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BUS 285 > Final Exam > Flashcards

Final Exam Flashcards

1
Q

Fundamental accounting equation

A

Assets= Liabilities + Equity

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2
Q

Current ratio

A

=CA/CL, Liquidity

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3
Q

Quick Ratio

A

=CA-Inventory / CL , Liquidity

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4
Q

Debt to total assets

A

=Total Liabilities/ Total assets , solvency

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5
Q

Gross margin

A

Gross profit/ sales

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6
Q

Operating margin

A

operating income/sales

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7
Q

Profit margin

A

net income/ sales

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8
Q

Cash From customers

A

= net sales + A/R beginning – A/R ending –
unearned revenue beginning + unearned revenue
ending

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9
Q

Cash paid to suppliers

A

= - cost of goods sold + inventory beginning –inventory ending – A/P beginning + A/P ending

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10
Q

Cash paid to employees

A

= - salaries and wages expense – salaries payable
beginning + salaries payable ending

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11
Q

A/R Turnover

A

Sales/ (𝐴𝑅 𝑙𝑎𝑠𝑡 𝑦𝑒𝑎𝑟 + 𝐴𝑅 𝑡ℎ𝑖𝑠 𝑦𝑒𝑎𝑟)⁄2

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12
Q

Days in A/R

A

365/A/R Turnover

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13
Q

Inventory Turnover

A

COGS/(𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑝𝑒𝑟𝑖𝑜𝑑 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 + 𝑝𝑟𝑖𝑜𝑟 𝑝𝑒𝑟𝑖𝑜𝑑 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦)⁄2

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14
Q

Average days in inventory

A

365/ inventory turnover

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15
Q

Straight line depreciation

A

(cost - residual value) / useful life

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16
Q

Declining balance deprecation

A

=NBV * 1/useful life * multiple

17
Q

Units of production depreciation

A

(Cost-residual value / total units to be produced ) * units in year

18
Q

3 criteria of an asset

A

controlled by the firm, results from a past event, and the assets has future economic benefits to the firm

19
Q

3 criteria of a liability

A

present liability, arises from past events, will result in an outflow of a firms resources

20
Q

Layout of an income statement

A

Sales, COGS, Gross Profit, Operating expenses, operating Income, Other income/expenses; gains and losses, Income before taxes, income tac expense, net income

21
Q

Debt to Equity

A

TL/TE leverage

22
Q

Times interest was earned

A

Operating income/ Interest expense

23
Q

Left side of a bank Reconciliation

A

Balance per bank
Plus deposits in transit
Less outstanding cheques
etc
Adjusted balance per bank

24
Q

Right side of the bank reconciliation

A

Balance per books
plus EFT
less bank fees
less NSF cheque
etc
Adjusted balance per bank

25
Q

what are the 5 main cash controls

A

separation of duties and supervision, job rotation, maximum bank balance, two signatures on cheques, maintaining a safe for cash and cheques

26
Q

Layout of statement of changes in equity

A

Top: common shares, RE, Total
Side: Beginning balance, Net income, Dividends declared, ending balance

27
Q

Layout of statement of cash flows except last 3 lines

A

Operating activities
Cash provided by (used in) operating activities
investing activities
Cash provided by (used in) investing activities
Financing activities
Cash Provided by (used in) financing activities

28
Q

Last 3 lines of a cash flow statement

A

Net change in cash
Cash balance beginning
Cash balance ending

29
Q

What is the direct method

A

cash flow method that follows the income statement order of items to find operating activities

30
Q

What is indirect method

A

starts with net income and backs out all non cash amounts and accruals

31
Q

Who pays for shipping in FOB Shipping Point

A

Receiver is responsible for the shipped item as soon as it leaves suppliers hands

32
Q

Who pays for shipping in FOB destination?

A

Supplier is responsible for goods transit until it gets to the receiver

33
Q

Indirect methodology

A

Net income
+/- Income statement adjustments
Add back losses and expenses and deduct gains
+/- Working capital adjustments
Add back decreases in assets
Deduct increases in assets
Add back increases in Liabilities
Deduct decreases in Liabilities

34
Q

What are the journal entries a sale

A

DR AR/cash
CR sales
DR COGS
CR Inventory

35
Q

What is the perpetual inventory system

A

always shows the current value of inventory that is up to date FIFO and Weighted average

36
Q

What is a periodic inventory system

A

inventory changes periodically, using the purchases account where COGS=beginning Inventory + purchases - ending Inventory

37
Q

Pros and cons of issuing share

A

Pros: no interest, less cash flow risk, shareholders may bring expertise, flexible cash flows
Cons: less control over firm, split profits, no end to shares holder relationship

38
Q

Pros and cons of loans

A

Pros: keep control over company, keep all profits, gone after paid off after certain amount of time, faster to get
Cons: Interest must be paid, risky for cash flows

BUS 285 (3 decks)

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