Exam 12: The Role of Accounting in Business

Gross profit is the negative difference between revenues and the cost of goods sold.

If you were asked to identify "the language of business," you should reply: _____.

Breakeven analysis is a method of determining the level of sales at which a company will have no profit or loss.

Businesses that sell services rather than merchandise don't have a line for _____ on their statements.

Its _____ ratio shows how efficiently a company sells its average stock of goods on hand in one year.

On a company's balance sheet,_____ reflects the amount that a business has charged as depreciation expense on its long-term assets

What was Rebecca's gross profit margin?

If you sell merchandise rather than services,your financial statements won't have a cost-of-goods sold line.

A ratio analysis is a technique for financial comparison that shows the relationship between two numbers.

To find out the relationship between assets that can be converted to cash within a year and liabilities that will be paid within a year,you can look up Zanzibar Corp.'s _____ ratio in its annual report.

_____ analysis allows a business to determine the level of sales that it must reach to avoid losing money.

The _____ ratio shows how much of each sales dollar is left after certain costs have been covered.

Last year,Rebecca's Bookstore had $1 million in sales.She spent $590,000 to buy the books that she sold and paid out $300,000 in operating expenses.Interest and taxes came to $3,000.How much profit did Rebecca have for each $1.00 in sales?

The purpose of accounting is to help employees.

This past year Donald's Duck Farm had revenues of $25,000.The company spent $1,000 per month on duck eggs and $700 per month on feed,rent,and utilities to keep incubators running.What was Donald's net income?

Bakersfield, Smith, and Babble LLC is a midsized accounting firm in New England. In order to project an image as a full service company, each partner specializes in a different field of accounting. Bakersfield provides information and analysis to business owners in order to help them operate their companies. Smith’s job is to furnish information to individuals and groups both inside and outside organizations to help them assess their firms’ financial performances. Babble is primarily responsible for preparing financial statements for business owners, managers, and investors and other users, such as creditors and government agencies. -Smith specializes in management accounting.

To find out if you have made a profit,you will prepare a so-called "general statement," which shows revenues and expenses.

Business student Maurice Langdon can use _____ analysis to show the relationship between two numbers.

Public accounting firms offer consulting and tax services,the hallmark of the profession being the performance of internal audits.

Vertical percentage analysis expresses each item on an income statement as a percentage of a certain base.