Exam 17: Understanding Accounting and Financial Information

Peak Performance Sporting Goods Company has reported net income after taxes = $3,750,000, with 18,250,000 shares outstanding. Basic Earning per Share for Peak Performance = _________.

The reports and financial statements prepared by accountants:

Net income before taxes is found by deducting total operating expenses from gross profit.

The basic earnings per share and the diluted earnings per share would have quite different values for a firm that relied heavily on preferred stock and convertible debt securities to acquire funds.

Brianna is a bookkeeper for Monograms, Limited. She takes the firm's transactions and records them in a record book or computer program referred to as:

Liabilities are reported on the income statement.

Explain the meaning of the fundamental accounting equation and its relation to the balance sheet. If it is helpful, create an example using numbers.

Nebraska Communications is considering the purchase of a new satellite. The firm believes the satellite will help generate future earnings. In addition, the firm recognizes the tax benefits of a lower net income provided by the annual ________ of the asset.

Managers who are concerned about keeping costs under control should be very interested in the information and advice provided by their company's managerial accountants.

Jim works in the accounting department at the Kansas Sunflower Corporation, where it is his job to record all transactions into journals. After completing this task, the next step in the accounting process is to:

Rapidly growing companies often buy increasing amounts of merchandise from suppliers on credit, and then sell the goods to their customers on credit. These companies sometimes have difficulty repaying their suppliers when customers who buy on credit don't pay on time. Firms that experience this difficulty need to do a better job of:

The sole purpose of accounting is to help managers evaluate the financial condition of the firm so that they may make better pricing decisions.

Keith will graduate from Southern State University this year. He has accumulated $18,000 in student loans during his four years at college. An accountant would classify the loans as:

A(n) __________ provides accounting services to individuals or firms on a fee basis.

What is the difference between a journal and a ledger? How are journals and ledgers incorporated into the accounting cycle?

The cost of goods sold reflects the selling price of the merchandise sold over a period of time.

Resources that a firm owns are called:

In order to understand if the results of ratio calculations indicate a financially strong company, the results:

What is ratio analysis? Explain the four different types of ratios and how each is used.

__________ is the accounting practice of recording each transaction in two places in the accounting journal.