Gateway to Business- Accounting Pop Quiz

Net Profit Margin=

((Revenue - COGS - Expenses - Interest - Taxes) / Revenue)*100

Accounting provides a framework for looking at:

-past performance -current financial health -possible future performance -financial performance of different firms

_______ is the company's ability to expense fixed assets over their useful life.

Depreciation

The usual expression of the accounting equation is Assets= Liabilities +Owners Equity?

True

Profitability Ratios

net profit margin, return on assets, return on equity

A ______ is a summary of the money flowing into and out of a firm.

statement of cash flows

Quick Ratio =

´(Total Current Assets - Inventory - Prepaid Expenses) / Current Liabilities

Current Ratio =

´Current Assets / Current Liabilities

Net Working Capital

´Total Current Assets - Total Current Liabilities

The balance sheet summarizes a firm's financial position over a period of time, for instance 3 month or a year.

False

______ Deals with reporting to outsiders. _______ accounting deals with the internal operations of the firm.

Financial accounting; Managerial accounting

To ensure accuracy and consistency in the way financial information is reported, accountants follow rules known as:

Generally Accepted Accounting Principles

Managerial Accounting provides all of the following financial information EXCEPT

Income Statements

An _________ is a summary of what a company has earned and spent over a given period.

Income statement

return on Asset=

Net Income / Average Total Assets

Return on Equity=

Net Income / Total Shareholders Equity

Things of value owned by a firm are called its

assets

_______ are debts that are to be paid within twelve months.

current liabilities

Types of Liquidity Ratios

current ratio quick ratio Net Working Capital

The difference between net sales and costs of goods sold is

gross profit

Toys "r" Us was founded in 1948. The iconic mascot Geoffrey the Giraffe was introduced in February 1960. Geoffrey used in all ads and promotions used by the retai; toy chain is an example of an _____ because it does not have a physical existence.

intangible asset

Another term for owners' equity is

net worth

A short-term loan from a bank, supplier, or others that must be repaid within a year is an

Account payable

The _____ summarizes an organization's financial status at the end of an accounting period

Balance Sheet

An accountant who has a bachelor's degree, passes a test prepared by the professional organization AICPA, and has a certain number of years of on-the-job training becomes a:

Certified Public Accountant

Current assets, such as marketable securities and inventory, usually are expected to be turned to cash within

One year

Independent accountants who serve organizations and individuals on a fee basis are called public accountants.

True

Accounting involves the ________ of the financial activities for firms

summarizing