Accounting for Business and Management (Chap 15 and 17)

Question 1

• implement firm’s financial plan

- determine most appropiate sources and uses of funds

Answer 1

Financial managers

Question 2

• specified funds needed
• timing of inflows and outflows
• determines most appropriate sources and uses of funds

Answer 2

Financial plan

Question 3

What questions is a financial plan built on?

Answer 3

• what funds are required during planning period?
• when will it need the money?
• where will it obtain the money?

Question 4

Financial plan consists of three steps:

Answer 4

• forecast sales or revenue over some future time period
• use sales forecast to determine expected profits
• estimate how many additional assets company will need to support projected sales

Question 5

gather, report and interpret financial information that describes status and operation of organization and aids in decision making

Answer 5

Accounting

Question 6

Any company whose stock is publicly traded must report to who?

Answer 6

Securities and Exchanges Commission

Question 7

These officials that use accounting to determine company’s tax liability

Answer 7

IRS and state tax officials

Question 8

activities that provide funds

Answer 8

finance

Question 9

activities that provide valuable assets

Answer 9

investing

Question 10

activities that focus on selling goods and services

Answer 10

operating

Question 11

accountant within a company; not affiliated with an accounting firm

Answer 11

management accountant

Question 12

They have the authority to establish finance accounting and reporting standards for publicly held companies

Answer 12

Securities and Exchanges Commission

Question 13

anything owed to creditors

Answer 13

liability

Question 14

evidence of a company’s financial strength and stability

Answer 14

owners equity

Question 15

The only financial statement considered to be PERMANENT

Answer 15

balance sheet

Question 16

year-to-year financial statement

Answer 16

balance sheet

Question 17

assets and liabilities are examined in this financial statement

Answer 17

balance sheet

Question 18

financial statement used in controlling and planning activities

Answer 18

income statement

Question 19

The ratio that covers the ability to meet short-term obligations; compares assets to liabilities

Answer 19

liquidity ratio

Question 20

The ratio that meets short term debt payments on short notice

Answer 20

acid test ratio

Question 21

The ratio that measures the effectiveness of management use of the company’s resources

Answer 21

activity ratio

Question 22

tracks company’s cash inflows and outflows

Answer 22

cash budget

Question 23

adopted by the International Accounting Standards Board (IABS)

Answer 23

International Financial Reporting Standards (IFRS)

Question 24

covered in GAAP and IFRS

Answer 24

assets

Question 25

low risk securities that either have short maturities or sold in secondary markets

Answer 25

marketable securities

Question 26

oversee finances on govt orgs, public companies and private firms

Answer 26

financial managers

Question 27

review financial data, make recommendations on cost and expense reduction

Answer 27

financial managers

Question 28

arrange for debt financing and equity financing; invest funds

Answer 28

financial managers

Question 29

advising services and data analysis (financing)

Answer 29

financial managers

Question 30

yet to be collected credit sales and represent significant percentage of company’s assets

Answer 30

accounts receivable

Question 31

two functions of accounts receivable (credit)

Answer 31

determine overall credit policy and which customers will be offered credit

Question 32

managing working capital; makes sure too much cash isn’t tied up in operations

Answer 32

inventory control

Question 33

currency can be exchanged for another country’s currency

Answer 33

exchange rate

Question 34

creates offsetting ability to non-dollar denominated asset

Answer 34

balance sheet hedge

Question 35

funds obtained through borrowing (_____ capital)

Answer 35

debt capital

Question 36

funds provided by company’s owners when they invest earnings, issue stock to general public or raise capital from outside investors

Answer 36

equity capital

Question 37

Type of company that obtains 50% of funds from lenders who purchase company bonds

Answer 37

Leverage company

Question 38

Type of company that raises funds through sales of company stock

Answer 38

Equity company

Question 39

Equity capital is more expensive than debt capital. True or False?

Answer 39

True

Question 40

funds that consist of current liabilities

Answer 40

short-term funds

Question 41

consists of long-term debt and equity

Answer 41

long-term funds

Question 42

Long-term loans are used to finance inventory. True or False?

Answer 42

False. Short term loans like lines of credit and revolving credit agreements are used to finance inventory

Question 43

a maximum amount someone can borrow over amount of time (short-term loan)

Answer 43

line of credit

Question 44

guaranteed line of credit; funds will be available when needed (short-term loan)

Answer 44

revolving credit agreement

Question 45

Where do organizations acquire long-term loans from?

Answer 45

commercial banks, bonds and equity financing

Question 46

major sources of funds for corporations

Answer 46

bonds and stocks

Question 47

investment companies that raise funds from rich people and wealthy institutions; funds used to make large investments in both public/private companies

Answer 47

private equity funds

Question 48

Do companies prefer short term or long term funds?

Answer 48

Long term funds; short term loans pose more risks

Question 49

An important determinant of a company’s dividend policy is its investment opportunities. True or False?

Answer 49

True

Question 50

most common type of security sold privately

Answer 50

corporate debt security

Question 51

govt owned invested company; investments like real estate

Answer 51

sovereign wealth fund