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34 Cards in this Set
- Front
- Back
Classified balance sheet |
Groups together similar A & L, using a number of standard classification and sections -Presents a snapshot at a point in time -Improve understandin by grouping similar A & L |
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Current Assets |
Assets that are to be used or converted into cash within 1 year or operation cycle (shorter one) *List C.A. in the order by liquidity first* |
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Current assets ex (5) |
1.Cash 2.investments 3.receivables 4.inventories 5.prepaid expenses |
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Current Liabilities |
Obligations to pay someone within the next year/operation cycle |
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Operating Cycle |
The average time required to go from cash to cash in producing rev- to purchase inventory |
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Long-Term Investments (3) |
1) investments in stock and bonds of other corporations that are held for more than 1 yr 2) Long term assets such as land and buildings that a company is not currently using in oper act 3) Long term notes receivable |
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PPE |
Assets with long useful lives that are currently used in operating a business |
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Depreciation |
Allocation of the cost of an asset to a # of years |
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Accumulated depreciation |
Shows total amt of depreciation that a company has expensed thus far in the assets life |
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Intangible assets |
-Assets that do not have physical substance -Includes goodwill, patents, copyrights, trademarks |
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Long term Liabilities |
Obligations that a company expects to pay AFTER 1 year |
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Retained earnings |
Income kept for use in the business |
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Stockholders equity |
common stock plus retained earnings |
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Ratio Analysis |
Expresses the relationship among selected items of financial statement data -A single ratio by itself is meaningless |
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Profitably ratios |
Measures the income of a company in a given period |
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Earnings per share (EPS) + formula |
Measures the net income earned on each share of common stock *(Net income-preffered dividend) /average # of common shares outstanding* PROFITABILITY |
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Current Ratio |
CR= Current assets / Current liabilities *higher ratio suggest favorable liquidity* LIQUIDITY |
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Debt to Assets Ratio |
Measures the % of total financing provided by creditors rather than stockholders *DTAR= Total liabilities / total assets* -*If 52%, every dollar of assets is followed by 52 cents of liability * SOLVENCY |
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Working Capital + formula |
-The diff between the amts of CA and CL *W.C.= Current Assets - Current liabilities* |
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Liquidity Ratio |
Measures short-term ability to pay obligations and to meet unexpected needs for cash |
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Solvency |
Ability to pay interest as it comes due and to repay the balance of a debt due at its maturity |
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Solvency Ratio |
Measure the ability of the company to survive over a long period of time |
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Free cash flow + formula |
A measurement to provide additional insight regarding a companies cash-generating ability *FCF= (cash provided by operations) - (Capital expenditures) - (Cash dividends) |
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Generally accepted accounting principles + 4 boards |
A set of rules and practices that the accounting profession recognizes as a general guide for financial reporting purposes 1) SEC 2) Financial acct standards board (FASB) 3) International acct standards board (IASB) 4)International financial reporting standards(Ifrs) |
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Predictive value |
Info that helps provide accurate expectations about the future |
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Confirmatory value |
Info confirms prior expectations |
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Materiality |
When the SIZE of an item makes it likely to influence the decision of an investor or creditor |
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Faithful representation |
Info accurately depicts what happened - Info must be COMPLETE, NEUTRAL, and FREE FROM ERRORS |
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Monetary Unit |
Only things that can be expressed in money are included in the accounting records |
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Economic Entity |
States that every economic entity can be separately identified and accounted for |
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Periodicity |
States that the life of a business can be divided into artificial time periods |
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Historical Cost |
Cost principle that dictates companies must record assets at their cost |
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Fair Value |
Indicates that assets and liab should be reported at fair value |
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Cost Constraint |
Weighs the cost that companies will incur to provide the info against the benefit that financial statement users will gain from having the info |