AGEC 340 Final Exam
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1. Profit definition: the amount remaining from a sale after the cost of the product,
operating expenses, and interest have been paid.
2. a record system should be what 4 things?: 1. simple and easy to understand
2. reliable, accurate, consistent and timely
3. Based on the uniqueness of the particular business
4. cost effective to implement and maintain
3. good financial records are used for what 5 things?: 1. Determining the suc-
cess of the business in terms of profitability during specifictime periods
2. Determining the general financial condition of a firm at a given moment in time
3. Predicting the future ability of the firm to meet demands of creditors, change,and
expansion
4. Analyzing trends in performance
5. Choosing among alternatives for future use of resources
4. balance sheet definition of assests?: what the business owns
5. assests =: liabilities + owners equity
6. current assets definition?: cash/checking or assets that will be converted to
cash duringa normal operating cycle of the business
7. current assets examples?: Cash
Accounts receivable Inventory
Prepaid expenses
8. Fixed assets definition?: Items that the business owns that have a relatively
long life
9. Fixed assets examples?: Equipment (less accumulated depreciation)
Land
Buildings, etc
10. Current liabilities definition: Outsiders' claims against the business that are
due within a normal operating cycle (usually 1 year)
11. Current liabilities examples: Accounts payable
Notes payable
Accrued expenses
Advances
12. Long-term liabilities:: Outsiders' claims against the business that are due
beyond one year
13. Long-term liabilities examples": Mortgages
Long-term loans
14. Owners equity definition: what the owners have invested in the business
(i.e.,the claims of the owners against the business' assets
15. owners equity examples?: Common stock - in an incorporated business, the
original investment is listedas common stock (original value)• Retained earnings
, AGEC 340 Final Exam
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16. Income statement definition:: summarizes revenue and expenses during a
specific period of time
- Reports profit or loss
-Net Sales- Cost of goods sold= Gross margin
- Operating Expenses= Net Operating Income
17. cash-basis approach:: Revenue and expenses occur when cash is received or
paid
18. cash-basis approach can understate true net income if:: Revenue earned
but not converted to cash (accounts receivable,inventory)
- Expenses incurred during prior or later years, but cash paid this year(decrease
in accounts payable and accrued expenses, increase in prepaidexpenses and
purchased supplies)
19. cash-basis approach can overstate true net income if:: Revenue generated
in prior years is converted to cash this year
- Expenses incurred this year, but cash paid during prior or later years
20. Accrual-basis approach: Revenues and expenses exist whenever they are
earned or incurred regardless of when the cash transaction occurs
21. is cash basis or accrual basis more accurate?: accrual
22. sales definition:: dollar value of all products and services that have been sold
during the specified period (cash or credit)
23. Gross sales- Returns- Discounts and allowances = what?: Net sales
24. cost of goods sold defintion?: total cost of goods actually sold during the
specified period
25. Beginning inventory- Ending inventory= Net inventory change
+ Purchases+ Freight = what?: Cost of goods sold
26. Gross Margin (Gross Profit) definition?: the difference between net sales and
total cost of goods sold; the money available to cover operating expenses, interest
expense and generate a profit
27. net sales - cost of goods sold =: gross margin
28. Operating expenses definition?
Includes:: costs associated with the sales transacted during the specific time period
- Marketing expenses• Administrative expenses• General expenses
29. Net operating income/margin:: Gross margin (or gross profit) minus total
operating expenses
30. Net income before taxes: Add non-operating revenue (i.e., interest or dividends
from investments)• Subtract non-operating expenses (i.e., interest paid on debts)
31. Net income after taxes: Subtract federal business profits tax
32. statement of owners equity?: Details the changes affecting owner's equity
accounts
Study online at https://quizlet.com/_h7ctzn
1. Profit definition: the amount remaining from a sale after the cost of the product,
operating expenses, and interest have been paid.
2. a record system should be what 4 things?: 1. simple and easy to understand
2. reliable, accurate, consistent and timely
3. Based on the uniqueness of the particular business
4. cost effective to implement and maintain
3. good financial records are used for what 5 things?: 1. Determining the suc-
cess of the business in terms of profitability during specifictime periods
2. Determining the general financial condition of a firm at a given moment in time
3. Predicting the future ability of the firm to meet demands of creditors, change,and
expansion
4. Analyzing trends in performance
5. Choosing among alternatives for future use of resources
4. balance sheet definition of assests?: what the business owns
5. assests =: liabilities + owners equity
6. current assets definition?: cash/checking or assets that will be converted to
cash duringa normal operating cycle of the business
7. current assets examples?: Cash
Accounts receivable Inventory
Prepaid expenses
8. Fixed assets definition?: Items that the business owns that have a relatively
long life
9. Fixed assets examples?: Equipment (less accumulated depreciation)
Land
Buildings, etc
10. Current liabilities definition: Outsiders' claims against the business that are
due within a normal operating cycle (usually 1 year)
11. Current liabilities examples: Accounts payable
Notes payable
Accrued expenses
Advances
12. Long-term liabilities:: Outsiders' claims against the business that are due
beyond one year
13. Long-term liabilities examples": Mortgages
Long-term loans
14. Owners equity definition: what the owners have invested in the business
(i.e.,the claims of the owners against the business' assets
15. owners equity examples?: Common stock - in an incorporated business, the
original investment is listedas common stock (original value)• Retained earnings
, AGEC 340 Final Exam
Study online at https://quizlet.com/_h7ctzn
16. Income statement definition:: summarizes revenue and expenses during a
specific period of time
- Reports profit or loss
-Net Sales- Cost of goods sold= Gross margin
- Operating Expenses= Net Operating Income
17. cash-basis approach:: Revenue and expenses occur when cash is received or
paid
18. cash-basis approach can understate true net income if:: Revenue earned
but not converted to cash (accounts receivable,inventory)
- Expenses incurred during prior or later years, but cash paid this year(decrease
in accounts payable and accrued expenses, increase in prepaidexpenses and
purchased supplies)
19. cash-basis approach can overstate true net income if:: Revenue generated
in prior years is converted to cash this year
- Expenses incurred this year, but cash paid during prior or later years
20. Accrual-basis approach: Revenues and expenses exist whenever they are
earned or incurred regardless of when the cash transaction occurs
21. is cash basis or accrual basis more accurate?: accrual
22. sales definition:: dollar value of all products and services that have been sold
during the specified period (cash or credit)
23. Gross sales- Returns- Discounts and allowances = what?: Net sales
24. cost of goods sold defintion?: total cost of goods actually sold during the
specified period
25. Beginning inventory- Ending inventory= Net inventory change
+ Purchases+ Freight = what?: Cost of goods sold
26. Gross Margin (Gross Profit) definition?: the difference between net sales and
total cost of goods sold; the money available to cover operating expenses, interest
expense and generate a profit
27. net sales - cost of goods sold =: gross margin
28. Operating expenses definition?
Includes:: costs associated with the sales transacted during the specific time period
- Marketing expenses• Administrative expenses• General expenses
29. Net operating income/margin:: Gross margin (or gross profit) minus total
operating expenses
30. Net income before taxes: Add non-operating revenue (i.e., interest or dividends
from investments)• Subtract non-operating expenses (i.e., interest paid on debts)
31. Net income after taxes: Subtract federal business profits tax
32. statement of owners equity?: Details the changes affecting owner's equity
accounts
