ACCOUNTING CHAPTER 1

what is vertical analysis?. the examination of the relevant flow of economic information. the supervision of the annual report of directors. the decision wether to stay or not in a company. relationship between shareholders and directors and their role in the company.

who manages the company?. Directors. Shareholders. Auditors. Managers.

What is an emolument?. A report of the company's financial position. The statement of the wealth generated by the company in a given period. The salaries of the directors. What the company decides to issue at the end of the year.

what do auditors do and are they necessary?. supervise the annual report of directors, not compulsory. supervise the annual report of directors, compulsory. Invest capital in the company, compulsory. Invest capital in the company, not compulsory.

What does income measurement consist of?. the capital's suppliers evaluation of the manager's stewardship. the evaluation of the best action among relative alternatives.

Who is financial accounting directed to ?. investors, creditors, govermet agencies and the public. managers, creditors, govermet agencies and the public. managers, creditors, auditors and the public. none of the above.

what type of information do management accounting provide?. budgets, forecasts and projections. Employee morale, corporate culture, customer satisfaction nuances. A competitor's internal cost structures, exact profit margins per product line, or proprietary budget plans.

which type of accounting needs to comply with accounting standards?. manegiral accounting. financial accounting.

what does double entry bookkeeping system mean?. It means that every financial transaction must be recorded in at least two different accounts, with equal and opposite debits and credits. It means that a business maintains two separate sets of financial books—one for internal management and one for tax reporting. It means that all transactions are recorded twice—once at the beginning of the month and once at the end of the month—to prevent errors. It means that only cash transactions are recorded, and each transaction requires two manager signatures for approval.

which type of accounting provides financial statements?. financial accounting. managerial accounting.

Who do external auditors work for?. Shareholders. Directors. the government.

What is the focus on both types of accounting?. Managerial accounting looks backwards and financial accounting looks forwards. Managerial accounting looks forwards and financial accounting looks backwards.

When do you have to pay an account payable?. 30-60 days. within a year. over a year.

what are the two main subparts in owner's equity?. paid in capital and retained earnings. retained earnings and expenses. retained earnings and dividends. expenses and revenues.

What is the basic component in paid in capital?. Par value of common stock. Retained earnings. Year-end net profit.

What is par value of common stock?. the foundational amount of capital contributed by shareholders when the shares are initially issued. inflows of resources that increase retained earnings by delivering goods or services to customers. resource outflows that decrease retained earnings due to operations. distributions to stakeholders of assets generated by net income.

what do dividends affect?. They are a type of expense that is contained in interest expenses. They provide the final net income by subtracting what stockholders get. They are a type of expense that is contained in operating expenses. They are recorded as a reduction of retained earnings.

what type of expenses are there?. Operating expenses, Cost of goods sold, Interest expenses, Income taxes. Discretionary expenses, non-discretionary expenses, Intangible expenses, tangible expense.

What is a profit?. net income. Excess of revenues over expenses. net profit. all of the above.

what does the cash flow statement showcase?. listing of all customer credit scores and the projected future sales revenue. movement in cash and bank balances over a year. value of the company's tangible and intangible assets minus its outstanding debts.

who is the most interested in retained earnings?. owners. customer. manager. director.

what is a financial statement?. statement of operations. profit and losses account. revenues and gains - expenses and losses. all of the above.

Gains and losses that are independent of a company's core operations such as the sale of a piece of land, a loss from a fire, or interest paid on a loan are already included in. the income statement classified as the "Non-Operating Items.". They are classified as Cost of Goods Sold (COGS). Discontinued Operations. Deferred Revenue.

what are net sales?. They are the total revenues minus the cost of goods sold, operating expenses, interest, and corporate taxes. the total sales minus any discounts or returns granted to customers. They are the total projected sales revenues that management expects to collect over the next calendar year. They are the total cash deposits received from investors in exchange for common stock during the fiscal year.

gross profit. It is the percentage of revenue used exclusively to pay out dividends to preferred and common shareholders. It is the total amount of cash collected from customers during the year, completely ignoring any unsold inventory costs. It is the profit a company makes after deducting the direct costs associated with producing its products from its net sales. It is the final profit remaining after all operating expenses, interest, and government taxes have been deducted from total revenue.

operating expenses. expenses not directly linked to production ( selling and administrative expenses). Gross profit- interest expenses. Gross profit- taxes. none of the above.

EBIT. gross profit - operating expenses. gross profit- interest expenses. net income- cost of goods sold. net sales- cost of goods sold.

what is additional paid-in capital and where can we find them in the balance sheet?. It is the excess amount investors pay over the par value of shares, located in the Shareholders' Equity section. It is the total accumulated revenue from secondary product sales, located in the Current Assets section. It is the value of unpaid short-term invoices from core vendors, located in the Current Liabilities section. t is the cash reserve set aside for future physical factory expansions, located in the Long-Term Assets section.

what is a marketable security and what type of asset is it?. currency and checking account(highly liquid bank account for day-to-day financial transactions) CURRENT. short term, liquid financial instruments (stock, bond) that can easily be sold CURRENT. sales for which payment has not yet been been received FIXED. reduction in the value of fixed assets due to use over time. FIXED.