160 Multiple choice questions
- The accounting equation
- Cost of the products that a business sells to customers.
- Loan given by a bank that doesn't require the borrower to put up collateral.
- Costs of selling products to customers, not including cost of goods sold.
- System in which computer-controlled equipment is programmed to handle materials used in manufacturing.
- Statement that defines the principles and guidelines that employees must follow in the course of all job-related activities.
- Layout that groups together workers or departments that perform similar tasks.
- is a cost of financing your business and appears on your income statement after the subheading operating income.
- examines the riskiness of a company's capital structure by looking at the amount of debt that it has relative to total equity.
- -Many companies outside the United States follow a set of accounting principles
- which are issued by the International Accounting Standards Board (IASB).
- Debt owed by a business to an outside individual or organization.
in which teams of workers perform all the tasks involved in building a
component, group of related components, or finished product.
- Maximum number of products that a facility can produce over a given period under normal working conditions.
- Shows how much cash the business has coming in and going out
- Application of ethical behavior in a business context.
- Credit given to a company by its suppliers.
of inventory to ensure that a company has enough inventory to keep
operations flowing smoothly but not so much that money is being wasted
in holding it.
- Financial statement showing income for more than one year.
- Report on a company's assets, liabilities, and owner's equity at a specific point in time.
- Resource from which a business expects to gain some future benefit.
- (Gross Profit ÷ Sales
Turnover) × 100%
The positive difference between sales and cost of goods sold
higher = better
- Ability of a product to satisfy customer needs.
- Financial ratio showing how effectively a firm is being run and measuring its overall performance.
- 1. Income statement
2. Statement of owner's equity
3. Balance sheet
- A document that itemizes the sources of income and expenditures for a future period (often a year).
of using a computerized program to calculate the quantity of materials
needed for production and to reschedule inventory ordering.
- Layout in which workers are moved to the product, which stays in one place.
- Individual who pools funds from private and institutional sources and invests them in businesses with strong growth potential.
- A financial statement that details changes in owner's equity for a specified period of time.
- Method of determining the level of sales at which the company will break even (have no profit or loss).
for diagramming the activities required to produce a product,
specifying the time required to perform each activity in the process,
and organizing activities in the most efficient sequence.
- U.S. and non-U.S. companies follow different sets of standards in preparing financial accounting reports
U.S. companies adhere to a uniform set of rules called generally accepted accounting principles (GAAP), which are issued by an independent agency called the Financial Accounting Standards Board (FASB).
for reducing inventories and costs by requiring suppliers to deliver
materials just in time to go into the production process.
- Goods that a business has made or bought and expects to sell in the process of normal operations.
- Production method in which fairly high volumes of customized products are made at fairly low prices.
- appears on your income statement after the subheading net income before income taxes
-it's subtracted from income before income taxes before you arrive at your "bottom line," or net income.
- Computer-controlled machine used to perform repetitive tasks that are also hard or dangerous for human workers.
- Commitment by a bank that allows a company to borrow up to a specified amount of money as the need arises.
- Relationship between a company's debt (funds acquired from creditors) and its equity (funds invested by owners).
- the resources from which it expects to gain some future benefit
- Accountant who has met state-certified requirements for serving the general public rather than a single firm.
how much money the company needs, how and where it will get the
necessary funds, and how and when it will repay the money that it has
borrowed, what the company should do with its funds,what investments
should be made in plant and equipment, how much should be spent on
research and development, and how excess funds should be invested
- Accountant's examination of and report on a company's financial statements.
- Speed with which an asset can be converted into cash.
- Loan issued with a maturity date of one to five years.
of success is based on more than fiduciary responsibility (maximizing
shareholder wealth), but a comprehensive view of:
profit, people and planet
- Record of cash that will be received from a customer to whom a business has sold products on credit.
personal assets (personal savings, credit cards, home mortgages), Loans
from families and friends, Bank loans (including those guaranteed by
the Small Business Development Center)
- Liability that a business need not pay off within the following year.
- Positive difference between gross profit and total expenses.
- Set of international quality standards established by the International Organization for Standardization.
- Specific business or personal assets that a bank accepts as security for a loan.
assets/ current liabilities) Financial ratio showing the relationship
between a company's current assets and current liabilities. companies
should have enough liquid assets to meet the their obligations but not
- Practice of using outside vendors to manufacture all or part of a company's actual products.
- Financial institution that specializes in issuing securities.
- System in which the capabilities of a CAD/CAM system are integrated with other computer-based functions.
decisions pertaining to the purchase of inputs, the inventory of
components and finished products, and the scheduling of production
- Costs incurred by selling products to customers.
- All the steps taken by a company to ensure that its products satisfy customer needs.
- Activity that creates cash inflows or outflows through the selling or buying of long-term assets.
- Number of sales units at which net income is zero.
- the government agency that regulates securities markets.
- Graphical tool for determining the status of projects.
- Practice of buying or selling of securities using important information about the company before it's made public.
- Liability that a business intends to pay off within a year.
- (Sales ÷ Inventory)
Higher is better
Financial ratio that shows how efficiently a company turns over its inventory
More inventory is costly
- Activity that creates cash inflows or outflows through the obtaining or repaying of borrowed or invested funds.
- Production method in which products are made to customer specification.
- Site Selection
-Close to suppliers, customers, or both
-Supply of skilled workers
-Quality of life
- are used to assess a firm's financial strength
- (Net Profit ÷ Total Assets) x100 return on assets must exceed the funding resources cost for those assets
- Financial statement summarizing a business's revenues, expenses, and net income.
- having outside vendors manufacture the actual product
of accounting that furnishes information to individuals and groups both
inside and outside the organization to help them assess the firm's
- System for coordinating a firm's material requirements planning activities with the activities of its other functional areas.
- Company's designated business year.
- Record of cash owed to sellers from whom a business has purchased products on credit.
- Balance sheet that totals assets and liabilities in separate categories.
- Set of international standards for environmental management established by the International Organization for Standardization.
liabilities/ total equity) Financial ratio showing the relationship
between debt (funds acquired from creditors) and equity (funds invested
by owners). a high debt to equity ratio means it might be hard for a
company to borrow money, less is better
- 1. Reduce your cost of goods sold (say, package four toys instead of five)
2. Reduce your operating costs (salaries, advertising, table rental)
3. Increase the quantity of units sold
- issued with a maturity date of less than one year.
- Period of time for which a bank loan is issued.
- Goldman Sachs or Morgan Stanley
that an organization takes in balancing its responsibilities toward
different stakeholders when making legal, economic, ethical, and social
set of rules for financial reporting issued by an independent agency
called the Financial Accounting Standards Board (FASB).
- - initial public offering (IPO),
- help investment banking firm—a financial institution (such as Goldman Sachs or Morgan Stanley) that specializes in issuing securities.
- investment banker advises you that now's a good time to go public and determines the best price at which to sell your stock.
- approval of the Securities and Exchange Commission (SEC), .
- Costs that don't change when the amount of goods sold changes.
- Asset that a business intends to convert into cash within a year.
- Costs of a long-term or fixed asset spread over its useful life. (store signs, displays, furniture, and equipment)
- Budget that shows anticipated expenditures for major equipment.
- Because financial statements are interrelated: numbers generated on one financial statement appear on other financial statements
ex. if assets and liabilities are listed correctly, then the balance sheet will balance: Total assets will equal the total of liabilities plus owner's equity.
- System using computer technology to create models representing the design of a product.
- Layout in which products are produced by people, equipment, or departments arranged in an assembly line.
- Technique for monitoring production quality by testing sample outputs to ensure that they meet specifications.
- (net profit ÷ sales)
is the money that a company earns after paying all its expenses
(including the costs of buying or making its products, running its operations, and paying interest and taxes)
lower is bad
- Timetable that specifies which and how many products will be produced and when.
- Shows assets and liabilities the business has and the amount that the owner/ investor have invested in the business
- Individual who exposes illegal or unethical behavior in an organization.
for measuring and summarizing business activities, interpreting
financial information, and communicating the results to management and
other decision makers.
- The positive difference between sales and cost of goods sold
also known as "bottom line"
- Process of taking a privately held company public by selling stock to the public for the first time.
- The principle of providing products today that don't compromise the ability of future generations to meet their needs.
- Wealthy individual willing to invest in start-up ventures.
measures the number of times a firm's operating income can cover its
interest expense) assesses a company's ability to make interest payments
on outstanding debt.
- Situation in which an individual makes a decision that's unmistakably unethical or illegal.
income/ Interest expenses) Financial ratio showing a company's ability
to pay interest on its debts from its operating income. HIgher is better
- Loa issued with a maturity date of five years or more.
- Arrangement in a facility of equipment, machinery, and people to make a production process as efficient as possible.
- A Gantt chart is an easy-to-use graphical tool that helps operations managers determine the status of projects.
PERT charts are used to diagram the activities required to produce a good, specify the time required to perform each activity in the process, and organize activities in the most efficient sequence.
A PERT chart identifies a critical path—the sequence of activities that will entail the greatest amount of time.
- Amount of money earned by selling products to customers.
- recognize revenue as earned only when cash is received and recognize expenses as incurred only when cash is paid out.
- Process of monitoring cash inflows and outflows to ensure that the company has the right amount of funds on hand.
- Parties who are interested in the activities of a business because they're affected by them.
- Situation in which an individual must choose between the promotion of personal interests and the interests of others.
- Financial ratio showing how efficiently a company's assets are being used.
- Excess of revenue per unit over variable cost per unit.
- assets = liabilities + owner's equity
- Morally problematic situation.
- financial statement reporting on cash inflows and outflows resulting from operating, investing, and financing activities.
- Decision in which there is a right (ethical) choice and a wrong (unethical or illegal) choice.
- Duty of management to safeguard a company's assets and handle its funds in a trustworthy manner.
- -going public is quite costly—often exceeding $300,000
-financial results would be public information
-responsible to shareholders who will want to see the kind of short-term performance results that boosts stock prices
- Financial ratio that helps to assess a firm's financial strength.
- the debts that it owes to outside individuals or organizations
- compares net profit to total assets to determine whether the company generated a reasonable profit on the assets invested in it.
- Computerized exchange of business transaction documents.
- A federal law enacted to encourage ethical corporate behavior and discourage fraud and other wrongdoing.
- Production method in which high volumes of products are made at low cost and held in inventory in anticipation of future demand.
- Management of the process that transforms resources into products.
- Technique for financial analysis that shows the relationship between two numbers.
- Show changes in the business equity over a specific period of time
- Ability and willingness to distinguish right from wrong and when you're practicing one or the other.
- Accounting system that records transactions when they occur, regardless of when cash is paid or received.
- Financial ratio showing how much of each sales dollar is left after certain costs are covered.
- Financial plan that projects cash inflows and outflows over a period of time.
who perform similar jobs and work as teams to identify quality,
efficiency, and other work-related problems; to propose solutions; and
to work with management in implementing their recommendations.
- Collateral pledged to secure repayment of a loan.
of accounting that provides information and analysis to decision makers
inside the organization to help them operate the business.
- the costs of doing business other than the cost of products sold
- Accounting tool showing the resources of a business (assets) and the claims on those resources (liabilities and owner's equity).
set of worldwide accounting rules and guidelines used by companies to
prepare financial statements that can be compared with those of other
reports—including the income statement, the balance sheet, and the
statement of cash flows—that summarize a company's past performance and
evaluate its financial health.
- Asset that a business intends to hold for more than a year before converting it to cash.
- Activity that creates cash inflows or outflows through day-to-day operations.
- Schedule by which you'll reduce the balance of your debt.
- Process of acquiring materials and services to be used in production.
- System using computer technology to control production processes and equipment.
- Cost charged to use someone else's money.
- (operating Profit / Revenue) x 100
tells how much profit they generated from each dollar of sales after accounting for both costs of goods sold and operating expenses
- Company's commitment to making constant improvements in the design, production, and delivery of its products.
- Amount which is invested in a business by its owners and which owners can claim from its assets.
- Accountant who works for a private organization or government agency.
- Costs that vary, in total, as the quantity of goods sold changes but stay constant on a per-unit basis.
- Analysis of an income statement treating the relationship of each item as a percentage of a base (usually sales).
- Positive difference between revenues and cost of goods sold.
- Planning document that shows the amount of funds a company needs and details a strategy for getting those funds.
- your investment in your business
- Practice of comparing a company's own performance with that of a company that excels in the same activity.
- the amount left after subtracting cost of goods sold from sales