comm 101 chapter 17

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What is accounting?

The process of systematically collecting, recording, classifying, analyzing, and reporting financial information and activities (correct)

A method of tracking personal expenses without any formal structure

An art form to creatively manage financial resources

A type of software used for managing personal finances

What are the two primary types of accounting?

Tax and Auditing Accounting

Financial and Managerial Accounting (correct)

Public and Private Accounting

Cost and Compliance Accounting

What is financial accounting?

Focuses on the internal management of a business

Is only concerned with tax preparation

Is the process of preparing standardized financial statements that are used by people outside the organization (correct)

None of the above

What is the purpose of managerial accounting?

To provide financial information that managers inside the organization can use to evaluate and make decisions Signup and view all the answers

Canadian generally accepted accounting principles (GAAP) was used up until 2011 and was

the financial accounting rules, standards and usual practices followed when preparing financial statements Signup and view all the answers

In 2011, Canada adopted the International Financial Reporting Standards (IFRS) for:

Publicly traded companies and those private companies who chose to adopt them Signup and view all the answers

Private companies can choose to prepare financial statements based on IFRS or based on:

Accounting standards for private enterprises (ASPE) Signup and view all the answers

What are the 3 key financial statements?

Balance Sheet, Income Statement, Cash Flow Statement Signup and view all the answers

What is the statement of financial position (balance sheet)?

A report that shows the assets, liabilities, and owners equity at a specific point in time Signup and view all the answers

What does owner's equity mean?

owners belongings after debt is paid (assets-liabilities) Signup and view all the answers

What is a current liability?

a debt obligation due within 1 year Signup and view all the answers

Which of the following are examples of intangible assets?

patents Signup and view all the answers

What is a current asset?

An asset that is expected to be converted into cash or used within one year Signup and view all the answers

What is a long-term (fixed) asset?

assets that will be used + generate revenue for longer than 1 year Signup and view all the answers

long-term liabilities are ?

debts that don't need to be repaid for at least 1 year Signup and view all the answers

Liquidity refers to:

The ease at which an asset can be converted to cash Signup and view all the answers

What is goodwill in business?

The positive reputation of a company that provides economic value. Signup and view all the answers

What is the statement of comprehensive income (income statement) ?

A financial statement that shows revenues, expenses, and profits over a period. Signup and view all the answers

What is the primary difference between gross sales and net sales?

Gross sales are the total sales revenue before any deductions; net sales are after deductions. Signup and view all the answers

What does the term 'gross sales' refer to in business?

Total revenue from sales before deductions Signup and view all the answers

What is meant by net sales?

Sales revenue minus sales returns and allowances Signup and view all the answers

Expenses can either be what?

Fixed or variable Signup and view all the answers

What is the definition of cost of goods sold (COGS)?

The direct costs attributable to the production of the goods services sold by a company Signup and view all the answers

What are operating expenses in a business context?

Expenses incurred during the regular operations of a business Signup and view all the answers

Taxes aren't an expense, they are an

obligation, subtracted after all expenses have been subtracted Signup and view all the answers

What is net income?

Total revenue minus total expenses is in the + Signup and view all the answers

What is meant by 'net loss' in financial terms?

Total expenses exceed total revenue. Signup and view all the answers

What is the primary purpose of the statement of cash flows?

To show how cash flows in and out of a business over a specific period. Signup and view all the answers

What is the purpose of the statement of cash flows?

To provide information about the cash inflows and outflows of a business Signup and view all the answers

Which of the following are included in cash flows from operating activities? (Select all that apply)

revenue in: sales of goods and services Signup and view all the answers

Which of the following statements about cash flows from investing activities are correct?

Buying and selling long-term assets, like property, plant, and equipment Signup and view all the answers

Which of the following is a cash flow from financing activities?

Issuing stocks Signup and view all the answers

What is meant by operating activities?

Cash related to the production of goods and services Signup and view all the answers

What are investment activities related to?

Cash related to the purchase and sale of long-term (fixed) assets Signup and view all the answers

Financing activities are related to which of the following?

Cash related to debt and equity financing Signup and view all the answers

What is ratio analysis in business?

A method to examine the relationship between different financial statement items Signup and view all the answers

What is a financial ratio?

A mathematical relationship between two financial figures. Signup and view all the answers

What does liquidity in business refer to?

The ability to quickly sell an asset without losing value and pay short-term debts Signup and view all the answers

profitability measures

how effectively a firm is using it's various resources to achieve profits Signup and view all the answers

What do activity measures assess?

The effectiveness of a firm's management in using available assets Signup and view all the answers

What does debt (leverage) measure?

The degree to which a firm relies on borrowed funds in it's operation Signup and view all the answers