CH 17

_______ are economic resources owned by a firm.

Assets

The key working areas of accounting include managerial accounting, financial accounting, tax accounting, government and nonprofit accounting, and _______ .

auditing

Assets, liabilities, and owners' equity are the major accounts listed on ______.

a balance sheet

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

accounting information

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

cash

What term describes the cost of merchandise the firm sells?

cost of goods sold

What type of ratio measures a company's ability to turn assets into cash to pay its short-term debts?

liquidity ratio

Rent, salaries, supplies, utilities, and insurance are examples of ________ expenses that are general expenses.

operating

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

operating expenses

What is the difference between assets and liabilities?

owners' equity

Which are steps in the accounting cycle? (Select all that apply)

record transaction in the journal prepare a trial balance analyze transactions

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

statement of cash flows

What type of ratios measure how effectively a firm is using its various resources to achieve profits?

profitability

True or false: Gross profit is what a company shows on their income statement as the bottom line figure.

False

_________ accounting generates financial information for people outside the firm, while ________ accounting generates financial information for people inside the firm.

Financial , managerial

Which are considered to be the working areas of accounting? (Select all that apply)

government and not-for-profit accounting managerial accounting auditing financial accounting tax accounting

Which type of accountant would be available to businesses or individuals on a fee basis?

public accountant

Return on equity is net income minus taxes divided by ______.

total owners' equity

A _______ accountant is trained in tax law and is responsible for preparing tax returns or developing tax strategies.

tax

A _______ accountant is trained in tax law and is responsible for preparing tax returns.

tax

Stockholders, or owners' equity represents ______.

the value of the business that belongs to owners

What is another name for debts?

liabilities

Users of managerial accounting information include ______. (Select all that apply)

department managers the Chief Financial Officer

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

auditing

Return on _________ is net income after taxes divided by total owners' equity.

equity

The current ratio is an example of a(n) ________ ratio that measures a company's ability to turn assets into cash to pay its short-term debts.

liquidity

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

operations

The assessment of a firm's financial condition and performance through calculations and interpretation of financial ratios developed from the firm's financial statements is called _______ analysis.

ratio

The primary users of government and nonprofit accounting information are ______. (Select all that apply)

special interest groups legislative bodies taxpayers

What type of accountant is most likely to develop strategies for a firm in dealing with the Internal Revenue Service?

tax accountant

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

GAAP

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

auditing

Leverage or debt ratios measure the degree to which a firm relies on ______.

borrowed funds

An accountant's time is freed up to do more important tasks such as financial analysis due to the assistance provided by using ______.

computerized accounting programs

A summary of all the financial transactions that have occurred over a particular period is referred to as a ______.

financial statement

Items of value owned by a firm are called ______.

assets

_______ ratios measure the degree to which a firm relies on borrowed funds in its operations.

Debt

In using the accounting equation, if assets = $40,000 and liabilities = $30,000, then owner's equity is equal to ______.

$10,000

Managerial accounting is used to provide information ______.

inside the firm

What are retained earnings?

accumulated earnings not paid out to stockholders

_______ ratios tell us how effectively management is turning over inventory.

activitey

The ratios that measure the effectiveness of a firm's management in turning over inventory are called ______.

activity ratios

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

annual report

________ income after taxes is the last line on the income statement.

Net

________ ratios measure how effectively a firm is using its various resources to achieve profits.

Profitability

The _______ of ________ ________ measures the cost of merchandise the firm sells or the materials and supplies used to manufacture them for sale.

The costs of the goods sold

How do cash flow problems usually start?

The firm uses up its credit.

In accounting, liabilities refer to ______.

debts a business owes to others

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

Annual Report

The information and analysis that comes from managerial accounting is used to ______.

assist managers inside the organization with their decision making

Net income is ______.

all revenue minus all expenses and taxes

The formula for the costs of goods sold is ______.

purchase price + freight charges + storage costs

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

Liquidity ratios Activity ratios Profitability ratios Debt ratios

True or false: The Financial Accounting Standards Board defines the generally accepted accounting principles that accountants must follow.

True

The ability to read, understand, and analyze accounting reports and financial statements is critical in understanding ______.

business operations

What are the three major categories on the balance sheet?

owners' equity liabilities assets

Accumulated earnings from the firm's profitable operations that are kept in the business and not paid out to stockholders in distributions of company profits are called _______ earnings.

retained

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

annual report

The key working areas of accounting include managerial accounting, financial accounting, tax accounting, government and nonprofit accounting, and _____________ .

auditing

Because they indicate a firm's financial health and stability, the use of ______ are key factors in management decision making.

financial statements

The ________ statement summarizes profit (or loss), costs, and expenses over a specific period, which may be a week, a month, or a year.

income

Which financial statement shows a firm's bottom line—its profit (or loss) after costs, expenses, and taxes for a specific period?

income statement

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

people outside the organization

Jayleen works for her firm preparing and analyzing its financial statements. She would be called a(n) ______ accountant.

private

Government and nonprofit accounting involves working for organizations whose purpose is to serve ______. (Select all that apply)

ratepayers taxpayers

The monetary value of what a firm received for goods sold, services rendered, and other payments is termed ________ .

revenue

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

revenue

What are some benefits of using computers for accounting purposes?

-It frees accountants' time for more important tasks. -Software can help if no strong accounting support is available. -Information can be posted from journals instantaneously.

True or false: Financial accounting provides information to people inside of an organization, whereas managerial accounting provides information to people outside of an organization.

False

_______ and nonprofit accounting supports organizations whose purpose is not generating a profit, but serving ratepayers, taxpayers, and others according to a duly approved budget.

Government

________ and nonprofit accounting supports organizations whose purpose is not generating a profit, but serving ratepayers, taxpayers, and others according to a duly approved budget.

Government

Recording, classifying, summarizing, and interpreting financial events in an organization is referred to as ______.

accounting

The relationship among assets, liabilities, and owners' equity is a fundamental concept in accounting known as the _______ equation.

accounting

Through the recording, classifying, summarizing, and interpretation of financial events in an organization, the function of ______ helps managers make good decisions about the firm's operations.

accounting