Fnc1 Study Guide

Fnc1 Study Guide

Financial Statements
1. List the components that comprise a typical financial statement.
2. Describe how changes to a company’s revenue and expenses affect their Income Statement and Balance Sheet.
3. How do changes in the Income Statement and Balance Sheet data affect a Statement of Cash Flows?
4. Explain how you can evaluate the financial condition of a firm by reviewing the Balance Sheet.
5. How can you determine the contribution margin from an Income Statement?
6. How is a horizontal and vertical analysis calculated?
7. Describe how horizontal analysis and vertical analysis of a Balance Sheet are used to evaluate a firm’s performance over a period of time.
8. What two methods can be used to prepare a Statement of Cash Flows?
9. What three categories are shown on the Statement of Cash Flows? What accounts are shown under each category?
Ratios
1. What is the difference between liquidity ratios and solvency ratios and what is their relationship to a firm’s profitability?
2. What is the difference between profitability ratios and market prospect ratios?
3. Which ratios are liquidity, solvency, profitability, and market prospect? How are they calculated?
4. How does the interpretation of financial data differ depending upon the perspective of the person analyzing the data?
Cost Analysis
1. What is the difference between direct and indirect costs?
2. What is the difference between sunk costs, opportunity costs, and differential costs?
3. What is a cost variance analysis?
4. Describe the difference between activity-based costing and traditional allocation methods. When should you use activity based costing?
5. Define a job order costing system and a process costing system.
6. In what type of activity would you use job order costing? Process costing?
7. How is the contribution margin calculated?
8. What is Cost-Volume-Profit Analysis (CVP)?
9. How is the breakeven point in units calculated?
10. How is the breakeven point in sales dollars...

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