D196 EXAM STUDY QUESTIONS AND VERIFIED
SOLUTIONS RATED A WESTERN GOVERNORS
UNIVERSITY.
Name of the account that shows distribution of net income(earnings) to the
owners of a business
dividend
a transaction involving paying dividends to owners reduces
owners' equity
-the accounting equation must always remain in balance after recording a
transaction
financial statement analysis
statements used to evaluate a company's performance
-performance measure
2 financial disclosures required for companies that trade, whose stock trade on
securities markets in the US
SEC
1) Form 10-K: annual filing w/ SEC
2) Form 10-Q- quarterly filing w/ SEC
Form 10-k
disclosure form
What the business does
-its products/ services
-the markets/industries the company operates in
Risks
,-exposed to swings in interest rates
-reliance on very few suppliers
*business must disclose risks to potential investors & creditors
-list significant properties the company owns & location
-legal proceedings
-management's discussion & analysis of company's financial condition & results
(what the future looks like)
- other misc. items that should be told to lenders/investors
Financial statements
-balance sheet, statements of cash flow, income statement
Locate a company's 10-k on SEC.GOV
Format of Balance Sheet
1st- Assets- current, w/in operating cycle
2nd: liabilities- list current then long-term
3rd: Owners' Equity
Classified Balance Sheet
breaking items down into current & long-term results
liquid
form of cash, can be easily converted into cash
-these companies can easily repay you
illiquid
assets like undeveloped land that take time & effort to converted to cash w/in a year
current assets
cash & other assets that are expected to be converted to cash w/in a year
long-term assets
,property & equipment, needed in order to operate its business over an extended
period of time
Comparative Financial Statements
includes current & preceding years for users to identify any significant changes in
particular items
*increases in assets, liabilities
Limitations of the Balance Sheet
-often report cost not market value
-values reflect what things cost and what their worth now
*book value is not equal to market value
-some intangible assets are not reported at all
-good will/ relationships w/ ppl, employees, suppliers
-book value is measured by amount of owners' equity in the company
-less than company's market value
elements & purposes of a balance sheet
a balance sheet portrays the financial condition of a company at a point in time
Income statement is used to assess a company's profitability
-want to know reliability of company
-consult before giving loan
-job security
-info on company's future performance
Long-run Planning
*Managerial Accounting
-3-5 yrs
-strategic planning
-what we do & do not want to do
-what products we want to create
-the type of customers we want
, -Capital budgeting: what companys do we need, money, marketing, R&D, what
employees we need, what resources do we need to commit
Short-run planning
*managerial Accounting
-this week, this mo
-production &process prioritizing, what things we're going to do 1st & whats second
-operational budgeting(profit planning): a budget to function,
capital budgeting
systematic planning for long-term investments in operating assets
*planning for the acquisition of property, plant, and equipment
Controlling (using managerial accounting data)
measuring actual performance
-need to correct deviations on a regular basis
-comparing budget v actual
-assessing the important variances, can't possibly pay attention to every little thing
EX- baseball radar gun
-monitor pitcher's performance, pitch by pitch
- fix mechanics or replace the pitch
-tracking the data
3 primary functions of a company manager
planning, controling, evaluating
What does long run planning include
strategic planning & capital budgeting
managerial accounting differs between...
Manufacturing Business:
-General motors~maker of cars & trucks
-apple & boeing
SOLUTIONS RATED A WESTERN GOVERNORS
UNIVERSITY.
Name of the account that shows distribution of net income(earnings) to the
owners of a business
dividend
a transaction involving paying dividends to owners reduces
owners' equity
-the accounting equation must always remain in balance after recording a
transaction
financial statement analysis
statements used to evaluate a company's performance
-performance measure
2 financial disclosures required for companies that trade, whose stock trade on
securities markets in the US
SEC
1) Form 10-K: annual filing w/ SEC
2) Form 10-Q- quarterly filing w/ SEC
Form 10-k
disclosure form
What the business does
-its products/ services
-the markets/industries the company operates in
Risks
,-exposed to swings in interest rates
-reliance on very few suppliers
*business must disclose risks to potential investors & creditors
-list significant properties the company owns & location
-legal proceedings
-management's discussion & analysis of company's financial condition & results
(what the future looks like)
- other misc. items that should be told to lenders/investors
Financial statements
-balance sheet, statements of cash flow, income statement
Locate a company's 10-k on SEC.GOV
Format of Balance Sheet
1st- Assets- current, w/in operating cycle
2nd: liabilities- list current then long-term
3rd: Owners' Equity
Classified Balance Sheet
breaking items down into current & long-term results
liquid
form of cash, can be easily converted into cash
-these companies can easily repay you
illiquid
assets like undeveloped land that take time & effort to converted to cash w/in a year
current assets
cash & other assets that are expected to be converted to cash w/in a year
long-term assets
,property & equipment, needed in order to operate its business over an extended
period of time
Comparative Financial Statements
includes current & preceding years for users to identify any significant changes in
particular items
*increases in assets, liabilities
Limitations of the Balance Sheet
-often report cost not market value
-values reflect what things cost and what their worth now
*book value is not equal to market value
-some intangible assets are not reported at all
-good will/ relationships w/ ppl, employees, suppliers
-book value is measured by amount of owners' equity in the company
-less than company's market value
elements & purposes of a balance sheet
a balance sheet portrays the financial condition of a company at a point in time
Income statement is used to assess a company's profitability
-want to know reliability of company
-consult before giving loan
-job security
-info on company's future performance
Long-run Planning
*Managerial Accounting
-3-5 yrs
-strategic planning
-what we do & do not want to do
-what products we want to create
-the type of customers we want
, -Capital budgeting: what companys do we need, money, marketing, R&D, what
employees we need, what resources do we need to commit
Short-run planning
*managerial Accounting
-this week, this mo
-production &process prioritizing, what things we're going to do 1st & whats second
-operational budgeting(profit planning): a budget to function,
capital budgeting
systematic planning for long-term investments in operating assets
*planning for the acquisition of property, plant, and equipment
Controlling (using managerial accounting data)
measuring actual performance
-need to correct deviations on a regular basis
-comparing budget v actual
-assessing the important variances, can't possibly pay attention to every little thing
EX- baseball radar gun
-monitor pitcher's performance, pitch by pitch
- fix mechanics or replace the pitch
-tracking the data
3 primary functions of a company manager
planning, controling, evaluating
What does long run planning include
strategic planning & capital budgeting
managerial accounting differs between...
Manufacturing Business:
-General motors~maker of cars & trucks
-apple & boeing
