Exam 1: Fundamentals of the Business World

Dax is responsible for preparing financial statements for his employer. Each statement is reviewed against previous statements and against top competitors. Which Generally Accepted Accounting Principle (GAAP) standard does this best demonstrate?

Cascade Snowboards Shoppe had a cash balance of $10,000 last year. This year it received $500,000 in cash from sales and paid $200,000 for inventory and $130,000 for operating expenses. It also paid $10,000 for new office furniture and $120,000 for new machinery in its warehouse. Lastly, it paid $30,000 towards the mortgage. What is its new cash balance?

The liquidity ratio that consists of current assets divided by current liabilities is called the current ratio.

In which step in the accounting process would a company find and sort data from all transactions related to the business?

Standard Brakes had sales of $200,000 last year. It also has a cash total of $75,000, stocks and bonds of $50,000, and accounts receivable of $40,000. Standard has accounts payable of $50,000, notes payable of $125,000, and bonds payable of $175,000. Calculate the quick ratio for the company.

Lester, Lester & Lester, a law firm, has an accountant on staff to manage its financial information. This accountant is a(n) ________ accountant.

At the end of an accounting period, the bookkeeper prepares a(n) ______ to ensure that the data in the ledgers is accurate.

Akito has not yet paid the rent on his office for the month. How would this debt be labeled on a balance sheet?

What task would be a part of the first step in the accounting process?

You are an accountant and your supervisor asks you to calculate gross profit for the last quarter. What is gross profit? Define each element you will need for the calculation and describe the formula.

As it pertains to the balance sheet, ________ stock is the amount of stock that has been allocated to owners of the company.

The double-entry bookkeeping format is used during the ________ step of the accounting process.

A company had sales revenue of $1,000,000 last year. Its operating expenses were $100,000 and its income tax expense was $10,000. Additionally, the company had $20,000 in sales returns and cost of goods sold of $500,000. What was its gross profit?

When bookkeepers put journal entries into categories in a ledger, they are in which step of the accounting process?

If you were doing managerial accounting tasks, you might be

A current ratio of less than 2.0 is a potential red flag for a company because it means that

Tamarack Camping Company has a common stock balance of $50,000 and retained earnings of $20,000. It has notes payable of $100,000, current notes payable of $25,000, mortgage payable of $200,000, and accounts payable of $50,000. Using this information, calculate its debt to owners' equity ratio.

Elementary Online Training had net sales of $750,000, sales returns of $10,000, sales allowances of $5,000, and cost of goods sold of $500,000. If its accounts payable is $50,000 and its average inventory value is $75,000, what is its inventory turnover ratio?

The statement "assets = liabilities + owners' equity" is called the

In which step of the accounting process does ratio analysis play a role?