Exam 12: The Role of Accounting in Business

The purpose of accounting is to help employees.

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

Your _____ shows the amount of cash that you have coming in and going out.

Accounting can help your business in all of the following ways :

Examining both its debt-to-equity and interest coverage, its _____ ratios may show that a company is heading for financial trouble.

Its debt-to-equity ratio examines the risk entailed by a company's _____.

Which of the following may cause a company to have cash problems?

An account receivable is recorded as a current asset.

Describe three different financial ratios that can be used to analyze a company's financial statements.

Cash flows from _____ activities are derived from the day-to-day operations of your main line of business.

A long-term asset that will be used for several years-say, a vehicle-appears on the income statement as a depreciation expense.

Government agencies would have little interest in the kind of information supplied by this firm.

Its debt-to-equity ratio shows the risk entailed by a company's capital structure.

The public accountant examines a company's financial statements and submits an opinion on whether they have been prepared in accordance with _____.

Under accrual accounting, accounts receivable are recorded when sales are made and accounts payable when payments have been received.

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

Its debt-to-equity ratio shows a company's ability to pay interest on its debts from its operating income.

What's the purpose of a balance sheet?

What is an asset, and what two kinds of assets can a business have?

Your balance sheet shows what your sales and expenses are.