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What principle ensures that accounting data for a company remains comparable over time?
What principle ensures that accounting data for a company remains comparable over time?
Which accounting principle requires that bad news be reported promptly while good news is withheld until certain?
Which accounting principle requires that bad news be reported promptly while good news is withheld until certain?
What is the primary focus of the concept of materiality in accounting?
What is the primary focus of the concept of materiality in accounting?
In a balance sheet equation A = L + E, what does 'A' represent?
In a balance sheet equation A = L + E, what does 'A' represent?
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What is the relationship defined by articulation in financial statements?
What is the relationship defined by articulation in financial statements?
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What is the primary purpose of Cost-Volume-Profit (C-V-P) analysis?
What is the primary purpose of Cost-Volume-Profit (C-V-P) analysis?
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Which of the following is considered a fixed cost in the context of C-V-P analysis?
Which of the following is considered a fixed cost in the context of C-V-P analysis?
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What happens to total variable cost as the number of units produced increases?
What happens to total variable cost as the number of units produced increases?
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In Cost-Volume-Profit analysis, which of the following factors is NOT a key component?
In Cost-Volume-Profit analysis, which of the following factors is NOT a key component?
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Which of the following relates to dividing overhead costs into cost pools?
Which of the following relates to dividing overhead costs into cost pools?
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What is the primary focus of long run planning in management accounting?
What is the primary focus of long run planning in management accounting?
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Which of the following is NOT a characteristic of good management accounting?
Which of the following is NOT a characteristic of good management accounting?
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In the context of CVP analysis, which category of cost includes rent and salaries?
In the context of CVP analysis, which category of cost includes rent and salaries?
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Which component is involved in the controlling aspect of management accounting?
Which component is involved in the controlling aspect of management accounting?
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What does breakeven analysis primarily assess?
What does breakeven analysis primarily assess?
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What is the aim of evaluating variances in performance results?
What is the aim of evaluating variances in performance results?
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In operational budgeting, which aspect is prioritized?
In operational budgeting, which aspect is prioritized?
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Which activity is considered part of financial accounting?
Which activity is considered part of financial accounting?
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What does the Cash Flow to Net Income ratio reflect?
What does the Cash Flow to Net Income ratio reflect?
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Which ratio measures a company's ability to finance capital expansion through its operational cash flow?
Which ratio measures a company's ability to finance capital expansion through its operational cash flow?
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What is the formula for calculating Return on Sales?
What is the formula for calculating Return on Sales?
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How does the asset turnover ratio assess a company's performance?
How does the asset turnover ratio assess a company's performance?
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What is indicated by the 2/10, n/30 sales discount policy?
What is indicated by the 2/10, n/30 sales discount policy?
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Which expense is typically not a cash expense when assessing a company's financial health?
Which expense is typically not a cash expense when assessing a company's financial health?
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How much of Winthrop Merchandising's budgeted sales is expected to be cash sales?
How much of Winthrop Merchandising's budgeted sales is expected to be cash sales?
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What type of costs does the cost of selling on credit typically include?
What type of costs does the cost of selling on credit typically include?
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What is the correct formula for calculating Gross Profit?
What is the correct formula for calculating Gross Profit?
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Which of the following best describes Operating Income?
Which of the following best describes Operating Income?
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Which expense is subtracted from Operating Income to determine Income from Continuing Operations?
Which expense is subtracted from Operating Income to determine Income from Continuing Operations?
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What does Comprehensive Income reflect regarding a company's wealth?
What does Comprehensive Income reflect regarding a company's wealth?
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Which of the following items is NOT included in Net Income calculations?
Which of the following items is NOT included in Net Income calculations?
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What aspect does Physical Capital maintenance focus on?
What aspect does Physical Capital maintenance focus on?
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Which type of revenue is not typically recognized as operational revenue?
Which type of revenue is not typically recognized as operational revenue?
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What is the role of Accrual Accounting in financial reporting?
What is the role of Accrual Accounting in financial reporting?
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What is the primary purpose of a single step income statement?
What is the primary purpose of a single step income statement?
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Which principle dictates that expenses must be recognized in the same accounting period as the revenue they helped generate?
Which principle dictates that expenses must be recognized in the same accounting period as the revenue they helped generate?
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What is represented in the expanded accounting equation?
What is represented in the expanded accounting equation?
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What do restructuring charges typically relate to?
What do restructuring charges typically relate to?
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Which of the following best describes Economic Value Added (EVA)?
Which of the following best describes Economic Value Added (EVA)?
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What happens to retained earnings when dividends are issued?
What happens to retained earnings when dividends are issued?
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If a company projects a 40% increase in sales volume, which of the following is expected to increase by a similar percentage?
If a company projects a 40% increase in sales volume, which of the following is expected to increase by a similar percentage?
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Which country is noted for adopting the accrual basis for its official accounting?
Which country is noted for adopting the accrual basis for its official accounting?
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Study Notes
Accounting for Decision Makers - C213 Refresher
- Managerial Accounting focuses on internal company uses. It involves an accounting system for recording and analyzing company activities.
- Bookkeeping provides a systematic quantitative record of activities.
- Analysis organizes and evaluates accounting information.
- Financial Accounting reports information objectively and reliably to shareholders.
- Balance Sheet: Assets = Liabilities + Equity. Shows a company's financial position.
- Income Statement: Revenue - Expenses = Net Income. Shows a company's profitability.
- Statement of Cash Flows: Outlines where the company gets its cash and how it is used. Includes operating, investing, and financing activities.
- Securities and Exchange Commission (SEC) oversees financial accounting disclosures of companies, both U.S. and foreign, trading on U.S. exchanges.
- International Trade Commission uses financial accounting information to address unfair trade practices.
- Justice Department uses financial statements to evaluate if companies are earning excessive profits from monopolistic practices.
- State agencies (e.g., public utility commissions, insurance commissions) use financial statements and other accounting data to set/approve rates for services.
- Sarbanes-Oxley Act of 2002 increased government scrutiny of accounting and auditing financial statements.
Balance Sheet
- Assets = Liabilities + Equity This fundamental accounting equation is the basis of the balance sheet.
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Assets: Resources owned by a company.
- Current Assets: Easily converted to cash in the short term. (e.g., cash, accounts receivable).
- Long-term Assets: Used in the operation of the business for longer periods. (e.g., property, plant, equipment).
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Liabilities: Obligations owed to others.
- Current Liabilities: Obligations to be paid in the short term (e.g., accounts payable, salaries payable).
- Long-term Liabilities: Obligations due in the long term (e.g., mortgages, bonds).
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Equity: Residual interest in the assets after deducting liabilities. Represents the owners' stake.
- Paid-in capital: The amount invested by owners.
- Retained earnings: Profits the company has retained rather than paying them out as dividends.
- Treasury stock: Shares a company has repurchased.
- Accumulated other comprehensive income (OCI): Other gains and losses.
Income Statement
- Revenue - Expenses = Net Income/Loss
- Revenue: Income generated from sales.
- Expenses: Costs incurred during a period to generate revenue.
- Operating expenses: Costs incurred in the normal operation.
- Non-operating expenses: Activities unrelated to daily operations (unusual income or loss).
- Net income: The result—a profit or loss.
- Time Period: Frequency of reporting (monthly, quarterly, annually).
- Revenue Recognition Principle: Recognize revenue when it’s earned, regardless of when cash is received.
External Auditing and Control
- External Auditors are independent parties that verify that financial statements are accurately presented and adhere to Generally Accepted Accounting Principles (GAAP).
- Relevant: Information that helps in decisions and forecasts, and historical trends to understand performance.
- Reliable: Accurate information that faithfully represents the economic events it reflects.
- Comparability: Similar information is used across different time periods and companies.
- Consistency: Consistent method used over different time periods to report accounting data
- Conservativism: When uncertain, prefer cautious estimates or recognize losses but not recognize gains.
- Materiality: A large enough change to impact a user's decisions
- Accounting Principles (GAAP/IFRS): Globally recognized standards for financial reporting.
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Description
This quiz covers key concepts in Managerial Accounting, Bookkeeping, and Financial Accounting, emphasizing their importance for decision-making within companies. It includes essential statements such as the Balance Sheet, Income Statement, and Statement of Cash Flows. Test your knowledge on how these accounting practices support corporate finance and compliance.
