Su Mba 503 Financial Accounting Quiz 1

Front 1

What are 3 primary activities all business engage in?

Back 1

1. Financing
2. Investing
3. Operations

Front 2

Who are the primary users of financing information? (List 4)

Back 2

Managers and employees, Investment analyists, Creditors and suppliers, Shareholders and directors, Customers and strategic partners, Regulators and tax agencies

Front 3

What are the 4 primary financial statements required to be published by all public companies?

Back 3

Balance Sheet, Income Statement, Statement of Stockholder Equity, Cash Flow Statement

Front 4

Which financial statement reflects information as of a specific point in time?

Back 4

Balance Sheet

Front 5

Which financial statement shows information about a company's sales and expense?

Back 5

Income Statement

Front 6

Which financial statement shows a company's market value?

Back 6

None of the four primary financial statements

Front 7

What is the accounting equation?

Back 7

Assets = Liability + Stockholders' Equity

Front 8

What does ROE stand for?

Back 8

Return on Equity

Front 9

What term is used to describe the body of rules used in financial accounting?

Back 9

GAAP - Generally Accepted Accounting Principles

Front 10

What is FASB?

Back 10

Financial Accounting Standards Board - Sets the accounting standards for public companies in the U.S.

Front 11

SEC

Back 11

Securities and Exchange Commission - Enforces the nation's federal securities laws and regulations.

Front 12

IASB

Back 12

International Accounting Standards Board - Sets the accounting standards for use by countries other than the United States.

Front 13

What is Net Book Value?

Back 13

Assets less Liabilities; how the company is worth based on the accounting formula.

Front 14

What is net income?

Back 14

The difference between revenue and expenses

Front 15

Measuring Profit Margin

Back 15

Net income/Net sales - measures the profitability of each dollar of sales.

Front 16

Measuring Asset Turnover

Back 16

Sales/Average Assets - measures the productivity of assets

Front 17

Return on Assets

Back 17

Net income/Averages Assets - measures the return on total investment. Also profit margin x asset turnover

Front 18

Return on Equity

Back 18

Measures the return on owners investment

Front 19

AICPA

Back 19

American Institute of Certified Public Accountants - Standard setting and CPA oversight

Front 20

PCAOB

Back 20

Public Companies Accounting Oversight Board - regulatory oversight of auditors

Front 21

Costs

Back 21

Expenditures expected to result in a current (expense) or future benefit (asset)

Front 22

Depreciation

Back 22

Cost allocation of an asset over time

Front 23

Current Assets

Back 23

Assets expected to be converted in one year. (ie. cash, accounts receivable, inventory)

Front 24

Long-Term Investments

Back 24

Assets expected to be held longer than one year.

Front 25

Plant property and Equipment

Back 25

Assets used in operation that have a life longer than one-year.

Front 26

Intangible Assets

Back 26

Assets without physical substance. (ie. patents, trademarks, copyrights, goodwill)

Front 27

Working Capital

Back 27

Difference between current assets and current liabilities.

Front 28

Capital Stock

Back 28

par value of stock sold to original investors

Front 29

Additional paid-in-capital

Back 29

value of stock sold to original investors

Front 30

Retained Earnings

Back 30

Accumulated net profits not distributed to stockholders as dividends.

Front 31

Historical Cost Principle

Back 31

Assets and liabilities that are generally carried on the balance sheet at historical cost. Most objective and verifiable measurement.

Front 32

Exceptions to Historical Cost Principle

Back 32

Marketable securities where pricing is readily available. (ie bonds, stocks, etc)

Front 33

Revenue Recognition Principle

Back 33

Revenue that is recognized when: a) Earned b) Realizable.

Front 34

Matching Principle

Back 34

Expenses that are recognized when incurred to derive revenue (even if cash has not been paid)

Front 35

Account

Back 35

Individual accounting record to keep track of increases and decreases of specific assets, liabilities, equity, revenue, or expense items.

Front 36

Chart of Accounts

Back 36

A list of all accounts used by a company numerically in order starting with Assets, Equity, Revenue, and Expenses

Front 37

Journal

Back 37

Listing of all transactions with summary totals (similar to checkbook)

Front 38

General Ledger

Back 38

Record of all accounts showing beginning balance, summary of transactions and ending balance

Front 39

Trial Balance

Back 39

A list of all accounts and their balance at a point in time (ie. end of month). Used to verify all transactions result in balanced accounting equation and to prepare financial statements.

Front 40

Debits and Credits

Back 40

If sum is greater on left side, DEBIT balance. If the right side, CREDIT Balance.

Front 41

Annual Filing

Back 41

10-K

Front 42

Quarterly Filing

Back 42

10-Q

Front 43

Material Information Filing with SEC

Back 43

8-K

Front 44

Prepaid Expenses

Back 44

Prepaid expense reflect advance cash payment that will ultimately become expenses. (ie. prepaid advertising)

Front 45

Unearned Revenue

Back 45

Unearned revenue reflect cash received from customers before any services or goods are provided. (ie. tickets sold for upcoming event)

Front 46

Accrued Expenses

Back 46

Expenses incurred and recognized on the income statement even though they have not been paid in cash. (ie. wages payable to employees)

Front 47

Accrued Revenue

Back 47

Revenues earned and recognized on the income statement even though cash is not yet received. (ie. sales on credit and long-term contracts)

Front 48

Accounting Information System

Back 48

Process company uses to systematically collect data about accounting transactions and summarizes that into a set of financial statements.

Front 49

Accrual Based Accounting

Back 49

Revenue and expenses are recognized when earned and incurred, not necessarily when cash is exchanged.

Front 50

Financial Statement Template: Issue Stock

Back 50

Increase Cash; Increase Contributed Capital

Front 51

Financial Statement Template: Purchasing Inventory on Credit

Back 51

Increase Non-Cash Liabilities; Increase Liabilities

Front 52

Financial Statement Template: Sell Inventory for $500 on credit

Back 52

Increase Non-Cash; Increase Earned Capital

Front 53

Financial Statement Template: Record Cost of Goods Sold

Back 53

Decrease Non-Cash Assets; Decrease Retained Earnings (Decrease Expenses)

Front 54

Financial Statement Template: Paying Dividends

Back 54

Decrease Cash, Decrease Earned Revenue (Do not touch Income Statement)

Front 55

Financial Statement Template: Wages not yet paid

Back 55

Increase Liabilities; Decrease Earned Capital

Front 56

Financial Statement Template: Received Payment for Service not yet completed

Back 56

Increase cash; Increase Liability

Front 57

Financial Statement Template: Paid for Advertising ahead of time

Back 57

Decrease Cash and Increase Non-Cash Assets