Chapter 17

Question 1

The recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other interested parties the information they need to make good decisions

Answer 1

Accounting

Question 2

Accounting used to provide information and analyses to managers inside the organization to assist them in decision making

Answer 2

Managerial Accounting

Question 3

A professional accountant who has met certain educational and experience requirements, passed a qualifying exam, and been certified by the Institute of Certified Management Accountants

Answer 3

Certified Management Accountant (CMA)

Question 4

Accounting information and analyses prepared for people outside the organization

Answer 4

Financial Accounting

Question 5

A yearly statement of the financial condition, progress, and expectations of an organization

Answer 5

Annual Report

Question 6

An accountant who works for a single firm, government agency, or nonprofit organization

Answer 6

Private Accountant

Question 7

An accountant who provides accounting services to individuals or businesses on a fee basis

Answer 7

Public Accountant

Question 8

An accountant who passes a dries of examinations established by the American Institute of Certified Public Accountants (AICPA)

Answer 8

Certified Public Accountant (CPA)

Question 9

The job of reviewing and evaluating the information used to prepare a company’s financial statements

Answer 9

Auditing

Question 10

An evaluation and unbiased opinion about the accuracy of a company’s financial statements

Answer 10

Independent Audit

Question 11

An accountant who has a bachelor’s degree and two years of experience in internal auditing, and who has passed an exam administered by the Institute of Internal Auditors

Answer 11

Certified Internal Auditor (CIA)

Question 12

An accountant trained in tax law and responsible for preparing tax returns or developing tax strategies

Answer 12

Tax Accountant

Question 13

Accounting system for organizations whose purpose is not generating a profit but serving ratepayers, taxpayers, and others according to a duly approved budget

Answer 13

Government and Not-For-Profit Accounting

Question 14

A six-step procedure that results in the preparation and analysis of the major financial statements

Answer 14

Accounting Cycle

Question 15

The recording of business transactions

Answer 15

Bookkeeping

Question 16

The record book or computer program where accounting data are first entered

Answer 16

Journal

Question 17

The practice of writing every business transaction in two places

Answer 17

Double-entry bookkeeping

Question 18

A specialized accounting book or computer program in which information from accounting journals is accumulated into specific categories and posted so that managers can find all the information about one account in the same place

Answer 18

Ledger

Question 19

A summary of all the financial data in the account ledgers that ensures the figures are correct and balanced

Answer 19

Trial Balance

Question 20

A summary of all the transactions that have occurred over a particular period

Answer 20

Financial Statement

Question 21

Assets= Liabilities + Owner’s Equity; this is the basis for the balance sheet

Answer 21

Fundamental Accounting Equation

Question 22

Financial statement that reports a firm’s financial condition at a specific time and is composed of three major accounts: assets, abilities, and owner’s equity

Answer 22

Balance Sheet

Question 23

Economic resources (things of value) owned by a firm

Answer 23

Assets

Question 24

The ease with which an asset can be converted into cash

Answer 24

Liquidity

Question 25

Items that can or will be converted into cash within one year

Answer 25

Current Assets

Question 26

Assets that are relatively permanent, such as land, buildings, and equipment

Answer 26

Fixed Assets

Question 27

Long-term assets (e.g. patents, trademarks, copyrights) that have no real physical form but do have value

Answer 27

Intangible Assets

Question 28

What the business owes to others (Debt)

Answer 28

Liabilities

Question 29

Current liabilities are bills the company owes to others for merchandise or services purchased on credit but not yet paid for

Answer 29

Accounts Payable

Question 30

Short-term or long-term liabilities that a business promises to repay by a certain date

Answer 30

Notes Payable

Question 31

Long-term liabilities that represent money lent to the firm that must be paid back

Answer 31

Bonds Payable

Question 32

The amount of the business that belongs to the owners minus any liabilities owed by the business

Answer 32

Owner's Equity

Question 33

The accumulated earnings from a firm's profitable operations that were reinvested in the business and not paid out to stockholders in dividends

Answer 33

Retained Earnings

Question 34

The financial statement that shows a firm's profit after costs, expenses, and taxes; it summarizes all the resources that have come into the firm (revenue), all the resources that have left the firm (expenses), and the resulting net income or net loss

Answer 34

Income Statement

Question 35

Revenue left over after all costs and expenses, including taxes are paid

Answer 35

Net income or net loss

Question 36

A measure of the cost of merchandise sold or cost of raw materials and supplies used for producing items for resale

Answer 36

Cost of Goods Sold (or cost of good manufactured)

Question 37

How much a firm earned by buying (or making) and selling merchandise

Answer 37

Gross Profit (or gross margin)

Question 38

Costs involved in operating a business, such as rent, utilities, and salaries

Answer 38

Operating Expenses

Question 39

The systematic write-off of the cost of a tangible asset over its estimated useful life

Answer 39

Depreciation

Question 40

Financial statement that reports cash receipts and disbursements related to a firm's three major activities: operations, investments, and financing

Answer 40

Statement of Cash Flows

Question 41

The difference between cash coming in and cash going out of a business

Answer 41

Cash Flow

Question 42

The assessment of a firm's financial condition using calculations and interpretations of financial ratios developed from the firm's financial statements

Answer 42

Ratio Analysis