Test Bank for FIN 320F Unit 4 Working Words Latest Update 100% Pass
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Course
FIN 320F Unit 4
Institution
FIN 320F Unit 4
Test Bank for FIN 320F Unit 4 Working Words Latest Update 100% Pass
Games and activities
Generally Accepted Accounting Principles (GAAP) - Answers A common set of rules and a standard format for public companies to use when they prepare their financial reports.
Accrual Method/Matching Principl...
Test Bank for FIN 320F Unit 4 Working Words Latest Update 100% Pass
Games and activities
Generally Accepted Accounting Principles (GAAP) - Answers A common set of rules and a standard
format for public companies to use when they prepare their financial reports.
Accrual Method/Matching Principle
Realization Principle
Cost Principle
The Accrual Method/Matching Principle - Answers Revenues should be matched with the expenses used
to produce them.
The Realization Principle - Answers The accountant recognizes revenues when a contractual obligation
occurs, such as a formal sales contract where a customer purchases a product from the company, or
debt is incurred.
The Cost Principle - Answers The accountant generally records an item at cost, and does not adjust its
value in the accounting statements.
The Balance Sheet/Statement of Financial Position - Answers The balance sheet reflects the accounting
value of the firm's productive assets and the claims against those assets.
The balance sheet/accounting identity - Answers Total assets = Total Liabilities + Stockholders' equity.
Assets - Answers The cash, inventory, property, plant and equipment, and other investments a company
has made that can be used to produce goods and services.
Accounting liquidity - Answers The ease and quickness with which assets can be converted to cash.
Current assets - Answers Cash or assets that could be converted into cash within one year—liquid assets.
cash, marketable securities, accounts receivables, inventories, and pre-paid expenses such as rent and
insurance.
Cash - Answers Purchasing power accepted by market participants in the form of money or its
equivalent.
Marketable securities - Answers Short-term, low-risk investments that can be easily sold and converted
to cash (such as money market investments, like government debt, that mature within a year).
, Accounts receivable - Answers Amounts owed to a firm by customers who have purchased goods or
services on credit.
Inventories - Answers A firm's raw materials as well as its work-in-progress and finished goods.
Long-term assets/Capital assets - Answers Net property, plant, and equipment, as well as property used
in business operations, start-up costs in connection with a new business, investments in long-term
securities, and property held for sale.
Depreciation expense - Answers Amount deducted, for accounting purposes, from an asset's value to
reflect wear and tear over a given period.
Accumulated depreciation - Answers The cumulative depreciation of an asset up to a given point in its
life equal to last period's accumulated depreciation plus the current period's depreciation expense.
Book value - Answers The acquisition cost of an asset less its accumulated depreciation.
Market value - Answers The price at which buyers and sellers would trade the asset
Goodwill - Answers The difference between the price paid for a company and the book value assigned to
its assets.
Intangible assets - Answers Non-physical assets, such as intellectual property, brand names, trademarks,
and goodwill.
Amortization/Impairment charge - Answers An accounting adjustment that periodically lowers the book
value of a loan or intangible asset. Like depreciation, amortization is not an actual cash expense.
Liabilities - Answers A firm's obligations to its creditors.
Current liabilities - Answers Liabilities that will be satisfied within one year. They include accounts
payable, notes payable, short-term debt, current maturities of long-term debt, salary or taxes owed, and
deferred or unearned revenue.
Short-term debt - Answers Debt with a maturity of less than one year.
Accounts payable - Answers The amounts owed to creditors for products or services purchased with
credit.
Net Working capital - Answers Net working capital = Current assets - Current liabilities
The difference between a firm's current assets and current liabilities that represents the capital available
in the short-term to run the business. It is a measure of a firm's liquidity: its ability to pay its short-term
liabilities.
Change in net working capital - Answers Investing or disinvesting in current (short-term) assets.
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