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Sml Biz ACCT/FIN F21 > Quiz 4 > Flashcards

Quiz 4 Flashcards

1
Q

balance sheet (financial condition)

A

reports the company’s assets, liabilities and owners’ equity as of a specified date

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2
Q

balance sheet date

A

the specified date of the balance sheet reporting assets and liabilities

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3
Q

asset

A

anything owned by the company

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4
Q

accounts receivable

A

amounts due from customers for goods and services the co. has already provided

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5
Q

inventory

A

merchandise normally available for sale to customers

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6
Q

current asset

A

an asset expected to be converted to cash within one year

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7
Q

non current asset

A

an asset expected to be converted to cash in greater than one year - has 2 sub categories

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8
Q

categories of non current assets

A

fixed and intangible

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9
Q

fixed asset

A

land, buildings, equipment and other long-term (more than 1 year) assets, are also known as plant assets

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10
Q

intangible asset

A

sub category of long term assets - include patents, trademarks, copyrights and goodwill

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11
Q

alternate names for fixed assets

A

PP&E property plant and equipment

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12
Q

accounts payable

A

amount due to suppliers/distributor for goods and service co has already received

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13
Q

long term liability

A

a liability expected to be paid in greater than one year

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14
Q

current liability

A

a liability expected to be paid within one year

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15
Q

OE

A

indicates the owners’ investment in the business

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16
Q

B2B

A

Business-to-business is a situation where one business makes a commercial transaction with another.

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17
Q

current + non current assets equal

A

total assets

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18
Q

current liabilities + long-term debt equals

A

total liabilities

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19
Q

alt names for balance sheet

A

statement of financial condition/position

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20
Q

3 examples of intellectual property

A

patent, copyright, trademark

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21
Q

2 names for reinvested profits

A

owners equity and retained earnings

accumulated earnings and reinvested profits

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22
Q

who do the profits of the business belong to

A

the owners

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23
Q

another term for profit

A

earnings/income

total after expenses

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24
Q

corporations name for owners equity

A

stockholder/shareholder equity

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25
Q

is preferred stock listed before or after common on the balance sheet

A

before

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26
Q

income statement

A

reports the business’s revenues, expenses, and net income for a specified period of time

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27
Q

revenues / top line

A

total sales

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28
Q

expenses

A

the cost of operations incurred to generate revenue

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29
Q

bottom line

A

the net income of a company for a certain period

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30
Q

2 alternate names for income statement

A

P&L/statement of operations

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31
Q

alternate terms for income

A

profit, earnings

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32
Q

dividend

A

a distribution (payment) of a corporation’s net income to its shareholders

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33
Q

what happens to profits not paid as dividends

A

reinvested and show up as retained earnings on the balance sheet

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34
Q

term for reinvested profits on the balance sheet

A

retained earnings

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35
Q

capital structure of a business

A

the % of debt and equity financing used to pay for the businesses assets

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36
Q

debt financing + equity financing =

A

capital structure

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37
Q

how to calculate capital structure

A

debt financing + equity financing

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38
Q

debt-to-total assets ratio formula

A

total liabilities / total assets

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39
Q

alt name for debt-to-total assets ratio

A

debt ratio

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40
Q

debt-equity ratio formula

A

total liabilities / total equity

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41
Q

alt name for debt-equity ratio

A

debt to equity ratio

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42
Q

debt-to-total assets ratio (2 interpretations)

A

indicates % of assets financed by debt
indicates % of assets financed by equity
% above 50 means more debt than equity

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43
Q

interpretation of debt-equity ratio

A

indicates debt capital as a multiple of equity capital

greater than 1 means more debt

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44
Q

with debt to total asset how to calc if it is using more debt than equity

A

divide liabilities by total assets = (L+OE), if percentage is more than 50, using more debt

45
Q

with debt to equity how to calc if it is using more debt than equity or equal amounts

A

divide debt by equity, comes out as a decimal, that is the multiple of debt - greater than 1 means more debt

46
Q

whether a higher debt-to-total assets ratio indicates a greater risk of default, or a smaller risk of default, than a lower debt-to-total assets ratio

A

greater risk of default

47
Q

whether a higher debt-equity ratio indicates a greater risk of default, or a smaller risk of default, than a lower debt-equity ratio

A

greater risk of default

48
Q

basic accounting equation

A

A=L+OE

49
Q

consolidated financial statement

A

financial statements of a parent company and its subsidiaries

50
Q

parent company

A

a company that owns another

51
Q

subsidiary

A

a company owned by another company

52
Q

sister companies

A

companies that share a parent company

53
Q

allowance of doubtful account

A

estimates the percentage of accounts receivable that are expected to be uncollectible

54
Q

alt names for allowance of doubtful account

A

estimated uncollectibles

55
Q

A/R net Formula

A

gross A/R - estimate of uncollectibles

56
Q

which is the total amount owed by customers to the company, gross A/R or A/R net

A

Gross A/R

57
Q

which is the amount the company actually expects to collect, gross A/R or A/R net

A

A/R net

58
Q

which is included in the company’s total assets, gross A/R or A/R net

A

A/R net

59
Q

which fixed asset is listed first

A

Land

60
Q

which fixed asset does not depreciate

A

land

61
Q

which indicates the total cost of the venture’s fixed assets, gross fixed assets or net fixed assets

A

historical cost/gross

62
Q

which is included in the venture’s total assets, gross fixed assets or net fixed assets

A

net fixed assets

63
Q

whether a fixed asset’s accumulated depreciation increases over time, or decreases

A

increases

64
Q

whether a fixed asset’s net book value increases over time, or decreases

A

decreases

65
Q

depreciation

A

spreading historical cost of a fixed asset over the assets estimated useful life

66
Q

accumulated depreciation

A

a fixed assets total depreciation from acquisition to the balance sheet date

67
Q

market value

A

price a buyer would pay to an unrelated seller

68
Q

[liabilities]

A

debt capital

69
Q

accrued payables

A

expenses that have been incurred but not yet paid

70
Q

3 examples of accrued payables

A

accrued wages/salaries
accrued interest
taxes payable

71
Q

2 other terms for contributed capital

A

invested capital

paid-in capital

72
Q

retained earnings

A

reinvested profits

73
Q

another term for retained earnings

A

owners equity and retained earnings

accumulated earnings and reinvested profits

74
Q

dividend

A

a distribution of profits to the owners

75
Q

whether the book value of a fixed asset is the same as its market value

A

it is not the same

76
Q

what goodwill on the balance sheet indicates

A

indicates the co has acquired other companies

77
Q

the type of asset that goodwill is

A

noncurrent - intangible

78
Q

whether the par value of stock is the same as its market value

A

no

79
Q

who determines if corp will pay dividend

A

board of directors

80
Q

role of board of directors

A

deciding to pay dividends/to protect the interests of the shareholders

81
Q

formula for ending gross fixed assets

A

beg gross fixed + historical cost of fixed assets purchased - historical cost of assets sold in period

82
Q

net book value of a fixed asset

A

historical cost - accumulated depreciation

83
Q

amt reported on balance sheet for preferred stock

A

number of pref shares issued x par value per pref share

84
Q

amt reported on balance sheet for additional paid in capital preferred

A

anything contributed above preferred stock par value

85
Q

amt reported on balance sheet for common stock

A

number of common shares issued x par value per common share

86
Q

amt reported on balance sheet for additional paid in capital common

A

anything contributed above common stock par value

87
Q

ending retained earnings formula

A

beg retained earning + net income - dividends

88
Q

net working capital in dollars

A

current assets - current liabilities

89
Q

current ratio formula

A

current assets/current liabilities

90
Q

quick ratio formula

A

(current assets - inventory) / current liabilities

91
Q

what does net working capital mean

A

amount of cash that can safely be spent

92
Q

what does current ratio mean

A

measures if the firm has the resources to pay debt with cash and assets

93
Q

what does quick ratio mean

A

how easily could you pay off liabilities in a very short amount of time (smaller than current ratio)

94
Q

3 ways to analyze a ventures ratios

A

compare to competitors
compare to companies in the same stage of life cycle
analyze trends for the company over time (up/down)

95
Q

3 limitations of financial statements

A

based on historical actual transactions and do not indicate future prospects
many valuable intangibles can not be recorded as assets on the balance sheet
net book value may be very different than their market value

96
Q

3 intangibles useful to a venture but cant be on balance sheet

A

experienced personnel
efficiencies (established procedures)
customer loyalty/reputation (goodwill from owned co.)

97
Q

2 examples of assets recorded on the balance sheet at lower than market value (undervalued)

A

land

buildings

98
Q

cash basis accounting

A

revenue is recorded when cash is received

expenses are recorded when cash is paid

99
Q

accrual basis accounting

A

revenues are recorded when earned or when services are performed REGARDLESS of when cash received
expenses are recorded when incurred or become liable for them REGARDLESS when cash paid

100
Q

capitalizing

A

recording purchases as assets and not as expenses in the current period

101
Q

expensing

A

recording purchases as expenses

102
Q

revenue recognition

A

recording revenues in the accounting system

103
Q

sales discounts

A

discounts given to A/R customers for paying early

104
Q

whether capitalizing has an immediate impact on the income statement (and therefore net income), or a delayed impact

A

delayed

105
Q

whether expensing has an immediate impact on the income statement (and therefore net income), or a delayed impact

A

immediate

106
Q

examples of operating expense

A

utilities/salaries/depreciation

107
Q

2 alt names for EBIT

A

operating income / operating profit

108
Q

multistep income statement

A 
revenues
(returns, discounts)
---
net sales
(COGS)
---
Gross profits
(ops expense)
---
EBIT (aka operating income)
(interest expense)
---
EBT
(taxes)
---
net income
109
Q

matching principle

A

expenses are recorded in the same accounting period as the revenues they helped generate

Sml Biz ACCT/FIN F21 (10 decks)

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