Chapter 11-15

Question 1

2 fields in accounting

Answer 1

1) Financial accounting- interest groups are kept informed about a firms financial condition
2) Managerial accounting- internal procedures that alert managers to problems and aid them

Question 2

3 common areas of accounting services

Answer 2

1) Auditing-financial records examined to determine if proper procedures were used
2) Tax services-Help clients to prepare for tax returns and planing their tax
3) Management consulting services- Personal financial planning

Question 3

3 types of financial statements

Answer 3

1) Assets
2) Liabilities
3) Owners equity

Question 4

3 types of Assets

Answer 4

1) Current assets- cash and other assets that can be converted into cash
2) Fixed assets

Question 5

3 parts of the accounting equation

Answer 5

1) Assets
2) Liabilities
3) Owners Equity
4) Assets = Liabilities + Owners Equity
5) Assets - Liabilities = Owners Equity

Question 6

3 categories of income statement (Revenues - Expenses = Profit (or loss))

Answer 6

1) Revenues
2) Cost of goods sold
3) Operating expenses

Question 7

3 important business activities of a statement of cash flow

Answer 7

1) Cash flows from operations
2) Cash flows from investing
3) Cash flows from financing:

Question 8

2 types of solvency

Answer 8

1) Short term- measure a company’s liquidity and its ability to pay immediate debts
2) Long term- measure company ability to pay long term debts

Question 9

3 types of probability ratios

Answer 9

1) Return on equity
2) Return on sales
3) Earnings per share

Question 10

4 trends that have emerged and are contributing to additional roles of the modern accountant

Answer 10

1) Few restrictions from physical and geographic boundaries.
2) Scoail-media-driven changes in relationships and the way business is conducted.
3) Need for the accountant to be an effective communicator.
4) Project management in the accountants expended role