Accounting Sheets & Statements Flashcards

Accounting Sheets & Statements Flashcards
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Cost of Inventory Sold
These are the costs associated with purchasing inventory, freight shipping, and any expenses associated with repackaging the inventory items.
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Assets
This refers to the items a company owns that it can use to pay debts, such as cash, stocks, or even contracts.
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Amortization
The process wherein a company stretches out the liability associated with an intangible asset over time.
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Causes of High Equity
This occurs if a business has high assets or low liabilities.
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Causes of Low Equity
This can be caused by low assets or high liabilities.
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Equity
We use this term to refer to the amount left over after we subtract liabilities from assets.
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Depreciation
A process wherein a business spreads out the liability for a tangible asset over time.
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Interest Coverage Ratio
A ratio that asseses how capable a company is of making its interest payments.
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Debt-to-Equity Ratio
Using this ratio will allow a company to determine what percentage of its financing is drawn from shareholders or banks.
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Formula: Quick Ratio
Accounts Receivable + Cash / Current Liabilities
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Formula: Return on Equity Ratio
Net Income / Average Stockholder Equity
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Formula: Earnings per Share Ratio
Net Income / Weighted Average Shares of Outstanding Common Stock
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Formula: Days Sales in Inventory Ratio
(Inventory / Cost of Goods Sold) x 365
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Days Sales in Inventory Ratio
Business use this ratio to determine how long their present inventory will last.
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Inventory Turnover Ratio
This ratio tells businesses how efficiently they are at buying and then selling inventory items.
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Asset Turnover Ratio
A ratio that business can use to see how well they're generating sales with their assets.
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Debt Ratio
You can find this ratio by dividing a company's total liabilities by its total assets.
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Liquidity
This deals with a company's or individual's ability to change assets into cash.
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Current Ratio
This ratio indicates a company's capability to sell assets in order to pay its liabilities.
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Gross Profit Margin
A profitability ratio that indicates how much money a business will have left over after purchasing supplies and paying for additional expenses.
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54 cards in set

Flashcard Content Overview

Check out the flashcards in this set to review accounting ledgers and journals and how they are used. You can also go over accounting ratios, such as the current, debt, and asset turnover ratios. The generally accepted accounting principles will also be covered by these cards as well as financial obligations, liabilities, and assets. You can even go over low and high equity as well as net losses and net profits.

Front
Back
Gross Profit Margin
A profitability ratio that indicates how much money a business will have left over after purchasing supplies and paying for additional expenses.
Current Ratio
This ratio indicates a company's capability to sell assets in order to pay its liabilities.
Liquidity
This deals with a company's or individual's ability to change assets into cash.
Debt Ratio
You can find this ratio by dividing a company's total liabilities by its total assets.
Asset Turnover Ratio
A ratio that business can use to see how well they're generating sales with their assets.
Inventory Turnover Ratio
This ratio tells businesses how efficiently they are at buying and then selling inventory items.
Days Sales in Inventory Ratio
Business use this ratio to determine how long their present inventory will last.
Formula: Days Sales in Inventory Ratio
(Inventory / Cost of Goods Sold) x 365
Formula: Earnings per Share Ratio
Net Income / Weighted Average Shares of Outstanding Common Stock
Formula: Return on Equity Ratio
Net Income / Average Stockholder Equity
Formula: Quick Ratio
Accounts Receivable + Cash / Current Liabilities
Debt-to-Equity Ratio
Using this ratio will allow a company to determine what percentage of its financing is drawn from shareholders or banks.
Interest Coverage Ratio
A ratio that asseses how capable a company is of making its interest payments.
Depreciation
A process wherein a business spreads out the liability for a tangible asset over time.
Equity
We use this term to refer to the amount left over after we subtract liabilities from assets.
Causes of Low Equity
This can be caused by low assets or high liabilities.
Causes of High Equity
This occurs if a business has high assets or low liabilities.
Amortization
The process wherein a company stretches out the liability associated with an intangible asset over time.
Assets
This refers to the items a company owns that it can use to pay debts, such as cash, stocks, or even contracts.
Cost of Inventory Sold
These are the costs associated with purchasing inventory, freight shipping, and any expenses associated with repackaging the inventory items.
Formula: Cost of Goods Manufactured Sold
Cost of Goods Manufactured + Opening Inventory of Finished Goods - Ending Inventory of Finished Goods
Formula: Cost of Services Performed
Cost of Labor + Cost of Supplies Used to Provide the Service
Statement of Cash Flows
A financial report with three sections: one for operating activities, one for investing activities, and one for financing activities.
Balance Sheet
Lists the company's name on line 1 and lists company assets (including a 'total' line) on the left side of the sheet and liabilities (including a 'total' line) and owner's equity on the right.
Formula: Cash Increase/Decrease on a Statement of Cash Flows
Additional Owner's Equity (cash on hand from the previous quarter) +/- Cash Provided by Operating Activities (cash gained or lost during that quarter)
Note Receivable
This financial documentation is used to record a company's promise to pay a specific amount of money before a set, future date.
Income Statement
A financial statement that presents information about expenses and revenues and states the net profit for the quarter.
Maturity Date of a Note Receivable
The date that marks when a company must pay off the amount of the note as well as any interest that has accrued.
Non-Current Liabilities
These financial obligations represents debts that won't be due for at least a year.
Financial Obligations
This represents a company's responsibility to pay for something using either goods, services, or money.
Credit Line
Banks and other lenders can offer these, which offer businesses a set amount of money that they can draw on as they need it within a set time limit.
Notes Payable
Companies give this promissory note to lenders as a promise that they'll pay back the principal, typically along with interest.
Capital Lease
If you lease some kind of property using this method, the property will be recorded on the balance sheet as an asset and the lease will be seen as a loan and a liability.

GAAP

Generally Accepted Accounting Principles

The acronym stands for generally accepted accounting principles, which are the principles that offer counsel to accountants on how financial statements should be performed.
Formula: Statement of Retained Earnings
Beginning Retained Earnings + Net Income (or - Net Loss) - Dividends and/or Withdrawals from Owner
Net Profit
Businesses end up with this if total revenue is greater than total expenses.
Net Loss
This occurs when a business's expenses are greater than its revenue.
Retained Earnings
You use this term to refer to the net income a company has left after it pays out dividends to its shareholders.
Financing Activities
Listed in the statement of cash flows, these accounting activities deal with cash payments and/or receipts as they apply to long-term liabilities.
Investing Activities
Listed in the statement of cash flows, accounting activities of this type involve selling or buying long-term assets and loan activity (providing or receiving), which can impact cash outflow or inflow.
Operating Activities
Listed in the statement of cash flows, these accounting activities record a company's cash outflow, e.g., paying employees, and its cash inflow, e.g., ticket sales, made during normal operations.
Fraudulent Financial Reporting
Businesses that falsely report financial information to purposely mislead creditors are engaging in this kind of reporting.
Reporting Error
These errors occur in accounting due to transposing mistakes, recording incorrect numbers by accident, or miscalculations.
Disagreement in Judgement
This problem with financial reporting occurs if two people involved in the reporting believe different things. They may have differing ideas on how to report payments or company purchases.
Accrual Accounting
You use this kind of accounting when you record revenue as a business earns it and expenses as they occur whether or not the cash is actually moved.
Revenue Recognition Principle
A principle used in accrual accounting that says you should report revenue as soon as its earned even if cash hasn't flowed yet.
Matching Principle
An accounting principle that states you should record the costs of operating a business in the same period that you record the revenue associated with those costs.
Adjusting Entry
Accountants make these journal entries when an accounting cycle ends. They can include accrued expenses, prepaid expenses, and both accrued and unearned revenue.
Trial Balance
This statement lists all of a business's accounts, along with their balances.
General Ledger
A statement that lists a company's transactions, itemizing them based on their accounts.
Purchases Journal
You can use this kind of journal to record business purchases that are made on account or on credit. It does not record cash transactions.
Subsidiary Ledger
A ledger that shows accounts grouped together by type. This ledger recorders individual account balances under a controlling account, such as accounts receivable.
Formula: Inventory Turnover Ratio
Cost of Goods Sold / Inventory
Formula: Asset Turnover Ratio
Sales / Total Assets

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