Exam 12: The Role of Accounting in Business

Define vertical percentage analysis.

What was Rebecca's gross profit margin

A business that has perishable goods will have high inventory turnover.

Which of the following groups is typically not interested in financial accounting information

Its fiscal year is a company's designated business year.

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

Explain breakeven analysis.

Contribution margin per unit is the shortage of revenue per unit over variable cost per unit.

The debt owed by a business to an outside individual or organization is called its _____.

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

The raft of corporate scandals that includes the notorious Enron episode was mainly the fault of _____.

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

Business student Maurice Langdon can use _____ analysis to show the relationship between two numbers.

What is an asset, and what two kinds of assets can a business have?

The _____ ratio shows how much of each sales dollar is left after certain costs have been covered.

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

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 first part of Brenda's job requires her to deal with management efficiency ratios.

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. -After calculating how efficiently the client's assets are being managed, Brenda must figure management effectiveness ratios.

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

Examining both its debt-to-equity and interest coverage, its _____ ratios may show that a company is heading for financial trouble.