Ch. 8 Accounting
What organization establishes GAAP?
What is FASB?
What is the main goal of financial management?
What is to maximize the value of the firm for its owners.
What does SEC stand for?
What is Securities and Exchange Commission.
Assets are $40,000 and liabilities $15,000. Find equity.
What is $25,000.
Assets=Liabilities+Owner's Equity
$40,000=$15,000+?
-$15,000=$15,000+?
$25,000=?
A bakery buys flour for each cake. Is the flour a direct or indirect cost?
What is direct cost.
Which statement shows assets, liabilities, and owners' equity?
What is Balance sheet?
What does liquidity measure?
What is a company's ability to meet short-term obligations.
What is the difference between a stock and a bond?
What is a stock represents ownership; a bond represents money lent to the issuer.
Revenue is $9,000 and expenses $6,500. Find the net income.
What is $2,5000.
$9,000-6,500=?
Remember ER!!!!
A company reinvests profits rather than distributing them. What are these called?
What is retained earnings.
What is the difference between financial and managerial accounting?
What is financial accounting serves mainly external users; managerial accounting serves internal managers.
What is the difference between debt and equity financing?
What is debt is borrowed and must be repaid; equity comes from owners to investors.
What is the difference between common and preferred stock?
What is common usually has voting rights; preferred has priority for dividends and certain claims.
Current assets are $30,000 and current liabilities $15,000. Find the current ratio.
What is 2:1.
CA/CL=CR
A business needs supplies now but will pay its supplier next month. What is this?
What is trade credit.
What is the difference between fixed and variable costs?
What is fixed costs remain the same within the relevant range; variable costs change with production.
What does factoring mean?
What is selling accounts receivable at a discount to receive cash sooner.
What is the difference between primary and secondary markets?
What is new securities are issued in the primary market; existing securities trade in the secondary market.
Total liabilities are $20,000 and equity $16,000. Find debt-to-equity.
What is 1.25:1.
TL/SE=DTE
A company sells shares to the public for the first time. What is this called?
What is Initial Public Offering (IPO)
Explain a static budget versus a flexible budget.
What is static assumes one sales level; flexible adjusts for different sales levels.
What does a positive net present value generally suggest?
What is the investment is financially favorable under the assumptions used.
What is diversification?
What is spreading investments across securities to reduce concentration risk.
Assets of $5000, revenue of $15,000, net income of $3000. Find its profit margin.
What is 20%.
(NI/R)x100=PM
Jordan owns a small business selling customized water bottles. He sells 300 bottles for $12 each. Each bottle costs $4 to purchase and $2 to customize. He also pays $400 per month in rent. What is Jordan's net income?
What is $1,400?