Accounting Terminology
Listed Below Are Eight Technical Accounting Terms Introduced

question 124

Essay

Accounting terminology
Listed below are eight technical accounting terms introduced in this chapter: $$\begin{array} { | l | l | l | } \hline \text { Current ratio } & \text { Return on assets } & \text { Price/earnings ratio } \\\hline \text { Quick ratio } & \text { Market share } & \text { Earnings per share } \\\hline \text { Debt ratio } & \text { Working capital } & \\\hline\end{array}$$ Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the term described, or answer "None" if the statement does not correctly describe any of the terms.
(a) The percentage of total assets financed by creditors.
(b) A measure of the effectiveness with which management utilizes a company's resources, regardless of how those resources are financed.
(c) A company's percentage share of total dollar sales within its industry.
(d) Current assets less current liabilities.
(e) A measure reflecting investors expectations of future profitability.
(f) A measure of short-term solvency often used when a company has large inventories that cannot be quickly converted into cash.
(g) A ratio that helps individual shareholders relate the profit of a large corporation to their equity investment.

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Definitions:

Discretionary Fixed Costs

Discretionary fixed costs are fixed expenses that can be adjusted or eliminated without directly impacting the short-term productivity of the business, such as advertising or research and development costs.

High-Low Method

An accounting technique used to estimate the variable and fixed components of a company's costs, based on the highest and lowest levels of activity.

Generally Accepted Accounting Principles

A collection of commonly-followed accounting rules and standards for financial reporting.

Non-Manufacturing Costs

Expenses that are not directly related to the production of goods, including selling, general, and administrative expenses.