MHA 706-M2 P2B EXAM QUESTIONS AND ANSWERS
WITH COMPLETE SOLUTIONS VERIFIED LATEST UPDATE
Long-term Debt
Debt financing with maturities greater than one year. Smaller businesses often obtain long-term credit
from commercial banks. Larger businesses typically issue (sell) bonds.
Equity
Nonliability claims against a business's assets. Equity obligations are not fixed by contract. For investor-
owned businesses, equity is the amount of owner-supplied financing. For not-for-profit businesses,
equity is the amount of capital supplied 'by the community'. Equity = Total assets − Total liabilities.
Capital Structure
The business's mix of debt and equity financing. A key financing decision affecting a business's overall
risk and cost of financing.
Fund Accounting
Not-for-profit providers with restricted endowment contributions must create complex balance sheets
following fund accounting rules. Assets and liabilities are classified as: Unrestricted, Temporarily
restricted, Permanently restricted.
Statement of Cash Flows
Combines income statement and balance sheet data to create a cash flow-focused report. Answers:
Where did the business get its cash? What did it do with the cash? How did its cash position change?
, Current Liabilities
Obligations due within one year, including Notes payable, Accounts payable, and Accrued expenses.
Total Liabilities
The sum of current liabilities and long-term debt.
Net Assets
Equity section of the balance sheet. For not-for-profit businesses, it is called net assets.
Retained Earnings
Account affected by net income shown on the income statement. For not-for-profit businesses, all net
income flows to the equity section; for-profit businesses may pay out dividends.
Common Stock
Type of equity representing ownership shares in a corporation.
Total Equity
Sum of Common Stock and Retained Earnings.
Total Assets
Sum of current assets and long-term assets.
Total Liabilities and Equity
Sum of total liabilities and total equity.
Term Loan
Long-term credit obtained by smaller businesses from commercial banks.
WITH COMPLETE SOLUTIONS VERIFIED LATEST UPDATE
Long-term Debt
Debt financing with maturities greater than one year. Smaller businesses often obtain long-term credit
from commercial banks. Larger businesses typically issue (sell) bonds.
Equity
Nonliability claims against a business's assets. Equity obligations are not fixed by contract. For investor-
owned businesses, equity is the amount of owner-supplied financing. For not-for-profit businesses,
equity is the amount of capital supplied 'by the community'. Equity = Total assets − Total liabilities.
Capital Structure
The business's mix of debt and equity financing. A key financing decision affecting a business's overall
risk and cost of financing.
Fund Accounting
Not-for-profit providers with restricted endowment contributions must create complex balance sheets
following fund accounting rules. Assets and liabilities are classified as: Unrestricted, Temporarily
restricted, Permanently restricted.
Statement of Cash Flows
Combines income statement and balance sheet data to create a cash flow-focused report. Answers:
Where did the business get its cash? What did it do with the cash? How did its cash position change?
, Current Liabilities
Obligations due within one year, including Notes payable, Accounts payable, and Accrued expenses.
Total Liabilities
The sum of current liabilities and long-term debt.
Net Assets
Equity section of the balance sheet. For not-for-profit businesses, it is called net assets.
Retained Earnings
Account affected by net income shown on the income statement. For not-for-profit businesses, all net
income flows to the equity section; for-profit businesses may pay out dividends.
Common Stock
Type of equity representing ownership shares in a corporation.
Total Equity
Sum of Common Stock and Retained Earnings.
Total Assets
Sum of current assets and long-term assets.
Total Liabilities and Equity
Sum of total liabilities and total equity.
Term Loan
Long-term credit obtained by smaller businesses from commercial banks.
