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Business 121 > Understanding Accounting and Financial Information (17 L.S.) > Flashcards

Understanding Accounting and Financial Information (17 L.S.) Flashcards

Chapter 17 L.S.

1
Q

The Red Cross in a non-profit which would most likely require the services of which type of accountant?

A

Public or private accountant

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2
Q

Financial ____ such as income statements and balance sheets indicate a firm’s financial heath and stability.

A

Statements

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3
Q

What are some benefits of using computers for accounting purposes?

A
  • Software can help if no strong accounting support is available
  • Information can be posted from journals instantaneously
  • Computers can handle large amounts of financial information
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4
Q

List the steps in the accounting cycle from the beginning to end.

A 
1- Analyze source documents
--Sales slips, travel records, ext.
2-Record transactions in journals
3-Transfer (post) journal entries to ledger
4-Take a trail balance
5-Prepare financial statements
-Balance Sheet
-Income Statement
-Statement of cash flows
6-Analyze financial statements
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5
Q

The ____ ____ is the yearly statement of the firm’s financial condition, progress, and expectations provided to the stakeholders.

A

Annual Report

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6
Q

The formula for the costs of goods sold is:

A

Purchase Price + freight charges + storage costs

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7
Q

Accounting

A

Classifying, summarizing, interpreting, and reporting

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8
Q

Bookkeeping

A

Recording

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9
Q

Accounting cycle

A 
Series of six steps:
1- Analyze source documents
--Sales slips, travel records, ext.
2-Record transactions in journals
3-Transfer (post) journal entries to ledger
4-Take a trail balance
5-Prepare financial statements
-Balance Sheet
-Income Statement
-Statement of cash flows
6-Analyze financial statements
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10
Q

Trial balance

A

Summary of dada in ledgers

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11
Q

Advantages of using computers to maintain and compile accounting information:

A
  • Speed

- Handle large amounts of data

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12
Q

Which is an example of an accounting software package:

  • Excel
  • DecisionTree
  • MRP
  • Quickbooks
A

Quickbooks

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13
Q

Accounting provides ____ _____ that are critical to understanding the health of a business.

A

financial statements

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14
Q

Which will be found on an income statement:

  • operating expenses
  • assets
  • net income
  • liabilities
  • cost of goods sold
  • revenue
A

-operating expenses
-net income
-cost of goods sold
-revenue
NOT
-assets
-liabilities

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15
Q

Net income or Net loss

A

Resources (revenue) left over or depleted

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16
Q

Income statement

A

a financial statement that shows a firm’s bottom line - that is, its profit after costs, expenses, and taxes

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17
Q

The statement of cash flows is a financial statement that shows…

A

Cash receipts and disbursements

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18
Q

Statement of cash flows consists of three major activities:

A

Operations
-transactions that will be done/finished within the year
Investments
-Cash used for investing activities
Financing
-taking on new debt, equity capital to pay business expenses, past debts, company dividends

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19
Q

The Financial Accounting ____ _____ defines the generally accepted accounting principles.

A

Financial Accounting Standards Board (FASB)

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20
Q

Computerized _____ programs post information from journals instantaneously so that financial information is readily available.

A

Accounting

21
Q

Which of the following is considered to be a part of accounting?

  • Classifying financial transactions
  • Changing financial transactions
  • Interpreting financial transactions
  • Recording financial transactions
A

-Classifying, interpreting, recording, and summarizing financial transactions

22
Q

The ____ line is another name for net income after taxes.

A

Bottom

23
Q

Financial statement that shows the firm’s profit after costs, expenses, and taxes.

A

Income statement

24
Q

Type of ratio that measures how effectively a firm is using its various resources to achieve profits.

A

Profitability

25
Q

Government and non-profit accounting involves working for organizations whose purpose is to serve…

A
  • ratepayers
  • taxpayers
  • others according to a duly approved budget
26
Q

A tax accountant has specialize and learned tax ____ and is responsible for preparing tax returns.

A

tax LAW

27
Q

The key working areas of accounting include:

A
  • managerial
  • financial
  • auditing
  • tax
  • governmental and non-for-profit
28
Q

Managerial accounting is used to provide information…

A

inside the firm to make the best financial desisions

29
Q

Managerial accounting is used to provide information…

A

inside the firm to make the best financial desisions

30
Q

____ accounting is used to provide information to managers within the organization to assist them in making decisions.

A

Managerial Accounting

31
Q

What are all of the inputs to the accounting system?

A
  • Sales documents
  • Purchasing documents
  • Shipping documents
  • payroll records
  • bank records
  • Travel records
  • Entertainment records
32
Q

The key working areas of accounting include managerial, financial, tax, government and non-for profit accounting, and ____.

A

Auditing

33
Q

A company that uses a capital account for owners equity is organized as a ___ ____ or a partnership.

A

Sole Proprietorship

34
Q

How many entries are required for each transaction in the ledgers?

A

Two (double-entry principle)

35
Q

CPA exams are established by the ___ ___ of Certified Public Accountants.

A

American Institute of Certified Public Accountants (AICPA)

36
Q

In order to be a certified management accountant a person must:

A
  • meet educational and experience requirements
  • pass a qualifying exam
  • be certified by the Institute of Certified Management Accountants
37
Q

The three profitability performance ratios are:

A
  • earnings per share (EPS)
  • return on sales
  • return on equity
38
Q

____ income after taxes is the last line on the income statement.

A

Net income

39
Q

Gross profit is…

A

Net sales minus cost of goods sold

40
Q

A(n) ___ ____ reports the firm’s financial condition on a specific date.

A

Balance Sheet

41
Q

The financial statement that states if a business is earning a profit or losing money.

A

Income Statement

42
Q

The role of an auditor is to….

A

Review and evaluate a company’s financial information

43
Q

Earnings per share can be either basic earnings per share or ____ earnings per share.

A

Basic earnings per share

Diluted earnings per share

44
Q

What are the main types of financial ratios used in ratio analysis?

A
  • Liquidity ratios
  • Current ratios
  • Leverage (debt) ratios
  • Profitability (Performance) ratios
  • Activity ratios
45
Q

Which ratio is the cost of goods sold divided by the average inventory?

A

The inventory turnover ratio

46
Q

Information in the journal is transferred to the ____, so managers can find all the information about a single account in one place.

A

Ledger

47
Q

On the statement of cash flows financing activities would include:

A

-taking on a new debt, or equity capital or cash used to pay business expenses, past debts, or company dividends

48
Q

Assets may include which of the following:

  • Economic resources
  • Bonds payable
  • Tangible resources
  • Intangible resources
A
  • Economic resources
  • Tangible resources
  • Intangible resources
49
Q

Accounting reports and ___ ___ are critical to understanding the health of a business.

A

Financial Statements

Business 121 (5 decks)

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