Exam 12: The Role of Accounting in Business

Last year, Rebecca's Bookstore had $1 million in sales. She spent $590,000 to buy the books that she sold and paid out $300,000 in operating expenses. Interest and taxes came to $3,000. How much profit did Rebecca have for each $1.00 in sales

The best way to prepare to be an investor is to learn all the _____ that you can.

A vertical income statement shows income for more than one year.

Cash flows from _____ activities result from obtaining or paying back the funds with which you've financed your business.

What's the purpose of a balance sheet?

As a junior accountant for the Waterford Crystal Co. of New Bedford, Connecticut, you’ve just completed an intensive four-week initial training session. During your first week at Waterford, you’ll be applying many of the concepts that you worked so hard to understand over the course of four grueling years of college accounting classes: sales revenues, cost of goods sold, operating and administrative costs, taxes, interest expenses, and net profit. In week two, you’ll get some actual experience working with current and long-term assets, current and long-term liabilities, and owner’s equity. In your third week, you’ll be keeping track of all cash coming into and going out of the business. -During your third week at Waterford, you'll be working with _____.

A more sophisticated kind of balance sheet is called a classified balance sheet.

What is a depreciation expense?

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

Which of the following may cause a company to have cash problems

In order to examine a firm's capital structure, you would look at its debt debt-to-equity ratio.

The public accountant examines a company's financial statements and submits an opinion on whether they have been prepared in accordance with _____.

As a junior accountant for the Waterford Crystal Co. of New Bedford, Connecticut, you’ve just completed an intensive four-week initial training session. During your first week at Waterford, you’ll be applying many of the concepts that you worked so hard to understand over the course of four grueling years of college accounting classes: sales revenues, cost of goods sold, operating and administrative costs, taxes, interest expenses, and net profit. In week two, you’ll get some actual experience working with current and long-term assets, current and long-term liabilities, and owner’s equity. In your third week, you’ll be keeping track of all cash coming into and going out of the business. -Your balance sheet will report Waterford's _____.

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.

_____ costs vary with quantity of goods sold but remain constant on a perunit basis.

Its debt-to-equity ratio examines the risk entailed by a company's _____.

_____ is the same thing as the item called net profit on an income statement.

Brenda Sinatra is senior analyst at a major Oregon accounting firm. One facet of her job is determining how much of each sales dollar is left after a client has covered certain costs. She’s also responsible for calculating how efficiently a client company’s assets are being managed. Another aspect of her job calls for measuring overall company performance and determining how effectively management is running the company. Finally, she reports on the firm’s financial strength to its board of directors. -The last thing that Brenda does is report on financial condition ratios.

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

Accounting can help your business in all of the following ways except: