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CLEP Financial Accounting
CLEP Prep (Incomplete)
Terms in this set (288)
The communication of economic events that have taken place in an entity is called __________.
Financial accounting is governed by basic ground rules that are referred to as Generally ________ Accounting Principles.
The end product of financial accounting is the preparation of financial __________.
Accounting principles are based on a set of concepts that underlie accounting _________.
The money measurement concept stipulates that all business transactions must be expressed in _____ terms.
The ______ concept refers to the separation of business transactions from those of the business owner(s).
The _____________ concept refers to the fact that the business under consideration will remain in existence for the foreseeable future.
The cost concept is an accounting principle requiring all financial statement items to be based on ________ cost.
The fundamental accounting equation is assets = ___________ + owner's equity.
The ___________ concept refers to the double sided nature of all accounting transactions.
_______________ in accounting dictates that all relevant and explanatory information be included in the statements.
The financial position of an entity at a specific point in time is called a _____________.
If a company has assets of $25,750 and liabilities of $18,400, what is the total of its Owner's Equity? $_____
When Assets are listed on the left-hand side and Liabilities and Owner's Equity are listed on the right-hand side, this is called the _______ form of the balance sheet.
A Balance Sheet with Assets listed at the top and ________ listed underneath is called the report form of a balance sheet.
The economic resources of an entity are called ______.
Current assets are cash and assets that are expected to be used up or converted into cash within a ____.
Marketable __________ are current assets.
The amount owed to an entity by its customers is called ___________________.
Goods that are being held for sale or needed to produce a saleable item or service are called _________.
Assets that are valuable but nonphysical are called __________ assets.
paid- ________ expenses are intangible current assets that will be used up in the near future.
Assets that are expected to be useful for more than one ____ are called long-term.
___ are long term assets that are currently being used to generate income.
Goodwill represents the premium a buyer is willing to pay for an entity over and above the value of __________.
___________ are the obligations of an entity to pay outside parties (creditors).
___________________ are those obligations that are expected to be paid within one year.
The amounts that an entity owes to its _________ resulting from the furnishing of goods or services are called accounts payable.
The amount an entity owes the government for taxes is called _____________.
The Current Portion of the Long Term Debt is the amount of the long term debt that is to be paid in one ____.
term- The liabilities that are not expected to be paid within one year are called _________ liabilities.
The claim against an entity's assets that the owner(s) has is called ______________.
Paid-in-capital is the amount of capital supplied by equity _________.
The amount of equity that has been earned by the __________ of the entity is called Retained Earnings.
Equity = Paid-in-Capital + _________________.
in-capital- In a Corporation, _______________ is listed as common stock.
In non-corporate entities (proprietorships or partnerships), the paid-in-capital section consists of capital, earnings, and ________.
Creditors have a direct claim on an entity's assets, whereas ______ have a residual claim.
The amounts of assets, liabilities and equity change from day to day, therefore the amounts shown on the _____________ change also.
Suppose Jones and Co. now borrows $15,000 from a bank and this transaction is evidenced as a note. What is the new value of the assets? _______
Jones and Co. buys inventory of $8,000 and pays cash for it. What is the value of Total Assets after this transaction? _______
Suppose Jones and Co. sells merchandise for $1200 cash that originally cost $750. What is the total Owner's Equity after this transaction? _______
Jones and Co. sells $2500 of inventory that cost $1600. $1200 of the sale is received as cash and the remainder is sold on account. What is the total value of the assets? _______
An entity's equity increases when the owners provide capital (buy shares or invest directly) and when profits increase the _________________.
The ________________ is a financial report that reports the results of business operations for a specific period of time.
The inflow of ______ from selling goods and providing services to customers is called revenue.
An _______ is a cost incurred in the normal course of business to generate revenues.
The difference between revenues and ________ in called net income.
Mayberry Inc. has sales of $14,000 and $10,000 of that is collected in cash. If the Net Income for Mayberry Inc. is $4,000, what are the total expenses? _______
The ____________ concept requires that revenues are recognized only when they are reasonable certain, and expenses are recognized as soon as they are reasonably possible.
Revenue that has been collected for goods or services not yet ________ is called unearned revenue.
_______ revenue is revenue that has been earned by the entity but not yet paid to the entity.
The realization concept states that the amount recognized as _______ is the amount that is reasonably certain to be realized.
The matching concept states that when a given event affects both revenues and expenses, the effect on each should be recorded in the ____ accounting period.
The ___________ concept refers to the practice of accountants to use Generally Accepted Accounting Principles (GAAP) except when to do so would be expensive or difficult, and where it makes no real difference if the rules are ignored.
___________ is the total invoice price of goods sold (shipped) or services rendered during a given period.
Returns and Allowances and Sales Discounts are subtracted from the Gross Sales figure to determine _________.
Cost of Goods Sold
The cost to the entity of the goods or services being sold is called COGS (__________________).
The difference between Net Sales and the COGS (Cost of Goods Sold) is called ____________.
Dividing the Gross Margin by the _________ gives the Gross Margin Percentage.
The _____________ is derived from Net Income divided by Net Sales.
The Bagel Company has Net Sales of $28,000, and a Net Income of $12, 240, what is the Profit Margin? _____
The Statement of _________________ links the previous year's retained earnings with the current year's Net Income, less any dividends or drawings, and calculates the current retained earnings.
The Balance Sheet and Income Statement are said to be articulate because they are ____________.
If Abacus Corp has Net Sales of $28,460, a Gross Margin of 28%, and Net Income of $4,550; what is the total Cost of Goods Sold? __________
If an entity has Sales of $171,846, Sales Returns of $3,396, and a Gross Profit of 32%, what is the Cost of Goods sold? ________
An _______ is the device used in accounting to record balance changes per item on the financial statements.
A ledger is a group of ________ that is either bound together in a book or kept together in a computer file.
____________ are business activities that change the balances in an entity's accounts.
Increases or decreases in account balances are recorded as either ______ or credits.
In accounting, debit means left and credit means _____.
Transaction analysis is the process whereby the concept of ___________ is applied to determine what effect the transaction had on the entity's accounts.
A useful way to remember which side an account increases or decreases on is to identify which side of the ___________ accounting equation the account is on.
An increase in revenue is recorded on which side of the account? Credit (CR), or _____-hand side.
An increase in an _______ is recorded on which side of the account? Debit (DR) or left-hand side
Asset accounts increase on the _____ side.
Equity accounts increase on the ___________ side.
Revenue accounts increase on the ___________ side.
Expense accounts increase on the __________ side.
When analyzing transactions, the amount debited must be ________ the amount credited.
Debited or DR
On January 1, T. Riff invested $5,000 cash into a business as the owner. The cash account is _____________ $5,000.
Credited or CR
On January 1, T. Riff invested $5,000 cash into LJM Inc. as the owner of the business. The cash account is debited (dr) $5,000 and the Owner's Capital Account is ______________ $5,000.
Debited or DR
On January 1, LJM Inc. paid $750 rent for the month of January. The cash account is credited (decreased) $750 and the asset account prepaid expense is _____________ $750.
LJM Inc. borrows $4,000 from a bank with 9% interest payable quarterly and a term of two years. ____ is debited $4,000, and Notes Payable is credited $4,000.
term- Equipment is purchased for $7,200 cash. The equipment is expected to last 10 years. Cash is credited $7,200 and the _________ asset Equipment is debited $7,200.
Inventory, Accounts Payable
An initial inventory of supplies is purchased on credit for $800. Using a comma to separate the answer, first give the account that is debited and then give the account that is credited (for example Answers1,Answer2). ___________________________.
In January, LJM Inc. cash sales total $12,000. What account is credited? _______
The Revenue and Expense accounts are considered temporary because they are closed out to the _________________ account at the end of an accounting period.
Debited or DR
During January, LJM, Inc paid employees' wages totaling $3,000 (payroll taxes are not considered in this example). The Wage Expense account is _____________ $3,000.
During January, additional inventory is purchased for $5,750 on credit. Using a comma to separate your answers, Inventory is (dr / cr) $5,750 and Accounts Payable is (dr / cr) $5,750 (for example, your answer might be dr,dr) _____
To generate January's sales, $6,000 of supplies were used. _________ is decreased (credited) $6,000 and COGS is increased (debited) by $6,000.
At the end of January, various utility bills totaling $450 are received. Utilities Expense is debited $450 and ________________ is credited $450.
Accounts Payable, Cash
During January, the $4,800 of Accounts Payable is paid. Using a comma to separate your answers, first give the account that is debited and then give the account that is credited. ______________________
On January 12, LJM, Inc. makes a $200 sale on credit (customer will pay within a month). What account is debited? ___________________
On January 15, LJM, Inc receives a check for $200 payment on account. ___________________ is credited $200 and Cash is debited $200.
When preparing financial statements, the account ________ must be determined.
Account balances are recorded on the same side as an entry that increases the account; therefore Asset accounts have _____ balance.
When an account has a balance on the side ________ the one where increases are recorded, then it has a deficit balance and it is recorded as a negative number or in parenthesis.
What is the balance of LJM's Accounts Payable account given the Account shown below? Type in the $ value, then CR or DR, for example, your answer might be $500, CR. __________
Before preparing financial statements, account balances are figured and a _____________ is prepared.
A Bank Reconciliation is performed to determine the correct amount of the ____ balance.
_________ entries are necessary to modify account balances to fairly reflect the business situation at the end of the period.
LJM, Inc. determines at the end of January that the $750 in prepaid expense for rent has been used up. What account is debited $750? ____________
term- _________ assets have a life expectancy over which their value depreciates.
asset- A ____________ account is subtracted from another asset account.
____ requires separate disclosure of the original cost of an entity's assets and the depreciation that has accumulated on these assets.
The equipment that LJM, Inc paid $7,200 for has a life expectancy of 10 years. At the end of January, one month's benefit has been used and the value of the equipment has depreciated. The Depreciation Expense account is debited what amount? ___
At the end of January, LJM, Inc. has accrued one month's interest on the $4,000 loan it received from the bank at a yearly interest rate of 9%. Using a comma to separate the two answers, what type of account is debited and for how much? ____________
If an entity borrows $100,000 on August 1, 2002 from First Financial Bank and agrees to 8% interest on the 1-year note, what is the accrued interest on January 31, 2003? ______
Revenue and Expense accounts are closed to the ______________ account at the end of a reporting period.
The _______ process involves transferring the balance of the Revenue and Expense accounts (temporary accounts) to the Income Summary account (clearing account).
Sales Revenue, Income Summary
The balance in the Sales Revenue account for LJM. Inc at the end of January is $12,200. Using a comma to separate your answer, first indicate what account is debited and then what account is credited? _____________________________
Income Summary, Cost of Sales
The balance in the Cost of Sales account for LJM. Inc. is $6,000. Using a comma to separate your answer, first indicate what account is debited and then what account is credited? _____________________________
Taxes Payable, $382
LJM. Inc has pretax income of $1,910. If the tax rate is 20% and taxes are paid once a year, at the end of January (using a comma between your answers) what account is credited and by what amount? ___________________
The final adjusting entry performed in an accounting period is to close the value of the ______________ account to the Retained Earnings account.
LJM's pretax income for January was $1,910 and the tax expense for the matching period was $382. What is the value of the Retained Earnings account at the end of January? ______
On July 31, Abacus Co. receives their bank statement indicating that $12.80 has been debited from their checking account. What account is credited to record this transaction? ____
If the total assets of Taylor Inc amount to $206,950 and the liabilities are $103,520, then the total owners' equity is? ________
The net loss of Lander Corp. is $10,280 and the total expenses are $17,305. What is the total revenue for the same period? ______
In practice, accounts are not debited and credited to T-accounts, rather the entries are made in a _______.
The account names and balances are summarized in the ______.
The process of transferring the individual debits and credits from the journal to the ______ is called posting.
The ________________ refers to the steps that are performed sequentially during an accounting period and that are repeated every subsequent period.
The ___________________ method that recognizes revenue in the period in which the goods are delivered is called the delivery method.
Percentage of Completion
Projects performed under long-term contracts (construction, design, consulting...) use the ________________________ method to recognize revenue that is actually done in the reporting period.
When an entity makes sales to customers on ______ (Accounts Receivable) it assumes the risk that not all monies owed will be collected. The expense account that is associated with this is called bad debts.
The asset account associated with Bad Debt Expense is the Allowance for _________________.
The method of estimating the portion of AR (accounts receivable) that is _____________ by assigning a different percentage depending on the age of the AR is called Aging Accounts Receivable.
Bad Debt Expense
XYZ. Corp is assumed to have a total of $7,132 in its Allowance for Doubtful Account. To record this transaction, what account is debited? ________________
If XYZ Corp had Accounts Receivable totaling $262,250 and an Allowance for Doubtful Accounts totaling 7,132, what is the net amount of the Accounts Receivable as shown on the balance sheet? ________
If an entity estimates that $3,000 of its AR is uncollectible, and prior to adjustments, the balance in the Allowance for Bad Debts account was a $1,200 credit; what is the adjusting entry for the Allowance for Bad Debts account (write as DR or CR , Amount--for example CR, $5,000)? __________
Companies often offer sales _________ to their customers to induce them to pay quickly.
Sales Returns and Allowances are another source of _________ entries to the Accounts Receivable account.
Money (cash) or claims to receive a fixed sum of money (accounts receivable, notes receivable...) are called ________ assets.
If an entity has an excess of cash they often invest in _____________________.
__________ paper is a generic term for short-term interest bearing promissory notes issued by large companies.
Treasury bills are __________ obligations that the US government issues.
to-maturity- Securities that an entity intends to hold until maturity are called ________________ securities.
Trading Securities are debt and ______ securities that are held for resale.
Available-for-sale maturities are debt and equity securities that are reported at market value but any realized gains (or losses) are directly credited (or debited) to the ______________ account.
The difference between current assets and current liabilities is called _______________.
The current ratio is a common measure of _________ that calculates the ratio of current assets to current liabilities.
What is the current ratio for XYZ company (refer to figure 1)? ___
stay the same
Brown Co. has current assets of $62,000 and current liabilities of $50,000. It uses cash to purchase inventory. Will the working capital increase, decrease, stay the same? _____________
stay the same
Skinner Corp has current assets of $78,000 and current liabilities of $75,000. It uses cash to purchase inventory. What is the effect on the current ratio? (increase, decrease, stay the same?) _____________
The _____ ratio calculates the ratio of monetary current assets to current liabilities.
What is the quick ratio for XYZ company (refer to figure 1)? ____
Skinner Corp has current assets of $78,000 and current liabilities of $75,000. It uses cash to purchase inventory. What is the effect on the quick ratio? (increase, decrease, stay the same?) ________
A calculation to see how quickly an entity collects cash on its outstanding Accounts Receivables is called Accounts Receivable ________.
If net sales for XYZ company are $80,000, what is the Day's Receivable for XYZ company (refer to figure 1)? _________
A _____________ company sells goods in basically the same form as it acquires them.
In the __________________ method a physical count is made of merchandise in the ending inventory and the cost of this inventory is determined.
Using the periodic inventory method, the amount of _________ remaining at the end of a period is subtracted from the total amount of goods available for sale to determine the cost of goods sold for the period.
The method of maintaining a record of each inventory item is called the _________ inventory method.
A _____________ company is one that converts raw materials into finished goods for sale.
Items of material that are to become part of the goods for sale after _____________ are called materials inventory.
Work in Progess
Goods that have started the manufacturing process but are not yet finished are called _______________ inventory.
Goods that have been manufactured but not yet sold are called ______________ inventory.
_______ costs are those that are associated with the production of products.
_____ costs are the sum of direct labor costs and direct materials cost.
______ costs are those that are associated with the sales and general activities of the accounting period.
_____ costs are those costs that do not vary with sales or production level.
________ costs are those costs that correlate with sales or production level.
If an entity has fixed costs of $80,000, variable costs at 48% of sales and sales of $450,000, what is the net income? ________
Suppose that in January, the total overhead of XYZ Co. was $150,000 and that 40% of this overhead is associated with production activity and 60% is general administration, what amount of overhead is considered a product cost? _______
Overhead costs that are classified as product costs are included in the _________ account until the product is actually sold.
If XYZ company spends $10,000 on production overhead, $100,000 on direct labor, and $20,000 on direct materials, and if no product was sold, the Inventory account would be increased by what amount? ________
Suppose the direct materials used to produce a widget cost $10, and 1/2 hour of direct labor is involved at a rate of $12/hour, and an overhead rate of $8 per direct labor hour is used. What is the cost of the widget recorded as? ___
Goody Company manufactures skateboards that retail for $80. Goody recently discover that it has 150 defective skateboards. Each skateboard has $40 of direct material, labor and overhead and the defective boards can be sold for $32 or repaired for $38. If Goody chooses to repair the boards what will its net income for the sale of all 150 boards be? ____
Research and Development is a _______ expense.
A plant's capacity is measured by the _______ number of units it can produce.
An entity has the capacity to produce 100,000 medallions per year with total fixed expenses of $180,000 and variable expenses of $3 per medallion. The medallions can be sold for $6.50 each. The company purchases a machine for $24,000 that has a service life of 3 years and that will reduce the variable cost to $1.75 per medallion. If the company produces and sells at 85% capacity for a one-year period, what is the net income at the end of the period? ________
The cost of goods ____________ is the amount of goods completed and transferred to the Finished Goods inventory.
The Cost of Goods Sold is determined by adding the cost of goods manufactured to the Beginning Goods inventory and then subtracting the ending amount of ______________ inventory.
Roar Inc. has net purchases of $70,000 and the merchandise inventory at the beginning of the period was $22,000. If their sales were $135,000 and their gross margin was 40% of sales, what was the value of the inventory at the end of the period? _______
_______________________ method of inventory costing uses the Cost of Goods Available for Sale (COGAS).
The ______________ method of determining inventory costs involves calculating an average cost of goods and applying that average cost to both ending inventory and COGS.
The ____ method of inventory evaluation assumes that the oldest goods are sold first and the most recently purchased goods are in the ending inventory.
____ inventory valuation assumes that the most recently acquired goods are sold first.
If management thinks that ____________ should reflect the difference between selling price and the cost of goods actually sold, then they should use the FIFO method of inventory valuation.
In periods of _________, LIFO results in lower income than FIFO or average costs.
Just-in-time inventory systems address the need to eliminate waste through _________ control and production efficiency.
The type of inventory valuation method chosen will affect the Balance Sheet and Income Statement. True or False? ____
The following transactions took place during April 2003 at Kendrick Co. The opening inventory consisted of 100 units of Product X valued at $10/unit. The following purchases were made during April:
The following transactions took place during April 2003 at Kendrick Co. The opening inventory consisted of 100 units of Product X valued at $10/unit. The following purchases were made during April:
The ratio of COGS to Inventory is called the Inventory ________.
_______________ is the number of day's inventory the entity has on hand.
An inventory turnover of 6 times is generally ______ than a turnover of 3 times. (Answer is Better or Worse?)
When an item of property, plant or equipment is acquired it is recorded at what value? ____
Suppose Gotcha Corp purchases a computer for $40,000 and pays $200 in freight and $1,000 installation, this purchase is recorded in the asset account as how much? _______
An entity buys a bottling machine with a list price of $30,000 and on terms of 2/10, n/30. Payment is made within a week and the cost of shipping is $150. The machine needs a special gate built and wiring installed at a cost of $700. To test the machine trial runs were done at a cost of $250 labor and $30 materials. The machine is recorded at a cost of what on the Balance Sheet? _______
A lease for a long period of time (almost the life of the asset) is called a _______ lease and is recorded as an asset.
Assets like property, plant and equipment have a _______ life, thus their value depreciates over time.
Land does not depreciate. True or False? ____
If an entity expects to ____ an asset at the end of its service life, the amount it expects to receive for the asset is called the residual value.
If a plant asset is purchased for $30,000 and it has an expected residual value of $3,000 at the end of its 10 year life, what is the amount of depreciation expense charged each year? ______
units of production
The ___________________ method to calculate depreciation multiples the unit cost by the number of units that asset produced in a period to determine the depreciation expense for that period.
Gotcha Co. purchased a truck for $44,000. It has a service life of 100,000 miles and a residual value of $4,000. What is the depreciable cost? _______
Gotcha Co. purchased a truck for $44,000. It has a service life of 100,000 miles and a residual value of $4,000. What is the estimated cost per mile? $0.40
Gotcha Co. purchased a truck for $44,000. It has a service life of 100,000 miles and a residual value of $4,000. If it was driven 15,000 miles the first year, what is the depreciation expense for that year using the unit-of-production method? ______
Charging off an equal fraction of an asset each year until the end of its service life is called _____________ depreciation.
In ___________ depreciation, more depreciation expense is charged in the early years of the asset's service life.
Decreases in the asset amount of a plant asset are accumulated in a separate account called ___________ Depreciation.
Depreciation Expense, Accumulated Depreciation
If $1,000 of deprecation expense is recognized for a given period, using a comma to separate your answers, what account is debited and what account is credited? ______________________________________________
On the Balance Sheet, the original amount of an asset less its accumulated depreciation is called the __________.
After the cost of an asset has been completely written off, the ____________ expense for that asset in remaining years is zero.
The difference between __________ and the value actually realized from the sale of a plant asset is called a gain or loss) on the disposition of plant assets.
An asset that cost $40,000, has accumulated depreciation of $30,000 and is sold for $12,000. What is the entry for the cash account? (dr or cr , Amount) ___________
An asset that cost $40,000, has accumulated depreciation of $30,000 and is sold for $12,000. What is the entry for the accumulated depreciation account? (dr or cr , Amount) ___________
An asset that cost $40,000 has accumulated depreciation of $30,000 and is sold for $12,000. What is the entry for the Plant Asset account? (dr or cr , Amount) ___________
An asset that cost $40,000, has accumulated depreciation of $30,000 and is sold for $12,000. What is the entry for the Gain on the Sale of Plant Asset account? (dr or cr , Amount) __________
Natural resources such as oil, coal, timber are called _______ assets and when the supply of such a resource is reduced it is called depletion.
When ___________ (goodwill, trademarks, patents...) are recognized as assets, their cost is written off over their serviceable life by the process of amortization.
The part of the current asset not financed by the current ___________ is called working capital.
____ capital refers to long term liabilities: they come due sometime after one year.
If White Co. issues 10 year bonds with a face value (issued amount) of $100,000, then white co. has a _________ account called Bonds Payable of $100,000.
The interest paid on bonds is an _______ and is recognized in the period to which the interest applies.
Capital received as an ownership interest in the entity is called ______ capital.
A business entity owned by an __________ is called a Sole Proprietorship.
A Partnership is an ______________ business owned by two or more persons jointly.
The _______ credited to each partner depends on the partnership agreement.
The partnership agreement between Abdul and Cowell provided that Cowell work part-time and receive a salary of $75,000, Abdul would work full time with $150,000 salary. They would each receive 9% interest on their invested capital and the remaining net income would be shared equally. On average Abdul's capital account was $100,000 and Cowell's was $90,000. If the net income before salaries was $280,000, by what amount was Cowell's capital account increased? _______
A ___________ is a legal entity separate from the owners and it has a charter under which to operate.
A corporation whose shares are traded on securities exchanges is called a ______ corporation.
Owners of a corporation are called ____________.
_________ stock provides the owner a preferential claim on the assets if the corporation is liquidated.
Stock is issued with a specific amount printed on the face of the certificate and this amount is called the _________.
in-capital- The amount shareholders have paid in exchange for their stock is called _______________.
Smith paid $25,000 to Smiling Buddha Co. and received 1,000 shares of $1 par value common stock. How much is credited into the Common Stock account? ______
Smith paid $25,000 to Smiling Buddha Co. and received 1,000 shares of $1 par value common stock. How much is credited to the Additional Paid-in-Capital account? _______
The __________ of common stock is the total shareholders' equity as reported on the balance sheet.
If Smiling Buddha has assets of $1,800,000, liabilities of $780,000, and 1200 shares outstanding with a par value of $250 each, what is the book value per share? ____
________ Stock is a corporation's own stock that has been issued and acquired by the corporation.
When a corporation earns income, the directors may vote to distribute money to the ____________ in the form of dividends.
Retained Earnings, Cash
If a dividend of $5000 is declared, using a comma to separate your answers, what account is debited and what account is credited? _______________________
When dividends are paid in the form of stocks rather than ____, they are called stock dividends.
in-Capital- If an entity declares a stock dividend totaling $15,000, what account is credited? __________________________
A stock split occurs when a corporation decides to ________ the outstanding shares for other shares (often 2 or 3 times the existing number).
A company that obtains a high portion of its capital from debt is said to be highly _________.
A common way of measuring the relative amount of debt and equity capital is the __________.
A corporation that holds more than one interest (i.e. owns more than one corporation) is called a parent and the other interests are called ____________. The set of financial statements for the whole family are called consolidated financial statements.
Foreign countries do not necessarily follow the same accounting standards and practices set out by the ____.
The _________ Statement reports the flow of cash during an accounting period.
The first section of the Cash Flow Statement reports how much cash was generated by the day-to-day operating activities of the entity and is called Cash Flow from __________.
The difference between current assets and current ___________ is called working capital.
Activities that generate cash are called _______ of cash.
Activities that involve spending cash are called ____ of cash.
The Cash Flow Statement is divided into 3 categories: operating activities, _________ activities, and financing activities.
The ______ method of presenting cash flows from operations involves summarizing the inflows and outflows related to operations and arriving at a net cash flow from operations.
The ________ method of preparing a Cash Flow Statement involves reconciling the net income amount to a cash amount.
If the balance in Accounts Receivable increased during the period, total cash collected (collections) can be determined by ___________ the increase in receivables from the sales revenue.
If CLEP Co. has a net income of $24,000 for 2003, and AR was $42,000 in 2002 and $40,000 in 2003; what entry is made on the Cash flow Statement to adjust net income to a cash basis? (write your answer as: + or - , $ amount. For example, your answer might be +, $8,000) _________
If an entity's Account Receivable increased from $64,000 to $78,000 and sales remained constant at $300,000, how much cash did the entity collect from its customers during the year? ________
If the balance in Inventory decreased during the period, total cash collected (collections) can be deduced by adding the decrease in inventory to the _____________.
If the balance in Accounts _______ increases during a period, the amount of the increase is Added to net income.
If CLEP Co's Accrued Wages were $6,000 in 2002 and $10,000 in 2003, what entry is made on the Cash flow Statement to adjust net income to a cash basis? (write your answer as: + or - , $ amount) _________
Net Income is adjusted to a cash basis by ______ the amount of Depreciation Expense for the period.
CLEP Company has a net income of $24,000 for the period ending 2003 and on the Income Statement for the period ended 2003 it reported a depreciation expense of $6,000. What is the total cash flow from operations after this is adjusted for? _______
When an entity _______ in additional property, plant or equipment (PPE), the amount involved is a cash outflow.
Payment of _________ is a financing activity that is a use of cash.
CLEP Co. paid dividends of $10,000 and its Mortgage Bonds payable increased from $34,000 in 2002 to $$40,000 in 2003. What is the net increase or decrease in cash flow at the end of 2003? _______
When a company is growing or in a financial downturn, it may focus more on the _________ Statement than the Income Statement.
Equity investors in a corporation are most interested in profitability and _________.
Break-even Analysis assesses the point at which there are no profits; at that point total revenue is _____ to total costs.
Margin of ______ is the number of units of sales revenue represented on a chart by the distance between the BE (breakeven) point and the expected sales.
Angle of _________ is the angle made by the intersection of the sales line & the variable costs line.
A market trader rents a stall at a fixed price of $200 for a day and sells souvenirs. These cost the trader $5 each to buy and have a selling price of $9 each. How many souvenirs must be sold to break even? ________
The area below the fixed cost line and to the left of the BE point (grey shade) represents the area of ____.
A dry-cleaning shop takes two types of clothing. Jackets cost $6 to clean and the customer is charged $9 per garment. Coats cost $10 to clean and the customer is charged $12 per garment. The monthly fixed costs are $600 for each garment (representing the rental costs of two different types of machine). The shop expects to take in 500 jackets and 500 coats in the month. What is the BE volume for Jackets and what is the BE volume for Coats? (separate your answer with a comma) ________
A dry-cleaning shop takes two types of clothing. Jackets cost $6 to clean and the customer is charged $9 per garment. Coats cost $10 to clean and the customer is charged $12 per garment. The monthly fixed costs are $600 for each garment (representing the rental costs of two different types of machine). The shop expects to take in 500 jackets and 500 coats in the month. What is the total profit for the month? ______
If the selling price of cleaning a coat rises to $15, then the contribution per unit will rise to $5, and that will require cleaning only 120 coats to break even. This will or will not improve the drycleaner's profitability? ________
If the variable cost increases, then the contribution per unit will ________, with the result being that more items will have to be sold in order to reach the breakeven point.
If fixed costs ________ (increase or decrease?) then more units have to be sold in order to reach the breakeven point.
even- __________ analysis is used to help decide whether or not to engage in a given business activity.
The break-even analysis does or does not recognize cash flow. ________
The ______________ period method of capital budgeting consists of determining the number of years required to recover the initial cash investment.
Vertical analysis analyzes the income statement items in terms of _________.
The Earnings per Share ratio represents the percentage of earnings per the number of ___________ shares.
Suppose Market Price per Share is $56.75, Net Income is $294,000 and there are 100,000 shares outstanding, what is the Earnings per Share? _____
Price per Earnings (P/E)
________________________ ratio is the ratio between what an entity's share price is and the Earnings per that share.
Suppose Market Price per Share is $56.75, Net Income is $294,000 and there are 100,000 shares outstanding, what is the P/E ratio? ________
___________________ Analysis involves calculating Financial Ratios to determine an entity's performance.
ROI (Return on Investment)
__________________________ is broadly defined as net income / investment.
ROA (Return on Assets)
______________________ reflects how much the firm has earned on the investment in all the financial resources committed to the firm.
What is the ROA for Gelding Company in 2002? (see figures 2.1 and 2.2) _____
ROE (Return on Equity) reflects how much the firm has earned on the funds invested by ____________.
What is the ROE for Gelding Company, Inc for 2002?( see figures 2.1 and 2.2) _____
A contingent liability is an obligation to pay an amount in the future, if and when an _________ event occurs.
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