MFT for MBA
Acid Test Ratio - answer The ratio of current assets And current liabilities also called
quick ratio. The ratio equals the sum of a company's cash, short term investments, and
accounts receivable divided by its current liabilities. This ratio shows how well of
business is able to cover it short term obligations.
A quick ratio of one means - answer The most liquid assets of a business or equal to its
total deaths in the business will just manage to repay all his debts by using its cash,
marketable securities, and accounts receivable.
A quick ratio of more than one means - answer Indicates that the most liquid assets of a
business exceed its total debts.
Action centered leader ship - answer Represents three key balanced activities achieving
the task building and maintaining the team and developing the individual
Activity-based costing (ABC) - answer An accounting system that recognizes a business
firms relationship between costs, activities, and products, and through this relationship
assigns indirect costs to products less arbitrarily than traditional methods
Actual Cash Value - answerreplacement cost - depreciation
A quick ratio of less than one means - answerIndicates that a business would not be
able to repay all its debts by using its most liquid assets
Economic Entity - answerthe recorded activities of a business entity should be kept
separate from the recorded activities of its owner(s) and any other business entities.
Going Concern Assumption - answerfinancial statements are prepared with the
expectation that a business will remain in operation indefinitely
Monetary Unit Assumption - answerrequires that only those things that can be
expressed in money are included in the accounting records
Periodicity Assumption - answeran organization can report its financial results within
certain designated periods of time.
Historical Cost Principle - answerAn accounting principle that states that companies
should record assets at their cost.
Revenue Recognition Principle - answerThe principle that companies recognize
revenue in the accounting period in which the performance obligation is satisfied.
, Matching Principle - answerrecognize expenses in the same period as the revenues
they help to generate
Full Disclosure Principle - answerAccounting principle that dictates that companies
disclose circumstances and events that make a difference to financial statement users.
cost-benefit constraint - answerThe notion that the benefit of a disclosure exceeds the
cost of that disclosure.
Materiality Constraint - answerprescribes that only information that would influence the
decisions of a reasonable person need be disclosed
Industry Practices - answeraccounting issues that are unique to a specific industry, and
which are used instead of normal accounting practices and reporting.
Conservatism Constraint - answerPrinciple that prescribes the less optimistic estimate
when two estimates are about equally likely.
Assets - answermoney and other valuables belonging to an individual or business
Liabilities - answerAmounts owed to creditors
Owner's Equity - answerthe amount remaining after the value of all liabilities is
subtracted from the value of all assets
Accounting Equation - answerAssets = Liabilities + Owner's Equity
Contributed Capital - answerowner contributions to a corporation
retained earnings - answerAn amount earned by a corporation and not yet distributed to
stockholders.
Income Statement - answerA financial statement that reports a company's revenues
and expenses and resulting net income or net loss for a specific period of time.
net sales - answersales less sales returns and allowances and sales discounts
Gross Profit - answernet sales - cost of goods sold
net income from operations - answergross profit - operating expenses
Net Income Before Taxes - answeramount of income earned by a business prior to
paying income taxes
Acid Test Ratio - answer The ratio of current assets And current liabilities also called
quick ratio. The ratio equals the sum of a company's cash, short term investments, and
accounts receivable divided by its current liabilities. This ratio shows how well of
business is able to cover it short term obligations.
A quick ratio of one means - answer The most liquid assets of a business or equal to its
total deaths in the business will just manage to repay all his debts by using its cash,
marketable securities, and accounts receivable.
A quick ratio of more than one means - answer Indicates that the most liquid assets of a
business exceed its total debts.
Action centered leader ship - answer Represents three key balanced activities achieving
the task building and maintaining the team and developing the individual
Activity-based costing (ABC) - answer An accounting system that recognizes a business
firms relationship between costs, activities, and products, and through this relationship
assigns indirect costs to products less arbitrarily than traditional methods
Actual Cash Value - answerreplacement cost - depreciation
A quick ratio of less than one means - answerIndicates that a business would not be
able to repay all its debts by using its most liquid assets
Economic Entity - answerthe recorded activities of a business entity should be kept
separate from the recorded activities of its owner(s) and any other business entities.
Going Concern Assumption - answerfinancial statements are prepared with the
expectation that a business will remain in operation indefinitely
Monetary Unit Assumption - answerrequires that only those things that can be
expressed in money are included in the accounting records
Periodicity Assumption - answeran organization can report its financial results within
certain designated periods of time.
Historical Cost Principle - answerAn accounting principle that states that companies
should record assets at their cost.
Revenue Recognition Principle - answerThe principle that companies recognize
revenue in the accounting period in which the performance obligation is satisfied.
, Matching Principle - answerrecognize expenses in the same period as the revenues
they help to generate
Full Disclosure Principle - answerAccounting principle that dictates that companies
disclose circumstances and events that make a difference to financial statement users.
cost-benefit constraint - answerThe notion that the benefit of a disclosure exceeds the
cost of that disclosure.
Materiality Constraint - answerprescribes that only information that would influence the
decisions of a reasonable person need be disclosed
Industry Practices - answeraccounting issues that are unique to a specific industry, and
which are used instead of normal accounting practices and reporting.
Conservatism Constraint - answerPrinciple that prescribes the less optimistic estimate
when two estimates are about equally likely.
Assets - answermoney and other valuables belonging to an individual or business
Liabilities - answerAmounts owed to creditors
Owner's Equity - answerthe amount remaining after the value of all liabilities is
subtracted from the value of all assets
Accounting Equation - answerAssets = Liabilities + Owner's Equity
Contributed Capital - answerowner contributions to a corporation
retained earnings - answerAn amount earned by a corporation and not yet distributed to
stockholders.
Income Statement - answerA financial statement that reports a company's revenues
and expenses and resulting net income or net loss for a specific period of time.
net sales - answersales less sales returns and allowances and sales discounts
Gross Profit - answernet sales - cost of goods sold
net income from operations - answergross profit - operating expenses
Net Income Before Taxes - answeramount of income earned by a business prior to
paying income taxes
