Exam 10: Understanding a Firms Financial Statements

If Hector's firm's current ratio _____,its liquidity _____.

Stephanie ordered merchandise from one of her vendors but she doesn't have to pay for it right away.The amount of this purchase will increase Stephanie's:

A two year-old asset has a depreciable life of 10 years.Its initial purchase cost was $450,000 and it is depreciated by 10 percent annually.What is the remaining depreciable value of the asset?

Match the term with its definition. a.Balance sheet b.Debt c.Dividend d.Financial leverage e.Mortgage f.Owners' equity g.Retained earnings h.Working capital cycle -The process of converting inventory to cash

Match the term with its definition. a.Accrual-basis accounting b.Cash-basis accounting c.Current ratio d.Financial statements e.Liquidity f.Operating profit margin g.Return on assets h.Return on equity -A measure of how well a firm is controlling its cost of goods sold and operating expenses relative to sales,determined by dividing operating profits by sales

Richard has in his warehouse some raw materials and finished goods that he has ready to fill customer orders.These are two types of _____.

A new business needs to manage cash flows carefully because if a firm runs out of cash,it is out of business.

Briefly explain the difference between accrual-basis accounting and cash-basis accounting.

Astoria is using a software application to prepare the balance sheet.She wasn't sure which of the following should be included in the fixed asset category.What would you tell her?

Match the term with its definition. a.Balance sheet b.Debt c.Dividend d.Financial leverage e.Mortgage f.Owners' equity g.Retained earnings h.Working capital cycle -A distribution of a firm's profits to the owners

Ignazio has just opened his business.One of the first things he should learn is:

Xavier wants to know how much his company owns and how much it owes.He should look at the:

To determine her company's profits before taxes,Marilyn will have to deduct the firm's interest expense from its ____ income.

Match the term with its definition. a.Accrual-basis accounting b.Cash-basis accounting c.Current ratio d.Financial statements e.Liquidity f.Operating profit margin g.Return on assets h.Return on equity -An accounting method of recording profits when earned and expenses when incurred,whether or not the profits have been received in cash or the expenses paid

The items on the income statement are expressed in dollars but the corresponding margins are expressed as:

Accounts receivable consist of payments due from a firm to its suppliers.

Match the term with its definition. a.Accounts payable b.Accounts receivable c.Accumulated depreciation d.Common stock e.Current assets f.Current debt g.Current ratio h.Depreciation expense -Borrowed money that must be repaid within 12 months

Some assets don't seem to fit neatly into any category so accountants created a category called "other." Which asset would considered an other asset?

The cash flow activities on the cash flow statement are divided into these categories:

Lucille is preparing the _____,which shows all cash receipts and payments involved in operating the business and managing its financial activities.