Exam 10: Understanding a Firms Financial Statements

Match the term with its definition. a.Accrued expenses b.Cash flow activities c.Cash flow statement d.Fixed assets e.Gross fixed assets f.Long-term debt g.Other assets h.Short-term notes -Loans from banks or other sources with repayment terms of more than 12 months

Match the term with its definition. a.Cost of goods sold b.Gross profit c.Long-term notes d.Net profits e.Operating profits f.Profit margins g.Profits before taxes h.Total asset turnover -Profits as a percentage of sales

Match the term with its definition. a.Accrued expenses b.Cash flow activities c.Cash flow statement d.Fixed assets e.Gross fixed assets f.Long-term debt g.Other assets h.Short-term notes -Depreciable assets at their original cost,before any depreciation expense has been taken

Denver wants to make sure he puts his company's assets in the correct categories.Which of the following is an example of a current asset?

When Darla prepares her company's balance sheet,she should include ___________ in the list of current assets.

Match the term with its definition. a.Accrued expenses b.Cash flow activities c.Cash flow statement d.Fixed assets e.Gross fixed assets f.Long-term debt g.Other assets h.Short-term notes -Physical assets that will be used in the business for more than one year

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 -Owners' investments in a company plus cumulative net profits retained in the firm

To determine the debt ratio,the total debt is divided by the total income.

Ownership equity represents the owner's investment in the company,which can be either his/her cash invested in the company or money borrowed from a bank to purchase fixed assets.

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 -Stock shares that represent ownership in a corporation

Fatima borrowed money from the bank to expand her business.She plans to repay the loan within 12 months.How is this reflected on the cash flow statement?

To determine his company's return on assets,Harold should divide the firm's operating profits by _____.

The owners of ABC,Inc.may expect to be paid a share of the profits of the company.These payments to owners are called:

Match the term with its definition. a.Cost of goods sold b.Current ratio c.Debt ratio d.Depreciable assets e.Income statement f.Interest expense g.Inventory h.Net fixed assets -The cost of borrowed money

Match the term with its definition. a.Cost of goods sold b.Current ratio c.Debt ratio d.Depreciable assets e.Income statement f.Interest expense g.Inventory h.Net fixed assets -Gross fixed assets less accumulated depreciation

For any business,both the _______ and ________ are needed to determine a firm's financial position.

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 a firm's profitability relative to the amount of its assets,determined by dividing operating profits by total assets

Match the term with its definition. a.Cost of goods sold b.Gross profit c.Long-term notes d.Net profits e.Operating profits f.Profit margins g.Profits before taxes h.Total asset turnover -Sales less the cost of goods sold

In order to derive a cash flow statement,the owner must add back the _____ to the income statement.

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 -Total depreciation taken over time