AP Business: Accounting and Financial Statements flashcards

Question 1

What term covers gathering, recording, sorting, summarizing, reporting and analyzing a firm's financial activity?

Accepted Answer

Accounting

Question 2

Which ratio divides current assets, with inventory left out, by current liabilities to gauge liquidity?

Accepted Answer

Acid-test (quick) ratio

Question 3

What are ratios that show how effectively a firm puts its assets to work?

Accepted Answer

Activity ratios

Question 4

Which document, published each year, reports a company's financial condition and usually reviews the past year and looks ahead?

Accepted Answer

Annual report

Question 5

What does a firm own that has value?

Accepted Answer

Assets

Question 6

What is the review of the records behind financial statements that ends in a formal opinion on whether accepted accounting rules were followed?

Accepted Answer

Auditing

Question 7

Which financial statement sums up a firm's financial position on one particular date?

Accepted Answer

Balance sheet

Question 8

What is a managerial accountant who has finished a professional certification program and passed its exam called?

Accepted Answer

Certified management accountant (CMA)

Question 9

Which accountant has an approved bachelor's degree, has passed the AICPA exam and has met state requirements?

Accepted Answer

Certified public accountant (CPA)

Question 10

What is the full expense of buying or producing the goods or services a firm sells?

Accepted Answer

Cost of goods sold

Question 11

What are assets that are or will be turned into cash within a year?

Accepted Answer

Current assets

Question 12

What are short-term claims against a firm that fall due within a year of the balance sheet date?

Accepted Answer

Current liabilities

Question 13

Which liquidity ratio divides total current assets by total current liabilities?

Accepted Answer

Current ratio

Question 14

What are ratios that show how much a firm borrows to fund its operations and what that borrowing does?

Accepted Answer

Debt ratios

Question 15

Which ratio compares total liabilities with owners' equity?

Accepted Answer

Debt-to-equity ratio

Question 16

What is it called when an asset's original cost is allocated across the years it is expected to produce revenue?

Accepted Answer

Depreciation

Question 17

In which bookkeeping method does every transaction get recorded twice, changing two accounts?

Accepted Answer

Double-entry bookkeeping

Question 18

Which branch of accounting produces reports for people outside the firm, such as investors, lenders, suppliers and government agencies?

Accepted Answer

Financial accounting

Question 19

Which private organization sets financial accounting standards in the United States?

Accepted Answer

Financial Accounting Standards Board (FASB)

Question 20

What name is given to the financial accounting standards US accountants follow when preparing financial statements?

Accepted Answer

Generally accepted accounting principles (GAAP)

Question 21

What is the amount left after a company pays to produce or buy its products, before operating expenses are subtracted?

Accepted Answer

Gross profit

Question 22

Which financial statement lists a firm's revenues and expenses and its resulting profit or loss for a period?

Accepted Answer

Income statement

Question 23

What are long-term assets that have no physical form?

Accepted Answer

Intangible assets

Question 24

Which ratio divides cost of goods sold by average inventory to show how fast inventory becomes sales?

Accepted Answer

Inventory turnover ratio

Question 25

What term describes how quickly an asset can be turned into cash?

Accepted Answer

Liquidity

Question 26

What are ratios that show whether a firm can pay its short-term debts when they come due?

Accepted Answer

Liquidity ratios

Question 27

What are claims against a firm that come due more than a year after the balance sheet date?

Accepted Answer

Long-term liabilities

Question 28

Which branch of accounting gives managers inside an organization information for judging and deciding on current and future operations?

Accepted Answer

Managerial accounting

Question 29

What results when a firm's revenues are larger than its expenses, after subtracting all expenses from revenues?

Accepted Answer

Net profit (net income)

Question 30

Which ratio divides net profit by net sales to show the share of each sales dollar left after all expenses and taxes?

Accepted Answer

Net profit margin

Question 31

Which measure of liquidity subtracts total current liabilities from total current assets?

Accepted Answer

Net working capital

Question 32

What are the costs of running a business that are not tied directly to producing or buying its products?

Accepted Answer

Operating expenses

Question 33

What are ratios that show how well a firm uses its resources to earn a profit and how efficiently it is run?

Accepted Answer

Profitability ratios

Question 34

What is the practice of calculating and interpreting financial ratios from a firm's statements to assess its condition and performance?

Accepted Answer

Ratio analysis

Question 35

Which ratio divides net profit by total owners' equity to show the return owners get on their investment?

Accepted Answer

Return on equity (ROE)

Question 36

Which financial statement summarizes money moving into and out of a firm over a period, typically a year?

Accepted Answer

Statement of cash flows

AP Business: Accounting and Financial Statements flashcards

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