Exam 7: Accounting: Decision Making by the Numbers

What is a balance sheet? What is the accounting equation? Define each term in the accounting equation.

When managers are looking at different ways to achieve a certain goal,what can they perform as a means of comparing how the alternative decisions would affect the firm's revenues and costs?

Discuss the duties and responsibilities of several types of accountants.

The accounting equation is based on the fact that the value of a firm's assets is,by definition,exactly equal to the financing provided by creditors and by owners for the purchase of those assets.

Revenues are increases in a firm's assets resulting from the sale of goods,the provision of services,or other activities intended to earn income.

By subtracting dividends paid to shareholders from the net income,managers are able to calculate which of the following?

Incremental analysis is the evaluation and comparison of the financial impact different alternatives would have in a particular decision-making situation.

What is the term for what the firm owes its creditors?

Which set of statements comprises the major output of financial accounting?

The statement of cash flows shows the cash flowing in and out of the firm from three types of activities: operations,investing,and financing.It also shows the net increase or decrease in cash from all three sources and the total amount of cash on hand at the end of the period.

What does the statement of cash flows show about a firm?

Desmond owns a restaurant and is considering buying his desserts from a local bakery rather than continuing to hire a pastry chef for this purpose.When he performs an incremental analysis,which of the following would be considered an incremental cost?