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Business Final

Terms in this set (100)

A firm's current liabilities:
Are due to lenders in less than a year
A business has two sources of funds: the owner's equity and the non-owners. The financing provided by owners is represented on the balance sheet as ______, and the financing provided by non-owners is represented on the balance sheet as ______.
Owner's equity, liabilities
_______ is a technique used by managerial accountants to assign product costs based on links between activities that drive costs and the production of specific products.
activity-based costing
The major output of financial accounting is a set of statements including the:
Balance sheet, income statement, and statement of cash flows
Mason owns stock in Munnymacher Inc. and wants to see if he can identify any trends in its financial performance over the past few years. This suggests he would want to perform a(n):
horizontal analysis
The process of developing the operating budget begins with the:
sales budget
When managers are looking at different ways to achieve a certain goal, they may perform _______ as a means of comparing how the alternative decisions would affect the firm's revenues and costs.
incremental analysis
Pierre's Gourmet Foods produces high-quality desserts and appetizers that are distributed by upscale grocery stores. When assigning production costs to its various food products, the costs of ingredients used to make a product are _______, the cost of the workers who prepare the product are ______, and the cost of the rent and insurance on the building are ______.
direct material costs, direct labor costs, overhead costs
Lottadoe's liabilities are $130,000, and its owner's equity is $170,000. This means Lottadoe's:
Total assets are $300,000
While _______ is concerned with preparing financial statements for external stakeholders according to a fixed schedule, ________ provides information to internal stakeholders on an "as needed" basis.
Financial accounting, managerial accounting
Arvid's Moving and Storing has a fleet of 37 trucks. Arvid currently has two of his own mechanics who perform all of the routing maintenance as well as other minor repairs on all of the trucks. However, he wonders whether outsourcing this work would be more cost-effective and asks his accountant to work with two managers to analyze such a change. Which of the following types of analysis would the accountant be most likely to use:
incremental analysis
An auditor issuing a(n) ________ has uncovered serious and widespread problems with the preparation of a firm's financial statements.
adverse opinion
________ is/are what the firm owes it creditors.
liabilities
________ is/are the claims owners have against the firm's assets.
owner's equity
__________ accountants provide individuals and businesses a wide variety of services on a fee basis, including income tax preparation, external auditing services, and consultation on a variety of accounting issues and problems.
public
_____________ is a system for recognizing, recording, organizing, summarizing, analyzing, and reporting information about the financial transactions that affect an organization.
accounting
As a financial manager for his firm, Martin Meyer is worried about possible cash shortages his firm might face over the next few months. The ______ budget would help him identify periods when cash might be very tight.
cash
The _______ budget brings together all the firm's budgeting documents to provide a unified plan for the specific budget period.
master
________ addresses the needs of the external stakeholders, including stockholders, creditors, and government regulators.
financial accounting
When managerial accounts assign costs to the production of specific products, the costs that are easiest to assign are:
Direct labor and direct material costs
The _______ shows the cash flowing in and out of a firm through its operating, investing, and financing activities:
statement of cash flows
Taken together, the body of principles that guides the financial accounting process used to create financial statements is referred to as:
GAAP (Generally Accepted Accounting Principles)
A(n) __________ is issued if the external auditor does not find any problems with the way the firm prepares and reports its financial statements.
unqualified opinion
A company's sales budget indicates all of the following items for a given time period except:
expected unit production cost
All of the following are assets EXCEPT:
salaries payable
_______ normally is the first asset listed on a balance sheet.
cash
Which item would be listed first on the income statement
revenue
The financial budget of a firm includes:
Both the capital budget and cash budget
The indicates whether a firm earned a profit or suffered a loss over the past accounting period
income statement
_______ are valuable things owned by the firm.
assets
Four basic financial ratios are:
liquidity, asset management, leverage, and profitability
A(n) ________ measures the ability to pay short-term liabilities as they come due.
liquidity ratio
______ occurs when investors earn interest in the current time period on interest earned in previous time periods.
compounding
The purpose of ______ is to protect creditors by preventing borrowers from pursuing policies that might jeopardize the lenders' funds.
covenants
All of the following would be included in the cash equivalents a firm might hold EXCEPT:
common stock
The function of ________ is to determine the types of assets needed to achieve the goals of the organization and to determine the best way to obtain the funds needed to acquire those assets.
finance
_____ are companies that provide short-term financing to firms by purchasing accounts receivable at a discount.
Investment bankers
The Chief Financial Officer of Dorf Motors, Inc. recently mentioned in an interview that a dollar received today is worth more than a dollar received in the future because the sooner you receive a sum of money the quicker you can put that money to work. The Chief Financial Officer was speaking about the _______.
time value of money
Return on equity and return on assets are both classified as ____ ratios.
profitability
Kyle is the credit manager for Timber Trails, Inc., a local landscaping company. Just recently, his mulch supplier noted on the invoice the terms 3/15 net 30. What does this mean?
Timber Trails will get a 3 percent cash discount if the balance owed to the supplier is paid within 15 days; otherwise the entire balance is due in 30 days
A key difference between a line of credit and a revolving credit agreement is that under a line of credit:
the bank only agrees to make funds available as long as the borrower's credit rating doesn't deteriorate while in a revolving credit agreement, the bank guarantees that the funds will be available
A(n) ________ measures how effectively a firm uses its assets to generate revenue.
asset management ratio
A(n) ______ forecasts the sales, expenses, and net income for the firm in some future time period.
pro forma income statement
The finance managers collected the following information from their firm: Total Assets=$60,000; Current Assets=$10,000; Long-term Liabilities=$100,000; Current Liabilities =$8,000. The Current Ratio = ______.
1.25
A wealthy relative promise to give you $5,000 when you complete all of the college courses needed to earn a degree in business. The present value of this future sum will be:
less than $5,000, but the exact value depends on how long it takes you to earn your degree and the rate of interest you can earn on investments
A(n) _______ measures the extent to which a firm relies on debt to meet its financing needs.
leverage ratio
Cash equivalents include all of the following EXCEPT _____.
inventory
The key elements of a credit policy would include all of the following EXCEPT:
evaluating the appropriate stock of inventory needed to meet credit sales
Financing provided by a firm's owners is classified as _______ financing.
equity
The debt-to-equity and debt-to-assets ratios are both classified as _____ ratios.
leverage
Advantages of debt financing include all of the following EXCEPT:
covenants that provide important benefits to the borrower are normally included in debt agreements
________ consist(s) of short-term unsecured promissory notes issued by financial institutions and other major corporations.
commercial paper
Snow International, a ski resort located in Colorado, has 500 shares of outstanding common stock and has not issued any preferred stock. Net income is $27,500. What would the earnings per share calculation?
$27,500/500 = $55
____ agreement means specified workers had to be members of a union before being hired for a job.
closed shop (illegal)
Earnings per share is calculated as the __________.
net income of the firm less any preferred dividend payout divided by the number of shares outstanding
_______ are short-term IOUs issued by the US government that mature in 4, 13, and 26 weeks increments.
T-Bills
________ consist(s) of short-term unsecured promissory notes issued by financial institutions and other major corporations.
commercial papers
_________ sexual harassment refers to situations in which an employee's submission to unwanted conduct is made either explicitly or implicitly a term or condition of employment or is used to influence employment decisions affecting the worker's job status.
quid pro quo
he process of bringing in an impartial third party to render a binding decision in a labor dispute is referred to as:
arbitration
A(n) __________ occurs when a union encourages its members and the general public not to buy the products of a firm involved in a labor dispute.
primary boycott
___________ is the use of a third party to encourage labor and management to continue negotiating in an effort to settle a labor dispute or achieve a mutually acceptable labor-management agreement.
mediation
_____________ is the process by which representatives of a union meet with representatives of management to negotiate a contract for workers.
collective bargaining
In a(n) ________, all of the members are skilled specialists in a particular trade.
craft union
The __________ sets the tone and clarifies the terms and conditions under which labor and management agree to function over a specific period of time.
negotiated labor-management agreement
If a union is present in a firm that has a(n) _________ shop arrangement, workers may join the union if they wish, but they are not required to join or pay a union fee in order to keep their jobs.
open
Two of the most important tactics used by unions when collective bargaining efforts break down are:
strikes and boycotts
A(n) ________ is an employee organization that represents workers in employee-management bargaining over job-related issues.
union
Historically, the most potent union tactic when collective bargaining efforts break down has been the:
strike
___________ are workers a company hires to replace workers who are out on strike.
strikebreakers
In a(n) __________ shop, workers do not have to belong to a union before they are hired, but they must join a union within a specified period (usually 30, 60, or 90 days) in order to keep their job.
union
At one time, as a condition of employment, the employer could make the employee sign a statement prohibiting the worker from joining a union. This was called a(n):
yellow-dog contract
In the early years, there were power struggles among the larger national unions. Leaders recognized that there was power in numbers. After the passage of the Taft-Hartley Act in 1947,
the AFL and CIO merged
The Taft-Hartley Act:
allowed individual states to pass right-to-work laws prohibiting compulsory union membership
The __________ is a tactic police, firefighters, and other workers who are not legally allowed to strike sometimes use to express their frustration and displeasure with working conditions or pay.
blue flu
A(n) ________ boycott is an illegal attempt by labor to convince others to stop doing business with a firm that does business with a company that is the subject of a primary boycott.
secondary
The primary purpose of collective bargaining is to:
negotiate a labor-management agreement that both the union and management are willing to accept
The ___________ guaranteed union members the right to nominate candidates for union office and participate in union meetings.
Landrum-Griffin Act
A(n) ___________ is a union official who works permanently in an organization and represents employee interests on a daily basis
shop steward
Unions were originally formed __________________.
to seek protection against unfair treatment
In its early years, the AFL's strategy was to:
limit its membership to skilled craftspeople
____________ refers to unwelcome sexual advances, requests for sexual favors, and other unsolicited conduct of a sexual nature.
sexual harassment
A major reason John L. Lewis and his followers broke with the AFL and formed the CIO was that:
the leaders of the AFL wanted to organize only skilled workers, while Lewis and his followers wanted to organize both unskilled and skilled workers.
Which of the following topics is generally covered in a negotiated labor-management agreement?
grievance procedures
The NLRB (National Labor Relations Board) consists of:
a five-member panel appointed by the U.S. president
The ______________ was established by the Wagner Act to oversee labor-management relations.
National Labor Relations Board
____________ is the process by which a group of workers legally take away a union's right to represent them.
Decertification
The _________ Act established the National Labor Relations Board.
Wagner
The formal process by which a union is recognized by the NLRB as the bargaining agent for a group of employees.
certification
Stipulates workers who reap union benefits must either join the union or pay dues to the union
Union Security Clause
Legislation that gives workers the right, under an open shop, to join or not to join a union.
right to work laws
A charge by employees that management isn't abiding by the terms of the negotiated agreement
Grievances
Gains from labor negotiations are given back to management to help save jobs.
Givebacks
suggests that high returns come from riskier investments
Risk-return tradeoff
forecasts the types and amounts of assets a firm will need to carry out plans
Budgeted Balance Sheet
Money which is owed to a company by acustomer for products and services provided on credit
Accounts Receivable
private self-regulated board that establishes and enforces GAAP
Financial Accounting Standards Board (FASB)
reportshow retained earnings have changed
Statement of Retained Earnings
actual expenditures .Payments made to suppliers, workers and rent for office space
out of pocket costs
opportunity costs; not monetary but what is given up
implicit costs
rise and vary when the firm produces goods and services
variable costs
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