Adventis Fmc Level 1Complete With Newest Answer Version.docx

Adventis FMC Level 1COMPLETE WITH
NEWEST ANSWER VERSION.
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financial statement communicates what? - CORRECT ANSWERS-- financial condition
- results of operations
- various other activities of an organization
how board of directors use financial data... - CORRECT ANSWERS-- hold management
accountable - make board-level decisions about corporate strategy
how company management uses financial data... - CORRECT ANSWERS-- measure
performance
- make strategic, operating and financial decisions
how creditors use financial data... - CORRECT ANSWERS-- measure creditworthiness
- liquidity
- bankruptcy risk
how investors use financial data... - CORRECT ANSWERS-make decisions on
buying/selling equity investments
how acquirers use financial data... - CORRECT ANSWERS-- determine valuation
- make investment decisions
how regulators use financial data... - CORRECT ANSWERS-determine whether
company is operating according to regulations/law
what does the income statement present? - CORRECT ANSWERS-results of
operations over a period of time
what is the purpose of the income statement? - CORRECT ANSWERS-to show whether
the company made or lost money during the period reported
what does the income statement indicate? - CORRECT ANSWERS-how revenues are
translated into net income through subtracting expenses
revenue (sales) - CORRECT ANSWERS-amount charged for the delivery of goods or
services
cost of sales (cogs) - CORRECT ANSWERS-- direct cost of producing revenue
- Ex: raw materials, direct wages, etc.
gross profit - CORRECT ANSWERS-- revenue - cogs
- indicates how efficiently labor and materials are used in the production process
operating expenses - CORRECT ANSWERS-- all other expenses required to run a
business
- Ex: management salaries, marketing, travel, etc.
operating income (EBIT) - CORRECT ANSWERS-- revenue - cogs - operating
expenses
- indicates a company's earning power from ongoing operations
non-operating expenses - CORRECT ANSWERS-- expenses not related to regular
business of the company
- Ex: interest expense, restructuring expense, etc.
corporate taxes - CORRECT ANSWERS-local and federal income taxes the company
incurs

, net income (net earnings) - CORRECT ANSWERS-- revenue - cogs - operating
expenses - non-operating expenses - taxes
- indicates increase in shareholders' value resulting from operations
what does the balance sheet show? - CORRECT ANSWERS-an organization's financial
position at a particular point in time
what does the balance sheet disclose? - CORRECT ANSWERS-- the resources an
organization controls (assets)
- the claims on those resources (liabilities and equity)
what is the basic accounting equation? - CORRECT ANSWERS-assets = liabilities +
equity
what is the basic accounting equation a foundation for? - CORRECT ANSWERS-the
double entry bookkeeping system
what is the double entry bookkeeping system? - CORRECT ANSWERS-there is a credit
for every debit
what does the accrual accounting method measure? - CORRECT ANSWERS-the
performance of a company regardless of when cash transaction occur
cash - CORRECT ANSWERS-current assets comprising currency or currency
equivalents that can be accessed immediately
accounts receivable - CORRECT ANSWERS-amount owed to an organization from the
sale of a good or service
fixed assets - CORRECT ANSWERS-- value of assets and property that can't be easily
converted to cash
- has a useful life of greater than 1 year
- Ex: PPE
accounts payable - CORRECT ANSWERS-amount owed to an organization's vendors
debt - CORRECT ANSWERS-amount of obligations owed to creditors
equity - CORRECT ANSWERS-cumulative shareholder investment + cumulative net
income
what is working capital a measure of? - CORRECT ANSWERS-- a company's efficiency
- short term financial health
working capital equation - CORRECT ANSWERS-non-cash current assets - non-debt
current liabilities
what does a positive or negative working capital indicate? - CORRECT ANSWERS-
whether it's a source or use of cash
what can happen if a company's non-cash current assets < non-debt current liabilities? -
CORRECT ANSWERS-may run into challenges repaying creditors and suppliers in the
short run
non-cash current assets - CORRECT ANSWERS-- non-cash assets expected to be
turned into cash within one year
- Ex: accounts receivable, inventory, prepaid expenses, other assets
non-debt current liabilities - CORRECT ANSWERS-- all obligations besides short-term
debt that are due within one year
- Ex: accounts payable, accrued liabilities, other obligations
what is a less expensive form of capital? - CORRECT ANSWERS-debt because it's less
risky