fm p5

Question 1

Are tools that managers use to help them in their decision-making considering financial implications.

Answer 1

Financial statements

Question 2

Are the key source of information for most financial decision-making purposes.

Answer 2

Financial statements

Question 3

Are the product of financial accounting.

Answer 3

Financial statements

Question 4

They show the results of operation, financial
condition, changes in owner’s equity, and sources and uses of cash.

Answer 4

Financial statements

Question 5

Yearly audited financial
statements are submitted to the SEC (Securities and Exchange Commission)

Answer 5

Financial statements

Question 6

Income statement or

Answer 6

statement of comprehensive income

Question 7

Balance sheet or

Answer 7

the statement of financial position or statement of financial condition

Question 8

Cash flow statement or

Answer 8

statement of cash flows

Question 9

details the revenues earned and the expenses incurred by a company.

Answer 9

INCOME STATEMENT

Question 10

It shows the results of operation of a company.

Answer 10

INCOME STATEMENT

Question 11

It covers a certain accounting period, a month, a quarter, a six-month period, or a year.

Answer 11

INCOME STATEMENT

Question 12

It simply lists the income from operations, like service revenue or professional fees, and
deducts from such revenue the total operating expenses.

Answer 12

INCOME STATEMENT

Question 13

Shows the details of the computation for the cost of goods manufactured and sold. The schedule
highlights four costs including:

Answer 13

1. Total manufacturing cost;
2. Cost of goods manufactured;
3. Cost of goods available for sale; and
4. Cost of goods sold.

Question 14

is added the beginning work in process inventory and from the total thus
obtained is deducted the ending work in process to yield total cost of manufactured:

Answer 14

total manufacturing cost

Question 15

manufactured is added the beginning finished goods inventory to arrive at the total goods available for sale and then from the total thus obtained is deducted the ending finished goods inventory to arrive at the cost of goods sold.

Answer 15

cost of goods

Question 16

Are the cost of direct materials, direct labor, and overhead

Answer 16

PRODUCT COSTS

Question 17

also called manufacturing cost.

Answer 17

PRODUCT COSTS

Question 18

other term for product costs

Answer 18

manufacturing cost

Question 19

Are variable costs or costs that change in volume.

Answer 19

Direct materials & Direct labor

Question 20

Means that the more products are produced (volume), the greater or higher the cost of direct materials and direct labor is, because they are directly incorporated into the product.

Answer 20

Direct materials & Direct labor

Question 21

Are materials, directly incorporated into the product like lumber for
furniture, leather for shoes and bags, and cloth for clothing (dress, pants, shirt).

Answer 21

Direct materials

Question 22

Covers the wages paid to all direct workers.

Answer 22

Direct labor

Question 23

These workers handle jobs such as sewing for shoes.

Answer 23

Direct labor

Question 24

Covers all manufacturing costs other than direct
materials and direct labor.

Answer 24

Overhead (manufacturing/factory overhead)

Question 25

Includes; a.1 Indirect materials (screws and bolts) a.2 Manufacturing supplies (gasoline, oil) a.3 Salaries of factory or plant managers and supervisors, salaries of factory staff, rent for the plant or factory site, among others.

Answer 25

Overhead (manufacturing/factory overhead)

Question 26

Overhead (manufacturing/factory overhead) includes:

Answer 26

a.1 Indirect materials (screws and bolts) a.2 Manufacturing supplies (gasoline, oil) a.3 Salaries of factory or plant managers and supervisors, salaries of factory staff, rent for the plant or factory site, among others. b. 1 Variable b. 2 Fixed

Question 27

Means a change in volume.

Answer 27

Variable

Question 28

Means remains constant irrespective of volume.

Answer 28

Fixed

Question 29

Refer to costs incurred during a particular time period and reported either as selling or marketing expenses, and administrative or general expenses.

Answer 29

PERIOD COSTS

Question 30

Part of _____ are the taxes paid to the government taxes including income tax for the period.

Answer 30

PERIOD COSTS

Question 31

A corporate expense that changes in proportion to how much a company produces or sells, they vary depending on the profit of the business.

Answer 31

Variable costs

Question 32

Salesmen’s commissions and bonuses, utilities expenses, communication expense, transportation expense, among others are all variable.

Answer 32

Variable costs

Question 33

Expenses that a company must pay regardless of the level of goods or services produced or sold.

Answer 33

Fixed costs

Question 34

Include rent for office building, depreciation expense for the office building and office equipment and furniture and salaries of the office managers and staff.

Answer 34

Fixed costs

Question 35

Also called statement of financial position shows the assets, liabilities and owners equity of a business.

Answer 35

BALANCE SHEET

Question 36

It shows the financial condition or financial position of the business.

Answer 36

BALANCE SHEET

Question 37

It details the company’s resources (assets) and obligations (liabilities) and the composition of the owners’ equity.

Answer 37

BALANCE SHEET

Question 38

It shows the liquidity and solvency of the firm.

Answer 38

BALANCE SHEET

Question 39

refers to a firm’s ability to meet its maturing obligations in the short run.

Answer 39

Liquidity

Question 40

refers to the firm’s ability to meet maturing obligations in the long run.

Answer 40

Solvency

Question 41

the resources that will be used for current operations or within the current operating cycle.

Answer 41

Current assets

Question 42

refers to the resources of the firm that are durable or will last longer than a year like land, building, equipment, furniture and fixture, and long-term investments.

Answer 42

Non-current assets

Question 43

are obligations of the firm that will mature or need payment during the current accounting period or accounting year.

Answer 43

Current Liabilities

Question 44

are the obligations of the firm that will mature or become due within more than a year.

Answer 44

Non-current Liabilities or Long-term Liabilities

Question 45

Composed of the initial or original investment plus additional investments.

Answer 45

Owner’s equity

Question 46

(for sole proprietorship)

Answer 46

Owner’s equity

Question 47

(for a partnership)

Answer 47

partners’ equity

Question 48

(for a corporation)

Answer 48

stockholders’ equity

Question 49

where assets are listed on the left side and liabilities and owners’ equity on the right side.

Answer 49

Account form

Question 50

It is like T-account used in accounting.

Answer 50

Account form

Question 51

lists the assets followed by the liabilities and the owner(s)’ equity.

Answer 51

Report form

Question 52

Details the changes that occurred in the owner(s)’ equity.

Answer 52

STATEMENT OF CHANGES IN OWNERS’ EQUITY

Question 53

It shows the beginning owner(s)’ equity with additional investments for a sole proprietorship or partnership or, for a corporation, additional issuances of corporate stock.

Answer 53

STATEMENT OF CHANGES IN OWNERS’ EQUITY

Question 54

it shows the withdrawals made by a sole proprietor or partner(s) or declaration od dividends of a corporation.

Answer 54

STATEMENT OF CHANGES IN OWNERS’ EQUITY

Question 55

Details the beginning retained earnings, the profit/loss of the corporation, dividends declared, retained earnings appropriated, and return of appropriation.

Answer 55

RETAINED EARNINGS ACCOUNT

Question 56

Are the appropriation of the company’s accumulated earnings for such purposes as plant expansion, building construction, land acquisition, bond retirement, and other purposes as the corporation sees fit.

Answer 56

RETAINED EARNINGS APPROPRIATED

Question 57

it can be a simple statement of cash receipts and cash disbursements as is done in very small business.

Answer 57

CASH FLOW STATEMENT

Question 58

1. other term for cash flow statement

Answer 58

funds flow statement

Question 59

2. other term for cash flow statement

Answer 59

the statement of the sources and uses of cash

Question 60

3. other term for cash flow statement

Answer 60

the statement of sources and uses of funds

Question 61

Where recognition of income and expenses are made when income is earned, regardless when cash is received, and expenses are recognized when expenses are incurred, irrespective of when they are paid.

Answer 61

ACCRUIAL METHOD OF ACCOUNTING

Question 62

CASH FLOW STATEMENT IS DIVIDED INTO THREE SECTION

Answer 62

a. Net cash inflow from investing activities b. Net cash inflow from financing activities c. Net cash inflow from operating activities

Question 63

shows purchases and sales of fixed assets.

Answer 63

Net cash inflow from investing activities

Question 64

shows sales of capital stock, payment of dividends, and repayment of long-term liabilities.

Answer 64

Net cash inflow from financing activities

Question 65

reflects the amount of cash the company has on hand after operating expenses are deducted from total sales.

Answer 65

Net cash inflow from operating activities

Question 66

involve all activities related to non-current assets – disposing of them or selling them and buying them.

Answer 66

Investing activities

Question 67

involve obtaining resources from owners (issuances of capital stock) and paying them dividends as their share in the profit of the company.

Answer 67

Financing activities

Question 68

They also include obtaining resources form creditors and repaying the amounts borrowed.

Answer 68

Financing activities

Question 69

are all operation-related earning activities of the company – rendering service for a service firm, selling goods for a trading concern, and manufacturing and selling activities for a manufacturing company.

Answer 69

Operating activities

Question 70

Include the income and expense items found in the income statement and all other activities of the enterprise related to extension of credit to customers, investment in inventories, obtaining credit from suppliers.

Answer 70

Operating activities