chapter 12.2 financial records and financial statements

Question 1

the value of the owner’s investment in the business

Answer 1

owner’s equity

Question 2

contains info on all employees of the company, their compensation and benefits

Answer 2

payroll records

Question 3

used to record and analyze the financial performance of a business

Answer 3

financial records

Question 4

the value of the buildings and equipment owned by a business can be determined in the

• inventory records
• asset records
• records of accounts
• tax records

Answer 4

asset records

Question 5

what are the two common divisions of assets?

Answer 5

current assets

long term assets (aka fixed assets)

Question 6

how do business managers use the balance sheet and income statement?

Answer 6

to determine how the business is performing

Question 7

debts that continue for more than one year

Answer 7

long term liabilities

Question 8

lists all cash received and spent by the business

Answer 8

cash records

Question 9

budgets reflect the financial ____ of businesses. to determine if those ____ have resulted in success, financial records are needed.

Answer 9

budgets reflect the financial plans of businesses. to determine if those plans have resulted in success, financial records are needed.

Question 10

before computers, preparation and maintenance of financial records were done using ____ documents that had to be done by hand then saved and protected

Answer 10

before computers, preparation and maintenance of financial records were done using paper documents that had to be done by hand then saved and protected

Question 11

shows all purchases and sales made using credit

Answer 11

records of accounts

Question 12

what are some sources of income?

Answer 12

• the sale of products and services
• interest earned from investments

Question 13

what is reported on a balance sheet?

Answer 13

assets, liabilities and owner’s equity

Question 14

identifies customers that made purchases using credit and the status of each account

Answer 14

accounts receivable record

Question 15

when does a business have a net loss?

Answer 15

when expenses are greater than income

Question 16

what are some expenses?

Answer 16

• rent
• supplies
• inventory
• payroll
• utilities (electric, gas)

Question 17

reports that sum up the financial performance of a business

Answer 17

financial statements

Question 18

how often is an income statement (IS) prepared?

Answer 18

every 6 months or 1 year

Question 19

What are the 3 most important elements of a company’s financial strength?

Answer 19

assets, liabilities and owner’s equity

Question 20

report that shows the revenue, expenses and net income or loss from operations for a specific period - normally covers 6 months or a year

Answer 20

income statement

Question 21

true or false

the two most common and important financial records for businesses are the income statement and the balance sheet

Answer 21

true

Question 22

examples of long term liabilites

Answer 22

loans for land, buildings or expensive equipment

Question 23

current liablities are amounts owed that will be paid in less than

• one month
• six months
• one year
• five years

Answer 23

one year

Question 24

what is an I.S.?

Answer 24

• the income statement
• reports the revenue, expenses and net income or loss from operation for a specific period

Question 25

the assets with a life span of more than one year

Answer 25

long term assets/fixed assets

Question 26

what does owner’s equity show us on the balance sheet?

Answer 26

shows how much the business is worth on the date the balance sheet is prepared

Question 27

shows the type of quantity of resources and products on hand along with the current value of each

Answer 27

inventory records

Question 28

shows all taxes collected, owed and paid

Answer 28

tax records

Question 29

when does a business have a net income?

Answer 29

when revenue is greater than expenses

Question 30

_____ is changing the way financial info is collected. Most info is mow collected using point of production and point of sale technolody like scanners, touch screens and pda’s

Answer 30

technology

Question 31

include cash and those items that can be easily converted to cash like inventory and accounts receivable

Answer 31

current assets

Question 32

What are some types of records maintained other than the income statement and balance sheet?

Answer 32

• asset records
• depreciation records
• inventory records
• records of accounts (accounts payable/accounts receivable)
• cash records
• payroll records
• tax records

Question 33

business managers ____ financial statements carefully to determine how their businesses are performing

Answer 33

business managers review financial statements carefully to determine how their businesses are performing

Question 34

what are the two records of accounts reports?

Answer 34

accounts payable

accounts receivable

Question 35

the current value of investments made by the owners of a business can be found in the

• income statement
• balance sheet
• tax records
• record of accounts

Answer 35

balance sheet

Question 36

identifies the companies from which credit purchases were made and the amounts purchased, paid and owed

Answer 36

accounts payable record

Question 37

as a part of payroll, employers must _____ a percentage of employees’ salaries and wages for income taxes, social security and medicare taxes and sometimes unemployment compensation insurance

Answer 37

as part of payroll, employers must withhold a percentage of employees’ salaries or wages for income taxes, social security and medicare taxes and sometimes unemployment compensation insurance

Question 38

what a company owes

Answer 38

liabilities

Question 39

what the company owns

Answer 39

assets

Question 40

what are the two types of liabilites

Answer 40

current liabilities

long term liabilities

Question 41

liabilities that will be paid within a year

Answer 41

current liabilities

Question 42

lists the assets, liabilites, and owner’s equity for a specific date

Answer 42

balance sheet

Question 43

identifies the buildings and equipment owned by the business, their original and current value and the amount owed if money was borrowed to purchase the assets

Answer 43

asset records

Question 44

how often is a balance sheet prepared?

Answer 44

every 6 months or 1 time per year

Question 45

in addition to the taxes withheld from employees, _____ must pay the employer’s share of social security and medicare taxes and other taxes that are calculated as a percentage of payroll

Answer 45

businesses

Question 46

business now use ______ financial systems that have templates for each financial record. The software completes the necessary mathematical calculations needed.

Answer 46

computerized

Question 47

examples of current liabilities

Answer 47

• payments owed to banks for short term loans
• payments due to supplies for inventory purchases, supplies and inexpensive equipment

Question 48

shows the amount assets have decreased in value due to their age and use

Answer 48

depreciation records

Question 49

business records have to be _____ and should be kept up to date

Answer 49

business records have to be accurate and should be kept up to date