Chapter 19 --> Problem #7. Financial statements and analysis (Connect, Perform)

Question

Chapter 19 --> Problem #7. Financial statements and analysis (Connect, Perform)

PART ONE: Think about how organizations use financial tools for control and complete the following sentences with the correct terms.

A) Bank of America’s __________ provides information such as its interest expense, or the interest the bank paid depositors, and its interest income, or the interest it earned by investing deposits over a period of time. This document also states the bank’s other revenues and expenses for the time period.

Answer Choices

Option 1: Balance Sheet

Option 2: Activity Ratio

Option 3: Income Statement

Option 4: Leverage Ratio

B) A company’s debt ratio is one type of _________, providing information about how well supported its debt is by assets and whether it is a good or poor credit risk.

Answer Choices

Option 1: Activity Ratio

Option 2: Liquidity Ratio

Option 3: Profitability Ratio

Option 4: Leverage Ratio

PART TWO: Complete the sentences below with the correct terms related to budgets.

A) Managers use ___________ when they set expense targets, compare actual expenditures to the targets, and make adjustments if needed.

Answer choices:

Option 1: Hieracharchial Control

Option 2: Decentralized Control

Option 3: Budgetary Control

Option 4: Balanced Scorecard

B) Managers analyze ___________ to determine whether the organization is earning income as expected or exceeding or falling short of expectations. This budget does not show cash outlays.

Answer Choices:

Option 1: A Capital Budget

Option 2: An Expense Budget

Option 3: A Revenue Budget

Option 4: A Cash Budget

PART THREE: If senior managers set budget targets for all the organization’s units so the unit managers will have to work within those limits, which of the following approaches are they using? select one

A) Bottom-up budgeting

B) Top-down budgeting

C) Zero-based budgeting

PART FOUR: You are the owner of Rock Gardens, a small business specializing in oriental gardens. Last week, you found out that the owner of Heavenly Bamboo is looking for a buyer for her business.

Which of the following items would be included in Heavenly Bamboo’s liabilities? Check all that apply.

A) The company truck

B) Loan on the company truck

C) Money due to garden tool suppliers

D) Bamboo plants in existing inventory

In order for the deal to go through, you need to compare the owner’s current assets and ___________ by looking at her ___________. But because you also want to see the company’s _____________ , or profit and loss, for a one-year period, you also ask to see her ___________ .

First Blank Annswer Choices: (A) Inventory Turnover, (B) Profit Margin, (C) Profitability, or (D) Liabilities

Second Blank Answer Choices: (A) Owner's Equity, (B) Income Statement, (C) Activity Ratios, or (D) Balance Sheet

Third Blank Answer Choices: (A) Leverage, (B) Capital Budget, (C) Inventory Turnover, or (D) Net Income

Fourth Blank Answer Choices: (A) Income Statement, (B) Liquidity Ratios, (C) Balance Sheet, or (D) Owner's Equity

Explanation / Answer

?Part One:

Part two:

Part Four:

B) Loan on the company truck

C) Money due to garden tool suppliers

Second Blank Answer Choices: (A) Owner's Equity, (B) Income Statement, (C) Activity Ratios, or (D) Balance Sheet

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