Bsbwor501 Final Exam

Revenues measure the inflow of net assets resulting from selling products or services. Failure to adjust for depreciation results in the overstatement of assets and the understatement of net income. (FALSE). Which of the following transactions would not affect owners’equity? Purchasing supplies for cash. Increased earnings do not always generate an increase in cash flow. CFO includes: selling goods, not: buildings, dividends, long-term debt. Depreciation reduces net income but is not related to a cash expenditure during the period (ignoring income tax effects). Current liabilities Are obligations that a firm expects to pay or discharge during the normal operating cycle of the firm, usually one year as of the date of the Balance Sheet. Usually
Short term liquidity ratios measure the ability of a company to pay off short term debts due in the very near future. Working capital = total current A – total current L. Net Sales – gross profit = COGS. Balance sheet + income statement show total costs of merchandise that remains and total sold. Accounting: a process of identifying, analyzing, recording, summarizing, and reporting economic information to decision makers. Financial accounting: focuses on specific needs of decision makers external to the org (stockholders, suppliers, banks, govt agencies) used for evaluating past performance, assess future prospects, bus. Relations. 10k report: letter to shareholders, description of bus./strategy, management’s discussion and analysis: covers liquidty, cap structure, results from operations. Financial statements, financial statement footnotes, highlights, 5-yr financial data, independent auditors report. Regulation: SEC (delegates rule making power to FASB) FASB: established GAAP (standards of financial acctg). IASB: established IFRS, PCAOB: created by Sarbanes-oxley act: established auditing standards for public