Exam (elaborations)
WGU C201 Chapter 15
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Exam of 3 pages for the course WGU C201 Chapter 15 at WGU C201 Chapter 15 (WGU C201 Chapter 15)
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WGU C201 Chapter 15Accounting - -process of measuring, interpreting, and communicating
financial information to enable people inside and outside the firm to make
informed decisions
-open book management - -allowing employees to view financial
information helps them better understand how their work contributes to the
company's success, which, in turn, benefits them
-Which is the permanent financial statement? - -Balance sheet
-Balance sheet - -shows financial position on a particular date
-Income statement - -indicates flow of resources that reveals the
performance of the organization over a specific time period; also called P&L
-Statement of owner's equity - -shows components of the change in equity
from the end of one fiscal year to the next
-statement of cash flows - -provides investors and creditors with relevant
information about a firm's cash receipts and cash payment for it's
operations, investments, and financing during an accounting period;
preparation can prevent financial distress.
-Accrual accounting - -recognizes revenues and costs when they occur, not
when the actual cash changes hands
-cash flow - -lifeblood of every organization
-Ratio analysis - -commonly used tool for measuring a firm's liquidity,
profitability, and reliance on debt financing.
-Liquidity ratios - -firm's ability to meet short-term obligations
-Activity ratios - -measures the effectiveness of management's use of the
firm's resources.
-Profitability ratios - -measures organization's overall financial
performmance; evaluation ability to generate revenue.
-Leverage ratios - -measures extent to which a firm relies on debt financing.
-Budget - -planning and controlling tool that reflects a firm's expected sales
revenue, operating expenses, and cash receipts.
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