Business chapter 14 (final exam)

In any accounting system, financial data typically pass through a four-step procedure sometimes called _______.

the accounting cycle

The balance sheet takes its name from its reliance on ______.

the accounting equation

The definition of accounts payable is ____.

the amount a company owes to suppliers for goods and services purchased with credit

Select from the following all the ways that managers and business owners use financial statements.

to assist in reporting to the IRS for reporting information to employees to aid in internal planning & control

True or false: Each share of stock in a corporation represents a claim on the organization.

true

Like its name suggests, double-entry bookkeeping requires that business transactions be recorded in ____ separate accounts.

two

The _____ format balance sheet is newer and gaining wide acceptance. It shows assets on the top followed by liabilities and owners' equity.

vertical

Select from the following the two formats of balance sheets.

vertical traditional

Which two terms are synonymous with the term "income statement"?

* P&L statement * operating statement

Select the three terms that are ~equivalent~ to the term operating income.

* earnings before interest and taxes * profit before interest and taxes * operating profit

Accounting cycle steps:

* examine source documents * record transactions * post transactions * prepare financial statements

_____ is an intangible asset that often includes an organization's reputation.

Goodwill

What does it mean to say that an annual report has been audited?

It bears the signature of a CPA attesting that the document is an accurate reflection of the financial condition of the firm.

Which of the following is a liability of Eggs4U, an online free-range egg supply company?

Money owed for purchased chicken feed

External statements that managers in an organization may prepare are used for which of the following?

Obtaining credit from lenders Filing income taxes Reporting results to stockholders Preparing the annual report

Which of the following would most likely include a title of controller or internal auditor?

Private accountant

The ____ ____ is a four-step procedure accounting system.

accounting cycle

Amounts owed to suppliers for goods and services purchased with credit are called ____.

accounts payable

This is an account representing ~all~ unpaid financial obligations incurred by the organization.

accrued expenses

Accrued expenses represent ______.

all unpaid financial obligations of a firm

Economic resources owned by a firm are called ____.

assets

Double-entry bookkeeping strives to maintain the ______ of the accounting equation.

balance

A(n) ______ reports the firm's financial condition on a specific date.

balance sheet

Cost of goods sold is calculated by using ______.

beginning inventory, interim purchases, and ending inventory

A(n) ____ is an internal financial plan that forecasts income and expenses of the organization for a set period of time.

budget

The ____ is an internal financial plan that forecasts income and expenses of the organization for a set period of time.

budget

Owners' equity ______.

can come from past profitable operations or from money investors have given the firm

Of utmost importance to management is/are _____, which is the movement of money through a firm on a daily, weekly, monthly, or yearly basis.

cash flow

The major activities of a firm, as shown on the statement of cash flows, include all of the following EXCEPT ______.

cash from taxes

Forensic accountants would most likely become certified as ______.

certified fraud examiners

Gross income or profit equals revenues minus the ______ required to generate the revenue.

cost of goods sold

The amount of money a firm spent to buy or produce the products it sold during the period to which the income statement applies is ______.

cost of goods sold

Financial statements prepared by accountants would be used by which of the following stakeholders of a business?

creditors investors managers government agencies

Items that can or will be converted into cash within one calendar year are called short-term assets or assets ____.

current

____ liabilities must be repaid within one year.

current

Assets that can or will be converted into cash within one year are termed ______.

current assets

Which of the following must be repaid within 1 year?

current liabilities

The process of spreading the cost of a tangible asset over its estimated useful life is referred to as ______.

depreciation

Owners' ____ includes all the money that has ever been contributed to a company that never has to be repaid.

equity

The first step in the accounting cycle is to ______.

examine source documents

The costs incurred in the day-to-day operations of an organization are called ____.

expenses

True or false: Organizational budgets are always prepared on a monthly basis.

false

True or false: An expense statement provides an explanation of how the company's cash changed from the beginning of the accounting period to the end.

false (this describes a statement of cash flow)

The accounting cycle is most known as being a _____ step process.

four

There are more than 75,000 certified _____ examiners across the United States who work to root out evidence of "cooked books" in firms.

fraud

Depreciation is considered a type of ______.

general & administrative expense

Revenue minus the cost of goods sold is called gross ______ or ______.

income or profit

Which report summarizes an organization's profitability over a specific period, which may be a week, a month, or a year.

income statement

A(n) ____ is a time-ordered list of account transactions.

journal

Debts that a firm owes to others are called ____.

liabilities

All assets on a balance sheet are listed in descending order of _____.

liquidity

______ refers to how fast an asset can be converted into cash.

liquidity

The internal use of accounting statements by managers in planning and directing the organization's activities is known as ____.

managerial accounting

If an accountant were to take a firm's total revenue and deduct all expenses (including taxes), the result would be ______.

net income (or loss)

The difference between revenue and expenses is called ______.

net income or loss

Cash from ______ activities is calculated by combining the changes in the revenue accounts, expense accounts, current asset accounts, and current liability accounts.

operating

All of the money that has been contributed to a firm that never has to be paid back is called ______.

owner's equity

Owners' contributions to the organization in combination with income earned and retained to grow and develop the firm are called ______.

owner's equity

An accountant that is employed by a large corporation, government agency, or other organization to prepare and analyze their financial statements would be called a(n) ______ accountant.

private

Gross income and gross earnings are two equivalent terms for gross ____.

profit

Step two of the accounting cycle is ______.

recording transactions

_______ is/are the total amount of money received (or promised) from the sale of goods or services, as well as from other business activities such as the rental of property and investments.

revenue

Revenue is defined as ______.

sales plus other money coming into the firm

The first step of the accounting cycle is to examine ____ documents such as checks, credit card receipts, and other evidence concerning specific transactions.

source

The ______ explains how the company's cash changed from the beginning of the accounting period to the end.

statement of cash flows

Which of the following is considered the most important component of an annual report?

CPA's signatures

Cash from operating activities is calculated by combining the changes in which four accounts?

Expense accounts Current liability accounts Revenue accounts Current asset accounts