FINAL EXAM: Ch 10

Question 1

the art of recording and summarizing in terms of money, transactions and interpreting the results there of

Answer 1

accounting

Question 2

the amount of cash that goes out of the business because it is buying goods or services needed for its operations

Answer 2

expenses

Question 3

Statement of the sum of goods or services provided

Answer 3

Invoices

Question 4

a set of standards to measure, recognize, and present the information that appears in a business financial statements

Answer 4

Accounting Framework

Question 5

US: GAAP

Answer 5

Generally Accepted Accounting Principles

Question 6

IFRS

Answer 6

International Financial Reporting Standards

Question 7

Involves the collection of financial info into external records, these records provide investors, banks, and others with selected info about the financial health of a company

Answer 7

Financial Accounting

Question 8

Examines the financial statements and supporting accounting systems of clients

Answer 8

Public Accounting

Question 9

Investigates and reconstructs financial information when there are no financial records available, this skills is needed when a business has committed fraud and the current counting system is not trustworthy.

Answer 9

Forensic Accounting

Question 10

employs a distinctive accounting framework to create and manage funds, these funds serve to pay for expenses that a gov entity incurs and outlays to porvide its services

Answer 10

Governmental Accounting

Question 11

involves identifying, measuring, analyzing and interpreting financial info, managers use this info so they can pursue the business goals.

Answer 11

Managerial accounting

Question 12

focused on examining business procedures and transactions to identify internal controls, these controls are important to identify deficiencies, waste, fraud, and mismanagement so that the accounting systems can be improved

Answer 12

internal auditing

Question 13

provides detailed info about assets, liabilities, and owners equity

Answer 13

balance sheets

Question 14

resources owned by the business that hold intrinsic, quantificable value

Answer 14

assets

Question 15

a debt that business owes to an external person or business

Answer 15

liablilities

Question 16

the amount of money remaining if a business sold all its assets and pay off their liabilities

Answer 16

owners equity

Question 17

Assets = Liabilities + owners Equity

Answer 17

Accounting equation

Question 18

losing value over time

Answer 18

deprecation

Question 19

profits that are not paid out and the owners invested back into the company

Answer 19

Retained Earnings

Question 20

a financial document that presents a summary of the business’ sales, expenses gains or losses, and the resulting net income/net loss that happened in a period

Answer 20

Income Statement

Question 21

inflows from selling goods and providing services, often used interchangeably with revenues

Answer 21

Net Sales

Question 22

outflows that are result of running the business

Answer 22

Expenses

Question 23

the expenses indirectly related to the business producing a good or providing a service, such as rent, utilities, insurance, and their overhead costs

Answer 23

General and Administrative expenses

Question 24

Account for the reduction of value of an asset

Answer 24

Deprecation Expenses

Question 25

the amount of money that remains from revenues after expenses are deducted

Answer 25

Income

Question 26

The difference between net sales and cost of goods sold

Answer 26

Gross margin

Question 27

the difference between gross margin and general administrative expenses including depreciation expenses

Answer 27

Operating Income

Question 28

the difference between operating income and income taxes

Answer 28

net income

Question 29

income statements can also include one time items that are not included in the operating income because they are not directly from producing a good or provide services

Answer 29

Other items

Question 30

Increases in equity from transactions and other events

Answer 30

Gains

Question 31

Reductions in equity from transactions and other events

Answer 31

Losses

Question 32

Offers a detailed narrative of what happened to the business' cash during a period

Answer 32

Cash Flow Statement

Question 33

Includes sources and uses of cash form business activities

Answer 33

Cash from operating activities

Question 34

Cash flow from buying or selling investments

Answer 34

Cash from investing activities

Question 35

Cash Flow used to fund the company

Answer 35

Cash from financing activities

Question 36

The money paid to the business shareholders

Answer 36

Dividends paid

Question 37

represents the money shareholders have deposited in the business as an investment

Answer 37

Capital Contributions

Question 38

measures liquidity, or cash flow, to reveal if the business has the current assets on-hand to cover its bills in a timely manner

Answer 38

Current Ratio

Question 39

measures the current assets that can be quickly converted to cash

Answer 39

quick ratio

Question 40

measures the amount of all debts and liabilities against owner's equity

Answer 40

debt to equity ratio

Question 41

lets shareholders know how profitable their investments in the business is and its evaluates that investment's returns

Answer 41

return on equity ratio

Question 42

a measure of how much net profit is generated compared to the amount of net sales

Answer 42

net profit margin ratio

Question 43

activities that are added to the operating procedures of a business or organization with the purpose of protecting assets

Answer 43

internal controls

Question 44

intended to minimize errors or irregularities from occurring and to ensure business objectives are met

Answer 44

preventive controls

Question 45

Intended to find errors or irregularities once they have occurred

Answer 45

Detective controls

Question 46

Internal controls are not infallible

Question 47

Are the amount of cash that goes out of the business because the business is buying goods or services needed for its operations

Answer 47

Expenses

Question 48

Accounting transactions always need to be stated in terms of____

Answer 48

Money

Question 49

____is the accounting framework used in the United States

Answer 49

Generally Accepted Accounting Principles (GAAP)

Question 50

____is the accounting framework outside the United States

Answer 50

IFRS

Question 51

_accounting investigates and reconstructs financial information when financial records are not available

Answer 51

Forensic

Question 52

The balance sheet provides detailed information about___

Answer 52

Assets, liabilities, and owner's equity

Question 53

____ is the accounting equation

Answer 53

Assets=Liabilities+Owner's Equity

Question 54

___are resources owned by the business that hold, intrinsic, quantifiable value

Answer 54

Assets

Question 55

the business liabilities, the sum of money a business owes, such as loans accounts payable, mortgages and rent

Answer 55

Funding

Question 56

The Accounting System Manages:

Answer 56

Expenses, Invoices, Funding

Question 57

show balance sheet, income statement, and cash flow statement

Answer 57

Financial Statements

Question 58

amount of extra money that a business pays for another company that exceeds the value of assets

Answer 58

Goodwll

Question 59

Expected to be paid within the next year

Answer 59

Current Liability

Question 60

Expected to be paid in more than one year

Answer 60

Non-current Liability

Question 61

expected to be used within a year and are typically used for the day-to day operation, such as cash and inventory

Answer 61

Current Assets

Question 62

long-term assets that are illiquid, it would take time to convert it to cash, (a building)

Answer 62

Non-current Assets

Question 63

would be used over a number of years, such as equipment

Answer 63

long-term assets

Question 64

owners, managers, and employees

Answer 64

Internal Audience

Question 65

Investors

Answer 65

External Audience

Question 66

expenses related to the business' producing a good, such as purchased material and the labor used in production

Answer 66

Cost of Goods Sold

Question 67

money owed to the business by customers

Answer 67

Accounts receivable

Question 68

money the business owes to suppliers and vendors

Answer 68

Accounts payable

Question 69

use data from more than one financial statement

Answer 69

Combine Ratio