Health Online- Nutrition and Physical Activity- Guidelines for Healthy Eating Questions an, Exams of Accounting

Download Health Online- Nutrition and Physical Activity- Guidelines for Healthy Eating Questions an and more Exams Accounting in PDF only on Docsity! Fundamentals of Accounting Questions and answers *Accounting* CORRECT ANSWERS✅ a system that collects and processes (analyzes, measures, and records) financial information about an organization and reports that information to decision makers Financial Accounting Reports CORRECT ANSWERS✅ - Periodic financial statements and related disclosures - external decision makers. - creditors, investors, suppliers, customers. Managerial Accounting Reports CORRECT ANSWERS✅ - Detailed plans and continuous performance reports - internal decision makers - managers *Balance Sheet* CORRECT ANSWERS✅ (Statement of Financial Position) reports the amount of assets, liabilities, and stockholders' equity of an accounting entity at a point in time. Structure of Balance Sheet CORRECT ANSWERS✅ 1. *Name of entity,* Maxidrive Corp. 2. *Title of the Statement,* Balance Sheet. 3. *Specific Date of the Statement,* At December 31, 2010 4. *Unit of Measure* (in thousands of dollars) *Accounting Entity* CORRECT ANSWERS✅ the organization for which financial data are to be collected Fundamentals of Accounting Questions and answers *Basic Accounting Equation* (Balance Sheet Equation) CORRECT ANSWERS✅ Assets = Liabilities + Stockholders' Equity - Assets: economic resources - Liabilities + Stockholders' Equity: sources of financing for the economic resources - Liabilities: from creditors - Stockholders' Equity: from stockholders Financial Position CORRECT ANSWERS✅ the economic resources that the company owns and the sources of financing for those resources Assets CORRECT ANSWERS✅ the economic resources owned by the company; expected to provide future benefits owned by the entity as a result of past transactions Balance Sheet Assets: Cash CORRECT ANSWERS✅ the amount of cash in the company's bank accounts Balance Sheet Assets: Accounts Receivable CORRECT ANSWERS✅ - amounts owed by customers from prior sales - promise of future payment - later collected in cash Fundamentals of Accounting Questions and answers - Various terms are used in income statements to describe different sources of revenue (e.g., provision of services, sale of goods, rental property). *Sales Revenue: cash and promises received from the sale of goods and serves Elements of the Income Statement: Expenses CORRECT ANSWERS✅ - Represent the dollar amount of resources the entity used to earn revenues during the period. Expenses reported in one accounting period may actually be paid for in another accounting period. - Some require payment immediately, while others require payment at alert date. - Some may also require the use of another resource, such as an inventory item, which may have been paid for in a prior period. *Cost of goods sold expense: cost to produce disk drives sold *Selling, general, and administrative expense: operating expenses not directly related to production *Research and development expense: expenses incurred to develop new products *Interest expense: cost of using borrow funds Elements of the Income Statement: Net Income (net earnings) CORRECT ANSWERS✅ - the excess of total revenues over total expenses. - often called "the bottom line" - If total expenses exceed total revenues, a net loss is reported. - net income normally *does not equal* the net cash generated by operations. Fundamentals of Accounting Questions and answers *Statement of Retained Earnings* CORRECT ANSWERS✅ - reports the way that net income and the distribution of dividends affect the financial position of the company during the accounting period - investors examine retained earnings to determine other the company is reinvesting a sufficient portion of earnings to support further growth Statement of Retained Earnings Equation CORRECT ANSWERS✅ Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings Elements of the Statement of Retained Earnings: CORRECT ANSWERS✅ - *Retained Earnings*, Date (beginning-of-the-year retained earnings) - last period's ending retained earnings - *Net Income* for 20xx - net income reported on the income statement +added+ - *Dividends* for 20xx - dividends declared during the period --Subtracted-- from the net income amount. - *Retained Earnings*, Date (end-of-the-year retained earnings) Relationship among statements CORRECT ANSWERS✅ 1. Net income from the income statement results in an increase in ending retained earnings on the statement of retained earnings. Fundamentals of Accounting Questions and answers 2. Ending retained earnings from the statement of retained earnings is one of the two components of stockholders' equity on the balance sheet. 3. The change in cash on the cash flow statement added to the beginning-of-the- year balance in cash equals the end-of-the-year balance in cash on the balance sheet. Exhibit 1.6 (p. 17) Net Income earned during the year increases the balance of retained earnings, showing the relationship of the income statement to the balance sheet. The declaration of dividends to the stockholders decreases retained earnings. - retained earnings statement indicates the relationship of the income statement to the balance sheet. *Statement of Cash Flows* (Cash Flow Statement) CORRECT ANSWERS✅ reports inflows and outflows of cash during the accounting period in the categories of operating, investing, and financing. *Cash Flow Statement Equation* CORRECT ANSWERS✅ +/- Cash Flows from Operating Activities (CFO) +/- Cash Flows from Investing Activities (CFI) +/- Cash Flows from Financing Activities (CFF) ________________________________________________________ *Change in Cash* Cash Flows from Operating Activities Fundamentals of Accounting Questions and answers Maxi drive Corp. [*name of the entity*] Income Statement [*title of the statement*] For the Year Ended December 31, 2010 [*accounting period*] (in thousand of dollars) [*unit of measure*] *Purpose*, *Structure* & *Examples of Content* for Statement of Retained Earnings Heading/Title example CORRECT ANSWERS✅ Reports the way that net income and the distribution of dividends have affected the financial position of the company during etc accounting period. *BEGINING RETAINED EARNINGS* + *NET INCOME* - *DIVIDENDS* ------------------------------------------------------- ENDING RETAINED EARNINGS =============================== examples of content: Net income is taken from the income stamens; dividends are distributions to stockholders Ex of Title/heading: Fundamentals of Accounting Questions and answers Maxi drive Corp. [*name of the entity*] Statement of Retained Earnings [*title of the statement*] For the Year Ended December 31, 2010 [*accounting period*] (in thousand of dollars) [*unit of measure*] *Purpose*, *Structure* & *Examples of Content* for Statement of Cash Flows (Cash Flow Statement) CORRECT ANSWERS✅ Reports inflows (receipts) and outflows (payments) of cash during the accounting period in the categories opening, investing, and financing. +/- CFO +/- CFI +/- CFF ----------------------------- Change in Cash ================= examples of content: cash collected from customers, cash paid to suppliers, cash paid to purchase equipment, cash borrowed from banks Ex of Title/heading: Maxi drive Corp. [*name of the entity*] Statement of Cash Flows [*title of the statement*] For the Year Ended December 31, 2010 [*accounting period*] Fundamentals of Accounting Questions and answers (in thousand of dollars) [*unit of measure*] **Generally Accepted Accounting Principles** Why is GAAP important to Managers and External Users? CORRECT ANSWERS✅ (GAAP) are the measurement rules used to develop the information in financial statements 1. Effects on the selling price of a company's stock 2. Effects on the amount of bonuses reviewed by management and employees 3. Loss of competitive information to other companies **Securities and Exchange Commission** CORRECT ANSWERS✅ (SEC) is the US government agency that determines the financial statements that public companies must provide to stockholders and the measurement rules that they must use in producing those statements **Financial Accounting Standards Board** CORRECT ANSWERS✅ (FASB) is the private sector body given the primary responsibility to work out the detailed rules that become generally accepted accounting principles. *Audit* CORRECT ANSWERS✅ an examination of the financial reports to ensure that they represent what they claim and conform with GAAP. **Public Company Accounting Board** CORRECT ANSWERS✅ is the private sector body given the primary responsibility to issue detailed auditing standards. Fundamentals of Accounting Questions and answers ex of non current assets: investments, property and equipment, notes receivable, intangibles. **Liabilities** CORRECT ANSWERS✅ are probable debts or obligations of the entity that result from past transactions, which will be paid with assets or services. *listed on balance sheet in order of maturity. **Current Liabilities** CORRECT ANSWERS✅ are obligations that will be settled by providing cash, goods, or services within the coming year. ex current liabilities: accounts payable, accrued expense payable. ex non current liabilities: unearned franchise fees, notes payable, other long-term liabilities. **Stockholders' Equity** CORRECT ANSWERS✅ (also called owners' equity) is the financing provided by the owners and business operations **Contributed Capital** CORRECT ANSWERS✅ Results from owners providing cash (and sometimes other assets) to the business **Retained Earnings** CORRECT ANSWERS✅ Refers to the cumulative earnings of a company that are not distributed to the owners and are reinvested in the business. Fundamentals of Accounting Questions and answers **Materiality** CORRECT ANSWERS✅ Exception suggests that small amounts that are out likely to influence a user's decision can be accounted for in the most cost- beneficial manner. **conservatism** CORRECT ANSWERS✅ exception suggests that care should be taken not to overstate assets and revenues or understate liabilities and expenses. *transaction* CORRECT ANSWERS✅ (1) an exchange of assets or services for assets, services or promises to pay between a business and one or more external parties to a business or (2) a measurable internal event such as the use of assets in operations. *account* CORRECT ANSWERS✅ a standardized format that organizations use to accumulate the dollar effect of transactions on each financial statement item. *Typical *Asset* Accounts titles (in order of liquidity): CORRECT ANSWERS✅ - *cash* - *short term investments* - *accounts receivable*: Accounts with "receivable" in the title are always assets; they represent amounts owed by the company to be paid to others in the future. - *notes receivable* - *inventory* (to be sold) - *supplies* Fundamentals of Accounting Questions and answers - *prepaid expenses* (e.g., prepaid rent expense, prepaid insurance expense): is always an asset; it represents amounts paid by the company to others for future benefits, such as future insurance coverage, rental of property, or advertising. ___________ ^ current assets ^ ___________ - *long term investments* - *equipment* - *buildings* - *land* - *intangibles* - *accumulated depreciation* (cotra-asset) (credit, decreases) __________ ^ non current assets ^ __________ Typical *Liability* Account Titles (in order or maturity): CORRECT ANSWERS✅ - *Accounts Payable*: Accounts with "payable" in the title are always liabilities and represent amounts owed by the company to be paid to others in the future. - accrued expense payable - notes payable - taxes payable - *unearned revenue*: accounts with "unearned" in the title are always liabilities representing amounts paid in the past to company by others who expect future goods or services from the company - bonds payable Typical *Stockholders' Equity* Account Titles: CORRECT ANSWERS✅ - contributed capital Fundamentals of Accounting Questions and answers Classified Balance Sheet CORRECT ANSWERS✅ *-* assets are categorized as current assets (those to be used or turned into cash within a year, with inventory always considered a current asset) and noncurrent assets, such as long term investments, property and equipment, and intangible assets. *-* liabilities are categorized as current liabilities (those that will be paid with current assets) and long-term liabilities. *-* Stockholders' equity accounts are listed as contributed capital first, followed by retained earnings. Current Ratio Current Ratio Equation CORRECT ANSWERS✅ Measures the ability of the company to pay its short-term obligations with current assets. Although a ration between 1.0 and 2.0 indicates sufficient current assets to meet obligations when they come due, many companies with sophistication cash management systems have ratios below 1.0. Current Ratio = Current Assets / Current Liabilities *Operating* (cash-to-cash) *Cycle* CORRECT ANSWERS✅ is the time it takes for a company to pay cash to suppliers, sells goods and services to customers, and collect cash from customers. *Time Period Assumption* CORRECT ANSWERS✅ Indicates that the long life of a company can be reported in shorter time periods. Fundamentals of Accounting Questions and answers *Revenues* CORRECT ANSWERS✅ are increases in assets or settlements of liabilities from ongoing operations *Expenses* CORRECT ANSWERS✅ are decreases in assets or increases in liabilities from ongoing operations incurred to generate revenues during the period. *Gains* CORRECT ANSWERS✅ Are increases in assets or decreases in liabilities from peripheral transitions *Losses* CORRECT ANSWERS✅ are decreases in assets or increases in liabilities from peripheral transitions **Cash Basis Accounting** CORRECT ANSWERS✅ Records revenues when cash is received and expenses when cash is paid **Accrual Basis Accounting** CORRECT ANSWERS✅ records revenues when earned and expenses when incurred, regardless of the timing of cash receipts or payments Revenues (=when earned) - Expenses(=when incurred) ________________________________ Net Income (accrual basis) ========== Fundamentals of Accounting Questions and answers **Revenue Principal** CORRECT ANSWERS✅ States that revenues are recognized when (1) *goods or services are delivered* (2) *there is persuasive evidence* (3) *the price is fixed or determinable*, and (4) *collection is reasonably assured* If *ANY* of the criteria are *NOT* met, revenue normally is *NOT* recognized and cannot be recorded. **Matching Principal** CORRECT ANSWERS✅ requires that expenses be recoded when incurred in earning revenue. *Accounting Cycle* CORRECT ANSWERS✅ the process followed by entities to analyze and record transactions, adjust the records, at the end of the period, prepare financial statements, and prepare the records for the next cycle. **Trial Balance** CORRECT ANSWERS✅ a list of all accounts with their balances to provide a check on the equality of the debits and credits. **Adjusting Entries** CORRECT ANSWERS✅ are entries necessary at the end of the accounting period to measure all revenues and expenses of that period. **Deferred* (or unearned) *Revenues** CORRECT ANSWERS✅ are previously recoded liabilities that need to be adjusted at the end of the accounting period to select the amount of revenue earned. Fundamentals of Accounting Questions and answers Purpose of a trial balance CORRECT ANSWERS✅ A trial balance is a ;out of all accounts with their debit or credit balances indicated in the appropriate column to provide a check on the equality of the debits and credits. The trial balance may be - *unadjusted* - before adjustments are made - *adjusted* - after adjustments are made - *post-closing* - after revenues and expenses are closed to Retained Earnings *Net Profit Margin* CORRECT ANSWERS✅ *net profit margin = net income / net sales* Measures how much of every dollar of sales generated during the period is profit. A rising net profit margin signals more effective management of sales and expenses. *Corporate Governance* CORRECT ANSWERS✅ Refers to the procedures designed to ensure that the company is managed in the interests of the shareholders. *Board of Directors* CORRECT ANSWERS✅ Elevated by the stockholders to represent their interest, is responsible for maintaining the integrity of the company's financial reports. *Unqualified* (clean) *Audit Opinion* CORRECT ANSWERS✅ Is an auditor's statement that the financial statements are fair presentations in all ,material respects in conformity GAAP. Fundamentals of Accounting Questions and answers *Earnings Forecasts* CORRECT ANSWERS✅ predictions of earnings for future account periods *Institutional Investors* CORRECT ANSWERS✅ managers of pension, mutual, endowment, and other funds that invest on the behalf of others *Private Investors* CORRECT ANSWERS✅ Include individuals who purchase shares in companies *Lenders (creditors)* CORRECT ANSWERS✅ include supplies and financial institutions that lend money to companies. p. 236 CORRECT ANSWERS✅