Chapter 4 test review

(a)   offers an ownership interest to investors.

• Equities
• Debt financing
• Retained earnings
• Ratio analysis

The steps completed to ensure the accuracy of accounting records are known as (a)  

• Accounting cycle
• Ratio solving
• Financial leverage
• Information system

A set of processes, people, and equipment for converting data into information is called (a)   .

• Information system
• Controller
• Benchmark
• Due care

What are profits earned by a company that are not paid to shareholders as dividends?

• Retained earnings

• Solvency

• Equity financing

• Financial leverage

What is responsible for carrying out the strategy and policy of the board of directors?

• Chief executive officer

• Controller

• Accountant

• Financial leverage

Match the following financial reports with their descriptions.

• Comprehensive report on a company's activities throughout the preceding year.

• Annual Report

• Provides information about the cash inflows and outflows during a period.

• Statement of Cash Flows

• Shows the company’s revenues and expenses over a specific period.

• Balance Sheet

• Contains the company’s total assets, liabilities, and owner’s equity and how each category is divided.

• Income Statement

What is the accounting equation?

• Assets = Liabilities + Owner’s Equity

• Revenue = Expenses + Profit

• Cash = Assets - Liabilities

• Income = Revenue - Expenses

How are finance and accounting similar?

• Both involve managing a company's marketing strategies.

• Both focus on the production of goods.

• Both deal with the management of a company's financial resources.

• Both are primarily concerned with human resources.

How are finance and accounting different?

• Finance focuses on past transactions, while accounting focuses on future planning.

• Accounting focuses on past transactions, while finance focuses on future planning.

• Finance and accounting are identical in their functions.

• Accounting deals with marketing strategies, while finance deals with production.

How is a benchmark company used to analyze a business' performance?

• By comparing its marketing strategies.

• By comparing its financial performance.

• By comparing its product designs.

• By comparing its employee satisfaction rates.