Exam 12: The Role of Accounting in Business

The _____ ratio may suggest that inventory is moving quickly even though the rate of turnover is slowing.

On a company's balance sheet,_____ reflects the amount that a business has charged as depreciation expense.

What do management effectiveness ratios tell a business

Businesses that sell services rather than merchandise don't have a line for _____ on their statements.

Profit margin ratios help a company assess its financial strengths.

The Kathryn Lorillard Co.'s income after taxes is called _____ income.

What does interest coverage ratio report

Expenses are divided into two categories-cost of goods sold and operating expenses.

A company can assess its financial strengths by analyzing its _____ ratios.

Accountants do all of the following except _____.

In preparing financial statements, accountants adhere to a uniform set of rules called governmentapproved accounting principles (GAAP).

Its _____ ratio shows how efficiently a company sells its average stock of goods on hand in one year.

A merchandiser is a company that makes a profit by selling goods.

Its _____ ratio may tell us that a company generated an excellent return on assets in its first year and a good return in its second year.

The purpose of accounting is to help _____, who are interested in the activities of a business because they're affected by them.

Describe three different financial ratios that can be used to analyze a company's financial statements.

In September, Sherry's Shoe Mart ordered women's boots from a supplier. The boots were delivered in October, paid for in November, and sold in December. If Sherry uses accrual-based accounting, in which month should she report the boots under Cost of goods sold

_____ is the selling price per unit minus the variable cost per unit.

SCENARIO-BASED Bakersfield, Smith, and Babble LLC is a midsized accounting firm in New England. In order to project an image as a full service company, each partner specializes in a different field of accounting. Bakersfield provides information and analysis to business owners in order to help them operate their companies. Smith’s job is to furnish information to individuals and groups both inside and outside organizations to help them assess their firms’ financial performances. Babble is primarily responsible for preparing financial statements for business owners, managers, and investors and other users, such as creditors and government agencies. -Smith specializes in management accounting.

Its debt-to-equity ratio shows a company's ability to pay interest on its debts from its operating income.