POFB UNIT 6
Which of the following is a key component of managing working capital:
Cash conversion cycle
Cash method
Cash method is where receipts are recorded during the period they are received, and expenses are recorded in the period in which they are actually paid
Managerial Accounting
Controlling everything in the inside of the organization and making sure everything is going smoothly
What accounting tell a business?
If they are creating profit or losing profit
Every month you should calculate how profitable your business is by filling out theses two financial documents?
Income statement and balance sheet
What's more important for a business, income statements or balance sheets?
Income statements are telling you was your profit and what your cost and expense are
What does Days Payable Outstanding do?
Involves the company's payment of it bills or AP
Which of the following is a requirement for a good accounting system:
It should provide needed information quickly
What is finance?
Money and how to use it to achieve a goal
Which of the following doesn't go on a balance sheet?
Net Profit
The role of finance in a business often involves:
Obtaining funds
What happens to a business if they don't do any accounting?
They would writing checks, making deposits,and filing taxes for nothing
The three main sections of a income statement are revenues, expenses, and net income.
True
You need the AR and AP at the beginning and end of a period
True
The process of keeping the financial records of a business is known as
accounting
Businesses would not be able to determine if they are meeting their financial goals without accurate:
accounting systems
Money the business owes is known as
accounts payable
Money owed to the business is known as
accounts receivable
For an accounting system to be useful to the business, the accounting information it must contain
accurate and up to date
Businesses use the information collected through the accounting process to prepare accurate:
balance sheets
Determining which projects a business should invest in is known as
capital budgeting
The overall purpose of accounting is to
control the finances of the business
Assets a company already owns and can use to finance a new venture are called
equity
Assets a company already owns and can use to finance a new venture are called:
equity
When businesses invest funds to expand, they are involved in the process of:
finance
3 types of accounting
financial accounting,Management accounting, Tax accounting
Accounting is often called the _____language of business
language
Which of the following groups makes regular use of a business's managerial accounting
managers
Finance is the business function that involves managing
money
The finance function would definitely be involved in a decision regarding
new business projects and strategies
What does Days Sales Outstanding do?
number of days to collects sales and AP
Accounting is distinct from finance because it main focus is on
record keeping actives
Why are accurate accounting records important to a business?
they show the business how it is doing
What is one of the main reasons why businesses need tp keep accurate accounting records
to control expenses
A company's current balance of assets and liabilities falls under the focus of
working capital management
Maybe you're not good at accounting or even if you have a poor understanding of it, the main thing that you can do is keep your financial records well organized. Give two examples why?
-Taxes purposes -To get your bills accents
Accrual method
Accrual method is when they recognizes expenses when incurred and revenue when earned rather when payment is made or received
What does Days inventory outstanding do?
Addresses how many days it takes to sell inventory
Which of the following categories of information are found on a balance sheet;
Assets, liabilities, owner's equity
DSO
Average AR/Revenue per day
DIO
Average inventory/Cost of Goods Sold (COGS) per day
DPO
Average/COGS per day
What is the Days Sales Outstanding equation?
Avg AR/ Revenue per day
What do you use to calculate CCC for the quarter in question
Balance sheet
How do you calculate CCC
CCC=DIO+DSO-DPO
CCC
DIO+DSO-DPO
What are the key components of the CCC cycle
DSO, DIO, DPO
What is DIO?
Days Inventory Outstanding
If you were going to invest (buy stock) in a company, would you rather look at their financial accounting records or their managerial accounting records? why?
Financial accounting records because it will tell a company's financial health and it will help me to determine if they want to invest in the company
GAAP
Generally Accepted Accounting Principles and it means that your report financial statements in a consistent manner and maintain clear and it is important because the objective is reporting practice throughout the organization
What is the Cash Conversion Cycle?
How fast a company can make money
What is Capital Investment Decisions?
How investments will be financed
Which of the following is a capital investment decision:
How to finance investments
who usually coordinate the accounting procedure in a business?
The CPA or financial manager
What are the governing bodies offer authority/guidance on each type of accounting method?
The Financial Accounting Standards Board (FASB)
What 3 accounting practices have been developed in the last decades?
The activity-based-costing, the balanced scorecard and bottleneck accounting were developed over the past couple decades
