Strategic risk assessment is designed to identify, analyze, and manage possible threats
to the organization’s success concerning ____________________ forces such as
competitors, customers, suppliers, and PEST factors.
A probable loss from a lawsuit that can be reasonably estimated should notbe reported
on the balance sheet as a current liability.
____________________ is the quality of accounting information that allows a user to
analyze two or more companies and look for similarities and differences.
An income statement provides information at one specific point in time, while the other
basic financial statements provide information on activities that occur over a period of
time.
The ending cash balance is shown on the Balance Sheet and the Statement of Retained
Earnings.
According to the historical cost principle, assets are always carried at their current
market value.
During the closing process, revenues, expenses, and dividends must be closed to the
Income Summary account.
An independent auditor’s (CPA’s) report is a guarantee that the financial statements are
free from fraud or material error.
A company’s management expects to incur future expenses related to the repair or
replacement of defective products sold. Those expenses must be matched to revenues in
the period of the repair or replacement.
Bonds are generally issued in denominations of $1,000.
You are interning at a financial services firm and have been asked to evaluate the
performance of two major department stores. The following information (in millions)
is available for Wal-Mart and Nordstrom for the most recent fiscal periods available:
Wal-Mart
Net Sales $405,046 Beginning Accounts Receivable $4,144
Gross Profit 100,389 Ending Accounts Receivable 3,905
Operating Income 23,950
Net Income 14,848
Nordstrom
Net Sales $8,627 Beginning Accounts Receivable $1,942
Gross Profit 3,299 Ending Accounts Receivable 2,035
Operating Income 834
Net Income 441
Compute the (1) gross profit margin, (2) operating margin, (3) net profit margin, and (4)
accounts receivable turnover for the two companies and indicate which company’s
performed better.
Warranty expenses result when a company sells products then estimates the units and
cost per unit for repairs and replacements that may occur during the warranty period.
When a bank collects a note on behalf of a company, the bank is likely to issue a debit
memo.
A cost can be an asset or expense depending on whether or not the future economic
benefits have expired.
Cash flows from operating activities often relate to an increase or decrease in either a
current asset or a current liability.