Accounting Game Chapter 10

The Balance Sheet, the Income Statement, and the Cash Statement.

To better understand the profitability of the business.

Hiring someone to make advertising signs, making our own lemonade, and negotiating the right price for labor.

<p>The benefits of profit include increased efficiency, productivity, and innovation, as well as the ability to measure and evaluate business performance.</p> Signup and view all the answers

<p>Cash is the actual money flow in and out of a business, while profit is the net income earned after deducting expenses from revenue.</p> Signup and view all the answers

<p>Profits are not considered 'real' because they exist only on paper and can be easily lost or affected by various factors.</p> Signup and view all the answers

<p>The three major items on the Income Statement that affect profits are sales, cost of goods/services, and expenses.</p> Signup and view all the answers

<p>Profit is the amount by which sales exceed the costs of providing goods or services and running a business.</p> Signup and view all the answers

<p>The two cost categories that measure the effectiveness of a company's employees are Cost of Goods/Services and Expenses.</p> Signup and view all the answers

<p>Profits can be increased by increasing sales and decreasing Cost of Goods/Services and Expenses.</p> Signup and view all the answers

<p>Comparisons or ratios can be used to get consistent numbers and take out fluctuations in financial data.</p> Signup and view all the answers

<p>Yes, we made a profit each week this summer.</p> Signup and view all the answers

<p>The Net Profit/Sales ratio is trending down.</p> Signup and view all the answers

<p>The problem is reflected in the COGS/Sales ratio.</p> Signup and view all the answers

<p>The cost of lemonade at the grocer near the game was higher, leading to an increase in the COGS/Sales ratio.</p> Signup and view all the answers

<p>The text mentions learning about the three financial statements, separating cost of goods or services from expenses, accrual versus cash method of accounting, capitalizing versus expensing, depreciation, and cash versus earnings.</p> Signup and view all the answers

<p>The main focus in the book is on net profit.</p> Signup and view all the answers

<p>Some questions to consider include: Would you have done anything differently? Did you work hard? Did the business grow? Did you make money? What decisions or actions affected profit positively or negatively?</p> Signup and view all the answers

<p>COGS/Sales ratio increased dramatically from 0.4 to 0.6.</p> Signup and view all the answers

<p>Poor planning decisions include starting a new venture without continuing the profitable lemonade stand, purchasing expensive equipment, and not raising prices at the game.</p> Signup and view all the answers

<p>A cash shortage limited options and negotiating power at the new grocery store, indirectly affecting profit.</p> Signup and view all the answers

<p>Prioritize and make changes to the factors that affected profit, such as better planning, managing costs, and adjusting pricing according to market conditions.</p> Signup and view all the answers

<p>The three ratios used in the trend analysis are Cost of Goods Sales, Expenses Sales, and Net Profit Sales.</p> Signup and view all the answers

<p>The purpose of comparing ratios to competitors and ourselves is to determine if our numbers are good or bad and to identify areas for improvement.</p> Signup and view all the answers

<p>Conducting a trend analysis helps to identify patterns and trends in financial data over time, providing a better understanding of the overall performance of the organization.</p> Signup and view all the answers

<p>Some sources of industry ratios and norms include Dunn &amp; Bradstreet and Robert Morris &amp; Associates.</p> Signup and view all the answers

<p>Profit is the bottom line of a company's financial statement and represents the amount of money left after all expenses have been deducted from revenue. Cash, on the other hand, refers to the actual physical currency or money that a company has on hand.</p> Signup and view all the answers

<p>Profit allows a company to reinvest in its business, expand operations, pay dividends to shareholders, attract investors, and provide financial stability.</p> Signup and view all the answers

<p>Profits are not considered 'real' because they only exist on paper and can be affected by various factors such as fluctuations in revenue, expenses, and unexpected losses.</p> Signup and view all the answers

<p>Some factors that influenced profits at the lemonade stand include selling inventory at cost, dealing with customers with questionable credit, borrowing money and paying interest, choosing the LIFO method, buying property that required maintenance and depreciation, buying pre-made lemonade instead of making it, opening a new business opportunity at the ball game, purchasing lemonade at a higher cost near the ballpark, negotiating credit when cash was low, and forgetting to use purchased lemons resulting in spoilage.</p> Signup and view all the answers

<p>0.6</p> Signup and view all the answers

<p>0.4</p> Signup and view all the answers

<p>0.12</p> Signup and view all the answers

<p>0.4</p> Signup and view all the answers

<p>Balance Sheet, Income Statement, and Cash Statement</p> Signup and view all the answers

<p>Net Profit</p> Signup and view all the answers

<p>Hiring someone to make advertising signs, making our own lemonade, and hiring our sister to make some of the lemonade</p> Signup and view all the answers

<p>Income Statement</p> Signup and view all the answers

<p>Net Profit</p> Signup and view all the answers

<p>Sales, Cost of Goods/Services, and Expenses</p> Signup and view all the answers

<p>Profits are not real, they only exist on paper</p> Signup and view all the answers

<p>Cost of Goods to Sales, Expenses to Sales, and Net Profit to Sales</p> Signup and view all the answers

<p>To compare the costs of goods/services to the sales</p> Signup and view all the answers

<p>Use comparisons or ratios</p> Signup and view all the answers

<p>Increase sales and decrease Cost of Goods/Services and Expenses</p> Signup and view all the answers