Exam 8: Accounting Records and Financial Statements

Which of the following ratios shows effective management and the firm's effectiveness in generating profits from the available assets?

Compare and contrast leverage ratios and profitability ratios.

Scenario 8-2. Denny's Diner is undergoing an analysis of its current financial statements. Denny is interested in seeing how his business compares to the industry. In order to make this comparison, Denny has developed the following ratios. He has come to you for an interpretation of his numbers. Denny's Diner Industry Current Ratio 1.51 1.62 Average Collection Period 2.50 5.00 Inventory Turnover 80 75 Debt Ratio 43\% 52\% Net Profit Margin 10.2 8.3 -In Scenario 8-2, after analyzing the current ratio, you determined that ______.

Kim's Kar Kare Service has total debt of $690, total assets of $1,260, interest expense of $140, and sales of $400. Which of the following is the debt ratio for the business?

"Cash flow = Receipts − Disbursements" is the basis of the cash flow statement.

An accounting system in which every business transaction is recorded in an asset account, a liability account, or an owner's equity account in order for the system to balance is known as which of the following?

At Fran's Floral, Fran records transactions when cash is actually received and when expenses are actually paid. This is referred to as the ______ method of accounting.

Small business owners should always use separate checkbooks for their businesses and their personal lives.

______ are either full or partial estimates, since projections are being made as opposed to recording actual transactions.

Another name for assets is net worth.

Compare and contrast liquidity ratios and activity ratios.

The period of time that begins when money is spent on raw materials and does not end until money is collected on the sale of a finished good is known as which of the following?

The expertise with which the small business owner can understand, interpret, and use the information found in the financial statements will determine the soundness of the financial decisions made.

At Wilson's Wash and Go, business managers ensure that all financial transactions are recorded in chronological order. These transactions are then classified by type. This example specifically involves which two areas of the accounting process?

Most of the mismanagement decisions that cause small businesses to fail are related to ______.

The ratios used to measure a firm's ability to meet its short-term obligations to creditors as they come due are called ______.

An aging schedule that shows only the percentage of receivables for 0-30 days, 31-60 days, 61-90 days, and over 90 days is referred to as a/an ______.

"Profit = Revenue − Expenses" represents the activity described in the ______.

A cash budget typically covers a two-year period that is divided into smaller intervals.

A method of accounting in which income or expenses are recorded at the time they are incurred, rather than when they are paid, is called ______.