Unit 6- Accounting and Financial Management

equity

what financing does not involve borrowing money?

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

Which are considered to be the working areas of accounting?

employees, suppliers, management

Which are stakeholders of a business?

management suppliers employees

Which are stakeholders of a business?

income statement

Which financial statement's purpose is to reveal whether a business is earning a profit or losing money?

Undercapitalization Poor control over cash flow Inadequate expense control

Why do Firms Fail Financially

Private Accountant

Work in a single firm, government agency, or nonprofit organization.

Financial Statement

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

Budget

A(n) ______ allocates the use of specific resources throughout the firm.

providing ease of payment for customers providing the business with payment more quickly

Accepting credit cards can be useful to small businesses by:

Certified Public Accountant (CPA)

Accountants who have passed a series of examinations established by the American Institute of Certified Public Accountants (AICPA) and met a states requirements for education and experience.

cards are accepted in many places they save time

Advantages of using a credit card in small business financing include that:

speed

An advantage of the use of computers to maintain and compile accounting information is ______.

Managerial Accounting

Analysis to managers inside the organization/ cost of production or prepared budgets.

foreign governments federal, state, and local governments

Bonds can be issued by ______.

debt financing

Borrowing money the company has a legal obligation to repay is ______.

must be repaid

Debt financing refers to funds that ______.

Cash Budget

Estimates cash inflows and outflows during a particular period like a month or quarter.

Financial Managers

Examine financial data and recommend strategies for improving financial performance.

Preparing budgets Creating cash analyses Planning for expenditures

Finance activities include:

expenses costs revenues

Financial control is a process through which a firm periodically compares its budget to which of the following?

Journal; Ledger

Financial data from transaction documents are first recorded in a(n) ____________, . The data are then transferred into categories in a(n) __________, so managers can find all the information about a single account in one place.

Paying company bills Collecting payments Staying abreast of market changes Assuring accounting accuracy

Financial managers are responsible for:

increase a firm's rate of return on ownership's investment

Firms will leverage (raise needed funds through borrowing) because it will ______.

ratepayers taxpayers

Government and nonprofit accounting involves working for organizations whose purpose is to serve ______.

Capital Budget

Highlights a firm spending plans for major asset purchases that often require large sums of money.

finance

In any business, funds come into and go out of a business. What business function acquires funds for the firm and then manages those funds on a day-to-day basis?

the condition of the economy the nature of the business the age of the accounts receivable

In factoring, the discount given depends on

financial control

In financial planning, what is the process in which a firm periodically compares its actual revenues, costs, and expenses, with its budget?

operating expenses

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

accounts receivable

In pledging, the firm uses its ______ as collateral for a loan.

Tax Accounting

Keeping up with IRS guidelines for both personal and professional organizations.

Analyze source documents, record transactions in journals, transfer journal entries to ledger, take a trial balance, prepare financial statements, and analyze financial statements

List the steps in the accounting cycle from beginning to end.

capital

Major investments in either tangible long-term assets such as land, or intangible assets such as patents are considered to be ______ expenditures.

the value of the business that belongs to owners

Stockholders', or owners' equity represents ______.

True

The Financial Accounting Standards Board defines the generally accepted accounting principles (GAAP). True false question.

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. Multiple choice question.

Operating (Master) Budget

Ties together all the firms other budgets and summarizes its proposed financial activities.

the Chief Financial Officer department managers

Users of managerial accounting information include:

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

What are some benefits of using computers for accounting?

pledging

When borrowing against accounts receivable so when the account receivable is paid, the money is forwarded to the lender is the process of _____.

Duration Liquidity

When selecting an investment, which two criteria relate to how quickly you can get back your invested funds if you want or need them?

The type of business and industry it is in How quickly it can resell the merchandise it purchases with the funds

The amount a business borrows and for how long depends on which of the following?

stakeholders

A company's financial statements help the firm's _____, such as employees, owners, or investors make informed decisions.

term

A firm that has a promissory note that requires the borrower to repay the loan with interest in specified monthly or annual installments has a(n) _______ -loan agreement

secured

A firm that puts something of value, like a piece of property, up for collateral is applying for a(n) _______ loan.

Financial Statements

Owners, creditors, and suppliers will be most interested in which type of accounting report?

Public Accounting

Provide accounting services to individuals or businesses.

leverage

Raising needed funds through borrowing to increase a firm's rate of return is called

Financial Accounting

Reports to outside users, like investors or the government/ Annual Report.

auditing

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

Auditing

Reviewing and evaluating the information used to prepare a company's financial statements.

financial statements

The best way to understand a firm's financial health and stability is to look at its ______.

net income or loss

The bottom line is another name for ______.

Balance sheet

The financial statement that shows what a company owns and owes as of a particular date is called a(n) ______.

analyze source documents

The first step in the accounting cycle is to ______.

purchase price + freight charges + storage costs

The formula for the costs of goods sold is ______

Finance

The function in a business that acquires funds for a firm and manages them within the firm.

assist managers inside the organization with their decision making

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

capital, cash, operating

What are the three main types of budgets in financial management?

assets owners' equity liabilities

What are the three major categories on the balance sheet?

undercapitalization inadequate expense control poor control over cash flow

What are the three most common reasons firms fail financially?

how quickly it can generate funds using the borrowed cash the kind of business it is in

What are two criteria a business should use to determine how much money it should borrow?

credit

What form of financing takes place when the merchant accepts payment immediately from the bank and the customer agrees to repay the bank?

The lender may take the collateral.

What happens if a secured loan is not repaid?

implementing a just-in-time inventory control method

What inventory management procedure helps a firm to control inventory costs?

Liabilities

What is another name for debts?

accounting

What is considered to be the "language of business"?

tax return

What is the primary report given to the IRS by an organization?

Trial Balance

What step in the accounting cycle refers to a summary of all financial data to make certain the figures are correct and balanced?

the time it takes to get investments converted to cash how quickly you can recover your invested funds in cash

What two things does liquidity measure?

tax accountant

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

Owner's Equity

In the accounting equation, what is the term for the difference between assets and liabilities?

10,000

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

loans from family can hurt family relationships banks can assist the business in analyzing problems

It is better to go to banks instead of family and friends for business loans because:

venture capital

Money invested in new or emerging companies that investors believe have great profit potential is ______.

money has more value in your possession today than at a later point in the future

Money is considered to have a time value because ______.

making capital expenditures acquiring needed inventory controlling credit operations

Needs for operating funds include ______.

all revenue minus all expenses and taxes

Net income or loss is:

government and not-for-profit accounting

Not profit focused

income

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

time

The ________value of money is the idea that money in your possession today is worth more than money that will be in your possession in the future.

business operations

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

record business transactions; summarize financial data

The job of a bookkeeper is to ______, whereas the job of an accountant is to ______.

Owner's equity

The major categories of the balance sheet are assets, liabilities, and ______.

special interest groups legislative bodies taxpayers

The primary users of government and nonprofit accounting information are______.

Define Generally Accepted Accounting Principles (GAAP)

The purpose of the Financial Accounting Standards Board is to ______.

bookeepers; accountants

The recording of business transactions is done by ______, whereas ______ classify and summarize financial data to help managers in decision-making..

review and evaluate a company's financial information

The role of an auditor is to ______.

establish financial controls

The three steps in the financial planning process are to forecast the firm's short- and long-term needs, develop budgets, and ______.

tax accounting managerial accounting financial accounting

Which of the following are considered disciplines within the accounting profession?

recording, classifying, interpreting

Which three activities are part of the function of accounting? Multiple select question.

public accountant

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

Debt; Equity

______ financing involves borrowing money. ______ financing is selling part of the company or reinvesting retained earnings in the company.

Operating

______ funds are typically needed to manage day to day needs of a business as well as acquiring needed inventory.

Revenue

______ is the monetary value of what a company received for goods sold, services rendered, and all other payments to the firm.

assets

economic resources owned by a firm.