Fin 324 Final Exam Guide
1. Please explain the following accounting concepts and give an example of how they relate to accounting information: Materiality, Consistency, and Full Disclosure.
2. What would happen if all of the steps of the accounting cycle were not completed in a specific accounting period? What would be the impact on the company’s balance sheet and net income if a company did not set up a necessary receivable at the end of the accounting period?
3. What at the primary financial statements and how do the statements tie together?
4. What is the basic accounting equation? How is equilibrium maintained if overall liabilities decrease (what has to happen to assets or equity)?
5. What types of ratios would a credit analyst at a bank tend to focus on when deciding whether to give a company a loan (name a specific ratio)? What ratios would a financial manager focus on in order to manage a company (name at least two specific ratios)?
6. How can operating leverage be used to increase a company’s profitability?
7. Why is good working capital management important? What are some working capital strategies used in your organization (or an organization you’ve worked for in the past)?
8. How is a car loan an example of the time value of money? Under what circumstances should an individual take out a loan versus pay all cash?
9. What is the difference between stocks and bonds? Which represents more risk to the company? Why?
10. Does a company receive money when its stock is traded in the secondary market? How does the company affect the price of its stock? Why is a company concerned about its stock price in the secondary market?
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