Financial Accounting Tools for Business Decision Making Chapter 2 Exam Bank Solution Manual (Rated A+)

Financial Accounting Tools for Business Decision Making Chapter 2 Exam Bank Solution Manual (Rated A+) Classified Balance Sheet - Answers A balance sheet that groups together similar assets and similar liabilities, using a number of standard classifications and sections. current assets - Answers cash and other assets expected to be exchanged for cash or consumed within a year Operating Cycle - Answers The time span during which cash is paid for goods and services, which are then sold to customers from whom the business collects cash. Long-term investments - Answers Generally, (1) investments in stocks and bonds of other corporations that companies hold for more than one year; (2) long-term assets, such as land and buildings, not currently being used in the company's operations; and (3) long-term notes receivable. Property, Plant, and Equipment - Answers assets with relatively long useful lives that are currently used in operating the business intangible assets - Answers assets that do not have physical substance Current Liabilities - Answers Obligations that a company expects to pay within the next year or operating cycle, whichever is longer. Long-term liabilities (long-term debt) - Answers obligations that a company expects to pay after one year ratio analysis - Answers relationship among selected items of financial statement data ratio - Answers the mathematical relationship between two numbers or amounts intracompany comparisons - Answers covering two years for the same company industry-average comparisons - Answers based on average ratios for particular industries intercompany comparisons - Answers based on comparisons with a competitor in the same industry Profitability Ratios - Answers ratios that measure the rate of return a firm is earning on various measures of investment (success of a company over a given time) earnings per share - Answers net income or profit divided by the number of stock shares outstanding Liquidity - Answers the ease with which an asset can be converted into the economy's medium of exchange Working Capital - Answers current assets - current liabilities Liquidity Ratios - Answers Measures of the short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash. Current Ratio - Answers current assets divided by current liabilities Solvency - Answers The ability of a company to pay interest as it comes due and to repay the balance of debt due at its maturity. Solvency Ratios - Answers Measures of the ability of the company to survive over a long period of time. debt to assets ratio - Answers total liabilities/total assets..... a measure of solvency Free Cash Flow - Answers net cash provided by operating activities after adjusting for capital expenditures and cash dividends paid Generally Accepted Accounting Principles (GAAP) - Answers a set of accounting standards that is used in the preparation of financial statements Securities and Exchange Commission (SEC) - Answers monitors the stock market and enforces laws regulating the sale of stocks and bonds Financial Accounting Standards Board (FASB) - Answers The primary accounting standard-setting body in the United States. International Accounting Standards Board (IASB) - Answers An accounting standard-setting body that issues standards adopted by many countries outside of the United States. International Financial Reporting Standards (IFRS) - Answers Accounting standards, issued by the IASB, that have been adopted by many countries outside of the United States.