16 Questions
Match the following financial terms with their definitions:
Assets = The tabulating and bookkeeping of the capital resources of a particular firm Cost effective management = Refers to the strategic and efficient utilization of resources to achieve organizational goals while minimizing expenses. Balance sheet = Serves as a snapshot of the current net worth of a particular firm at a given moment in time. Accounting = Bank deposit balances, any petty cash funds, and cash equivalents
Match the following company characteristics with their descriptions:
People = A company that inspires its employees and creates a strong, cooperative morale will benefit in the long run. Technology = Effective application of the newest technical advances makes a business more efficient. International strategy = Only the company that can successfully implement an international strategy can fully compete in the new global community. RETURN = This is the lifeblood of a well-run company, without it, sooner or later, the company will die.
Match the following financial terms with their definitions:
Cash = Bank deposit balances, any petty cash funds, and cash equivalents Accounts receivable = The amount due from customers that has not yet been collected Inventory = The generally accepted method of valuation of inventory is the lower of cost or market (LCM) Prepaid expense = Payments made by the company, in advance of the benefits that will be received, by year's end
Match the following company characteristics with their descriptions:
Future outlook = Examine principal determinants of company operating and financial performance, key points of leverage in the future. People = A company that inspires its employees and creates a strong, cooperative morale will benefit in the long run. RETURN = This is the lifeblood of a well-run company, without it, sooner or later, the company will die. Technology = Effective application of the newest technical advances makes a business more efficient.
Match the following financial terms with their definitions:
Assets = The tabulating and bookkeeping of the capital resources of a particular firm Accounting = Bank deposit balances, any petty cash funds, and cash equivalents Inventory = The amount due from customers that has not yet been collected Accounts receivable = The generally accepted method of valuation of inventory is the lower of cost or market (LCM)
Match the following financial terms with their definitions:
The big three = The financial statements of a business enterprise are essentially their scribes the books. Operation = This characteristic reveals the inner workings of the company. Tools of the trade = Requires the working knowledge of certain important disciplines that are firmly footed in the mathematical and economic science. Asset = A strong balance sheet is a wonderful characteristic for a company in march of fame and fortune in the annals of great stocks.
Match the following company characteristics with their descriptions:
International strategy = Only the company that can successfully implement an international strategy can fully compete in the new global community. RETURN = This is the lifeblood of a well-run company, without it, sooner or later, the company will die. People = A company that inspires its employees and creates a strong, cooperative morale will benefit in the long run. Operation = This characteristic reveals the inner workings of the company.
Match the following financial terms with their definitions:
Prepaid expense = Payments made by the company, in advance of the benefits that will be received, by year's end. Cash = The amount due from customers that has not yet been collected Inventory = Bank deposit balances, any petty cash funds, and cash equivalents Accounts receivable = The generally accepted method of valuation of inventory is the lower of cost or market (LCM)
Match the following accounting terms with their definitions:
Fixed Assets = Assets that cannot be converted into cash within a normal operating cycle Current Liabilities = Debts that fall due within 12 months (or one operating cycle) Revenue = The amount received by the company for rendering its services or selling its goods Retained Earnings = The amount of earnings, above the dividend payout, accumulated by the firm
Match the following balance sheet components with their descriptions:
Liabilities = The next major portion of the balance sheet lists liabilities Stockholder's Equity = The total equity interest that all shareholders have in the company Fixed Assets = Assets that cannot be converted into cash within a normal operating cycle Income Statement = The balance sheet is the record of net worth for the firm
Match the following accounting concepts with their explanations:
Accrued Expenses = The amounts owed and not yet recorded on the books that are unpaid at the date of the balance sheet Income Tax Payable = The debt due to the Internal Revenue Service (IRS) or other taxing authorities but not yet paid Long-term Debt = Debts due beyond one year (or one operating cycle) Accounts Payable = Represents the amount the company owes to business creditors
Match the following income statement components with their descriptions:
Revenue = The amount received by the company for rendering its services or selling its goods Cost of Goods Sold (COGS) = The primary cost expense in most manufacturing companies Operating Earnings = Earnings attributed to the activities of the company without any impact from the financing of its balance sheet Interest Expense = Amount that equals the cost of borrowing money
Match the following financial terms with their definitions:
EBITDA = Known as a measure of cash flow, for it factors out the non-cash charges included in depreciation and amortization expense Depreciation and Amortization Expense = The estimated amount that management expects to use in the future to replace its operating facilities Operating Earnings Before Depreciation = Earnings attributed to the activities of the company without any impact from the financing of its balance sheet Retained Earnings = The amount of earnings, above the dividend payout, accumulated by the firm
Match the following accounting terms with their descriptions:
Income Statement = The balance sheet is the record of net worth for the firm Balance Sheet = The record of net worth for the firm Current Assets = Assets that can be converted into cash within a normal operating cycle Fixed Assets = Assets that cannot be converted into cash within a normal operating cycle
Match the following financial concepts with their explanations:
Cost of Goods Sold (COGS) = The primary cost expense in most manufacturing companies Operating Earnings Before Depreciation = Earnings attributed to the activities of the company without any impact from the financing of its balance sheet Interest Expense = Amount that equals the cost of borrowing money EBITDA = Known as a measure of cash flow, for it factors out the non-cash charges included in depreciation and amortization expense
Match the following accounting terms with their descriptions:
Long-term Debt = Debts due beyond one year (or one operating cycle) Stockholder's Equity = The total equity interest that all shareholders have in the company Current Liabilities = Debts that fall due within 12 months (or one operating cycle) Fixed Assets = Assets that cannot be converted into cash within a normal operating cycle
Study Notes
Future Outlook and Key Determinants of Company Performance
- A company's future outlook is influenced by its ability to inspire employees, maintain a strong balance sheet, effectively apply technical advances, implement an international strategy, and achieve a strong return on investment.
Key Company Characteristics
- A strong balance sheet is essential for a company's long-term success.
- Effective application of technical advances can increase efficiency.
- International strategy is crucial for competing in the global community.
- Return on investment is the lifeblood of a well-run company.
Operations and Management
- Cost-effective management involves strategic and efficient utilization of resources to achieve organizational goals while minimizing expenses.
- Accounting is the process of tabulating and bookkeeping a company's capital resources.
- Understanding certain mathematical and economic disciplines is essential for effective management.
Financial Statements and Accounting
- The three main financial statements of a business are like "scribes" that provide a snapshot of the company's financial position.
- Balance sheet provides a snapshot of a company's net worth at a given moment.
- Cash includes bank deposits, petty cash, and cash equivalents like money markets and U.S. Treasury Bills.
Current Assets
- Accounts receivable represents the amount due from customers that has not yet been collected.
- Inventory is valued using the lower of cost or market (LCM) method.
- Prepaid expenses include payments made in advance of benefits received, such as prepaid insurance premiums and rent.
Fixed Assets and Liabilities
- Fixed assets are noncurrent assets that cannot be converted into cash within a normal operating cycle.
- Liabilities include current liabilities (due within 12 months or an operating cycle) and long-term debt (due beyond 12 months).
Current Liabilities
- Accounts payable represents the amount owed to business creditors for goods and services purchased on account.
- Accrued expenses include amounts owed but not yet recorded on the books.
- Income tax payable is the debt owed to taxing authorities but not yet paid.
Stockholder's Equity and Retained Earnings
- Stockholder's equity represents the total equity interest of all shareholders in the company.
- Retained earnings represent the accumulated earnings above dividend payout.
Income Statement
- The income statement illustrates the firm's operating record, whereas the balance sheet records net worth.
- Revenue represents the amount received for rendering services or selling goods.
- Cost of goods sold (COGS) includes all costs incurred in converting raw materials into finished products.
Operating Earnings and Depreciation
- Operating earnings before depreciation (EBITDA) is a measure of cash flow that factors out non-cash charges.
- Depreciation and amortization expense represents the estimated amount expected to be used to replace operating facilities in the future.
- Operating earnings represent the earnings attributed to the activities of the company without financing impact.
This quiz examines the key determinants of a company's operating and financial performance, including people, asset, and technology factors. It also explores the importance of international strategy and future outlook.
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