BUSN 101 Tamu - Final Exam Review
Balance Sheet - CORRECT ANSWER-A financial statement that summarizes a firm's
financial position at a specific point in time.
Assets - CORRECT ANSWER-Things of value owned by a firm.
Liabilities - CORRECT ANSWER-What a firm owes to its creditors; also called debts.
Owners' Equity - CORRECT ANSWER-The total amount of investment in the firm minus
any liabilities; also called net worth. Includes owners' investments (stock issued for a
public company), net income, minus dividends since the inception of the company.
Accounting Equation - CORRECT ANSWER-Assets = Liabilities + Owners' Equity
Income Statement - CORRECT ANSWER-A financial statement that summarizes a
firm's revenues and expenses and shows its total profit or loss over a period of time.
Accounting - CORRECT ANSWER-The process of collecting, recording, classifying,
summarizing, reporting, and analyzing financial activities.
Financial Accounting - CORRECT ANSWER-Accounting that focuses on preparing
external financial reports that are used by outsiders such as lenders, suppliers,
investors, and government agencies to assess the financial strength of a business.
Managerial Accounting - CORRECT ANSWER-Accounting that provides financial
information that mangers inside the organization can use to evaluate and make decision
about current and future operations.
Auditing - CORRECT ANSWER-The process of reviewing the records used to prepare
financial statements and issuing a formal auditor's opinion indicating whether the
statements have been prepared in accordance with accepted accounting rules
Revenues - CORRECT ANSWER-The dollar amount of a firm's sales plus any other
income it received from sources such as interest, dividends, and rents.
Expenses - CORRECT ANSWER-The costs of generating revenues.
Cost of Goods Sold (COGS) - CORRECT ANSWER-The total expense of buying or
producing a firm's goods or services.
Gross Profit - CORRECT ANSWER-The amount a company earns after paying to
produce or buy its products but before deducting operating expenses.
