ budget shows the number of units that are expected to be acquired during the budget period.

purchases

The first step in preparing a master budget is to prepare a _____ budget.

sales