Accounting For Decision Making: Final Quiz Questions

Summary

Accounting for decision making covers topics in financial accounting. Students get practice with multiple-choice questions on financial statements, internal controls and ratios.

Financial Statement Analysis

Financial statements show the health of a business. Students learn about liquidity, profitability and solvency ratios. These help to compare a company's performance over time and with other companies.

Internal Control Principles

Internal controls prevent errors and fraud. Students study principles such as segregation of duties and independent verification. They see examples of internal control procedures.

Stock Transactions and Dividends

Stock transactions include issuing, buying back and dividing stock. Students see how stock dividends and stock splits affect paid-in capital. They also learn about recording treasury stock purchases.

Accounts Receivable and Inventory

Accounts receivable and inventory are important assets. Students calculate ratios such as receivables turnover and average days in inventory. They also learn about the allowance method for bad debts.

Key terms

Liquidity ratios

Ratios that show how well a company can pay its short-term debts.

Profitability ratios

Ratios that show how well a company generates profit.

Solvency ratios

Ratios that show how well a company can meet its long-term debts.

Internal controls

Procedures and policies to protect a company's assets and ensure accurate financial reporting.

Treasury stock

A company's own stock that it has bought back from shareholders.

Allowance method

A method of accounting for bad debts that estimates uncollectible accounts.

Questions this document helps with

• What are the main types of financial ratios?
• How do internal controls prevent fraud?
• What is the effect of a stock dividend on paid-in capital?

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