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Final Exam Practice (CH 17-18)

Terms in this set (35)

The ________ is an accounting statement that reports the financial condition of a firm at a specific point in time.
balance sheet
The purpose of a trial balance is to
affirm whether the figures in the account ledgers are correct and balanced.
Bond prices in the newspaper or online are quoted as a percentage of their face value of $1,000. If the bond price is 103.25, this bond's value is equal to
$1,032.50
The ________ shows the assets, liabilities, and owners' equity of a firm, at a specific point in time.
balance sheet
A ________ forecast predicts the future cash inflows and outflows in future periods.
cash flow
A ________ forecast predicts the revenues, costs, and expenses a firm will incur for a period longer than one year.
long-term
High-risk, high-interest bonds are called
junk bonds.
Investors in ________ preferred stock receive a guarantee that missed dividends will accumulate and potentially be paid later.
cumulative
Bonds that pay very high interest rates and typically have a higher risk of default are known as
junk bonds
The accounting profession is divided into 5 key working areas, two of which are
auditing and managerial accounting.
________ is the function in business that is responsible for acquiring funds for the firm, and managing funds within the firm.
Finance
When corporations elect to issue two or more shares of stock to existing stockholders for each share they currently own, they have initiated a(n)
stock split.
Which of the following offers low risk, guaranteed income, backed by the full faith and credit of the federal government?
U.S. government bonds
Stocks offering investors a high dividend yield are called
income stocks.
When issuing stock to obtain long-term funding, dividend payments are
not tax deductible.
A ________ provides a summary of cash coming into and money going out of a firm from operations activities, financing activities, and investing activities.
statement of cash flows
A ________ summarizes all the data from the account ledgers to verify that they are correct and balanced.
trial balance
When retained earnings are not enough to meet their long-term funding needs, businesses may be able to raise funds by
selling common stock.
Which of the following federal government agencies has responsibility for regulating the various stock exchanges in the U.S.?
SEC
The statement of cash flows identifies cash receipts and disbursements that result
from a firm's operations, investment, and financing activities.
The terms of the agreement in a bond issue are referred to as the
indenture terms.
The ________ account on the balance sheet shows profits that the firm has reinvested in the company.
retained earnings
Although accounting has several specific uses, the overall purpose of accounting can be summarized as
to provide financial information that is useful to decision makers.
Buying several different investment alternatives to spread the risk helps an investor achieve
diversification.
________ involve(s) computer instructions that automatically sell stocks whose value has dropped by a predetermined amount.
Program trading
The accounting profession follows generally accepted accounting principles as defined by
the FASB (Financial Accounting Standards Board).
The cost of a firm borrowing money is called the
interest rate.
Accounting recognizes that assets, such as machinery and buildings, lose value over time. Accountants will record a portion of the cost of an asset as an expense each year through the use of
depreciation.
Which of the following terms best describes the relationship between the New York Stock Exchange and the NASDAQ?
competitive
Which of the following represents a source of short-term funding?
commercial paper
An effective budget requires
accurate forecasts.
The ________ is a six-step procedure that results in the preparation and analysis of the major financial statements.
accounting cycle
Which of the following is an example of a financial transaction?
A firm purchases a fire insurance policy.
The traditional market barometer used to measure the direction of the stock market is the
Dow Jones Industrial Average (the Dow).
Stocks of corporations with earnings expected to increase faster than other stocks are called ________ stocks.
growth
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