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69 True/False questions

  1. Certified Management (CMA)A professional accountant who has met certain educational and experience requirements, passed a qualifying exam, and been certified by the Institute of Certified Management Accountants

          

  2. Return on equityNet income after tax/ total owners' equity

          

  3. Long term liabilitiesPayments that are not due for one year or longer

          

  4. Investmentscash used in or provided by the firm's investment activities

          

  5. ProcessingThe recording of business transactions

          

  6. Public accountantAn accountant who works for a single firm, government agency, or nonprofit organization

          

  7. Gross profitHow much the firm earned by buying or selling merchandise

          

  8. Statement of cash flowsNet income/ Net sales

          

  9. Net income after taxesRevenue left over or depleted after all costs and expenses, including taxes, are paid

          

  10. What is the heartbeat of competitive business?Financial management

          

  11. Return on salesNet income after tax/ total owners' equity

          

  12. Trial balanceWhat the business owes to others (debts)

          

  13. AssetsAccounting Documents: sales documents, purchasing documents, shipping documents, payroll records, bank records, travel records, entertainment records

          

  14. Tax AccountantAn accountant trained in tax law and responsible for preparing tax returns or developing law strategies

          

  15. The Bottom LineNet income or loss after taxes and the last line on the income statement

          

  16. Cash flowThe difference between cash coming in and cash going out of a business

          

  17. Income statementcash used in or provided by the firm's investment activities

          

  18. Intangible assetsItems such as land, buildings and equipment that are relatively permanent

          

  19. Journalthe record book or computer program where accounting data are first entered

          

  20. Accountingthe recording, classifying, summarizing and interpreting of financial events and transactions to provide management and other interested parties the information they need to make good decisions

          

  21. Balance SheetA specialized accounting book or computer program in which information from accounting journals is accumulated into specific categories and posted so that managers can find all the information about one account in the same place

          

  22. OperationsThe job of reviewing and evaluating the information used to prepare a company's financial statements

          

  23. Key financial statements of a businessAccounting information and analyses prepared for people outside the organization

          

  24. Double-entry BookkeepingThe practice of writing every business transaction in two pieces

          

  25. Certified Public Accountant (CPA)An accountant who passes a series of examinations established by the American Institute of Certified Public Accountants (AICPA)

          

  26. Current liabilitiesWhat the business owes to others (debts)

          

  27. Leverage (Debt) RatiosInventory turnover= costs of goods sold/ average inventory

          

  28. Owners' equityThe amount of the business that belongs to the owners minus any liabilities owed by the business

          

  29. Certified Internal Audit (CIA)A professional accountant who has met certain educational and experience requirements, passed a qualifying exam, and been certified by the Institute of Certified Management Accountants

          

  30. Major Scandal's in the 2000sTyco, WorldCom, Enron

          

  31. What is important to check?Inventory turnover= costs of goods sold/ average inventory

          

  32. Ratio analysisThe assessment of a firm's financial condition using calculations and interpretations of financial ratios developed from the firm's financial statements

          

  33. Fixed assetsItems such as land, buildings and equipment that are relatively permanent

          

  34. Activity ratioCurrent liabilities or bills the company owes to others for merchandise or services purchased on credit but not yet paid for

          

  35. Annual reportcash used in or provided by the firm's investment activities

          

  36. Profitability Performance Ratiomeasures how effectively a firm's managers are using its various resources to achieve profits

          

  37. Income Statementcash used in or provided by the firm's investment activities

          

  38. Bonds payableShort-term or long-term liabilities that a business promises to repay by a certain date

          

  39. Owner's equityThe value of what stockholders own in a firm (also called stockholders' equity)

          

  40. Cost of goods soldCost of merchandise sold or cost of raw materials or parts used to produce items for resale

          

  41. BookkeppingThe recording of business transactions

          

  42. Fundamental accounting equationAccounting information and analyses prepared for people outside the organization

          

  43. What cannot depreciate?measures the degree to which the company is financed by borrowed funds that is must repay

          

  44. LiabilitiesWhat the business owes to others (debts)

          

  45. Debt to owners equationThe systematic write-off of the cost of a tangible asset over its estimated useful life

          

  46. Debt to owners ratioDebt to owners equity ratio= Total liabilities/Owners' equity

          

  47. Accounts payableLong-term liabilities that represent money lent to the firm that must be paid back

          

  48. InputsCost of goods sold

          

  49. Notes payableShort-term or long-term liabilities that a business promises to repay by a certain date

          

  50. Financial statementA summary of all the financial transactions that have occurred over a particular period

          

  51. AuditingThe job of reviewing and evaluating the information used to prepare a company's financial statements

          

  52. LiquidityWhat the business owes to others (debts)

          

  53. Managerial AccountingAccounting information and analyses prepared for people outside the organization

          

  54. Independent AuditAn evaluation and unbiased opinion about the accuracy of a company's financial statements

          

  55. Operating expensesCost incurred by operating a business-- costs involved in operating a business, such as rent, utilities, and salaries

          

  56. Net income or net lossProfit or loss over a specific period after subtracting all costs and expenses

          

  57. Private accountantAn accountant trained in tax law and responsible for preparing tax returns or developing law strategies

          

  58. Government and not-for-profit accountingAn accountant who provides accounting services to individuals or businesses on a free basis

          

  59. Current assetsItems that can be converted to cash within one year

          

  60. Basic earnings per shareBasic earnings per share=net income after taxes/number of common stock shares outstanding

          

  61. DepreciationThe systematic write-off of the cost of a tangible asset over its estimated useful life

          

  62. Retained earningsNet income/ Net sales

          

  63. Accounting cycleA six-step procedure that results in the preparation and analysis of the major financial statements

          

  64. Financial accountingthe recording, classifying, summarizing and interpreting of financial events and transactions to provide management and other interested parties the information they need to make good decisions

          

  65. What is something to look out for?Where the revenues came from

          

  66. Financing1. Entries are made into journals: recording
    2. The effects of these journal entries are transferred or posted into ledgers: classifying
    3. All accounts are summarized

          

  67. COGSAnything of value Economic resources owned by a firm

          

  68. LedgerCost of goods sold

          

  69. The Sarbanes-Oxley Act1. Prohibits accounting firms from providing consulting services to companies they audit
    2. Requires CEO's to certify the accuracy of financial reports
    3. Strengthens the protection of whistleblowers