Chapter 17: Using Accounting and Financial Information Flashcards Preview

Comm 101 > Chapter 17: Using Accounting and Financial Information > Flashcards

Flashcards in Chapter 17: Using Accounting and Financial Information Deck (41)
Loading flashcards...
1
Q

is the largest financial language of business

A

accounting

2
Q

when someone talks about _____ they are talking about the information that is provided to managers and decision makers within the organization

A

managerial accounting

3
Q

the process of collecting, analyzing, and reporting financial information

A

accounting

4
Q

provides info for managers WITHIN an organization to make decisions about a company’s financing, investing, marketing and operating activities

A

managerial accounting

5
Q

provides info for people OUTSIDE an organization through the generation of standardized financial statements

A

financial accounting

6
Q

used to ensure accuracy and consistency in the way financial information was reported (old)

A

generally accepted accounting principles (GAAP)

7
Q
  • a set of globally accepted accounting standards

- to provide consistency in financial reporting internationally and replace the GAAP

A

international financial reporting standard (IFRS)

8
Q

accounting is broken down into 2 broad categories:

A

financial and managerial accounting

9
Q

3 types of financial statements

A

balance sheet, income statement, statement of cash flows

10
Q

accounting standards similar to the former Canadian GAAP for private companies

A

Accounting Standards for Private Enterprises (ASPE)

11
Q

a financial statement that provides a snapshot of a company’s financial position by stating assets, liabilities and owner’s equity

A

balance sheet

12
Q

a f.s that provides a summary of how much a company earned over a period of time; revenue, expenses and net income

A

income statement

13
Q

a f.s that illustrates how the company’s operating, investing and financing activities affect cash over a period of time

A

statement of cash flows

14
Q
  • often run at the end of accounting periods (monthly, quarterly, or annually)
  • assets - liabilities = owner’s equity
A

balance sheet

15
Q

is the portion of company assets that belong to the owners after all the debts are paid

A

owner’s equity

16
Q

the easier it is to convert an asset to cash, the more

A

liquid it is

17
Q

having assets that are more ______ places owners in a stronger financial position

A

liquid

18
Q

assets that can be converted quickly into cash (accounts receivable, cash and short-term investments and inventory)

A

current assets

19
Q

aren’t easily converted into cash or will be held for longer than a year (equpiment, fixed assets and intangible assets)

A

long-term assets

20
Q

money it owes to suppliers for purchases that were made using credits

A

accounts payable

21
Q

has liabilities related to upcoming salary and tax payments and do not need to be paid just yet

A

accrued expenses

22
Q

assets and liabilities are categorized as:

A

current or long-term

23
Q

assets that can be converted to cash or used in 1 year or less

A

current assets

24
Q

debts that will be repaid in 1 year or less

A

current liabilities

25
Q

assets that will be used for longer than 1 year

A

long-term assets

26
Q

debts that need not to be repaid for at least one year

A

long-term liabilities

27
Q

records how much the company earns from selling goods/services with the “bottom line” showing the company’s profit or loss for the period

A

income statement

28
Q

the cost of producing or purchasing products for sale

A

cost of goods sold (COGS)

29
Q

ongoing business expenses such as rent, salaries, utilities, and marketing expenses

A

operating expense

30
Q

provides some insight into the timing of the investment and financing activities over a period of time along with cash flows generated from the company’s primary operating activity, selling products, or providing services to customers

A

cash flow statements

31
Q

2 common methods of analysis

A
  1. compare the company’s current performance to past performance
  2. compare the company’s current performance to the competitor’s performance
32
Q

rather than compare actual numbers or $ amounts analysts use

A

financial ratios

33
Q

3 common ratios that measure the

A

profitability, liquidity and leverage of a company

34
Q
  • how good the company is at generating revenue and controlling its costs
  • higher ratio = better profit margins
A

profitability ratios

35
Q
  • company’s ability to meet short-term obligations
  • higher ratio = company can easily pay short-term debt obligations
  • ratio varies greatly by industry
A

liquidity ratio

36
Q
  • how much a company is financed using dept
  • a ratio over 1 = company has more debt than equity
  • higher ratio = higher level of debt
A

leverage ratio

37
Q

when we calculate, 3 common financial ratios

A

return on sales, current ratio and debt-to-equity ratio

38
Q

measures how effectively a company controls its costs

A

return to sales

39
Q

measures a company’s ability to convert short-term assets to cash in order to pay its short-term debt

A

current ratio

40
Q

measures leverage or how much debt a company has in comparison to owner’s equity

A

dept-to equity ratio

41
Q

the more dept a company has the more _________ it is

A

leveraged