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20 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Comparability |
For accounting information, the quality that allows a user to analyze two or more companies and look for similarities and differences. |
Analyze two or more companies for similarities |
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Conservatism |
The practice of using the least optimistic estimate when two estimates of amounts are about equally likely |
Optimistic estimates |
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Consistency |
For accounting information, the quality that allows a user to compare two or more accounting periods for a single company |
Two or more accounting periods |
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Current asset |
An asset that is expected to be realized in cash or sold or consumed during the operating cycle or within one year if the cycle is shorter than one year |
Consumed during the operating cycle or within one year |
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Current liability |
An obligation that will be satisfied within the next operating cycle or within one year if the cycle is shorter than one year |
If the cycle is shorter than one year |
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Current ratio |
Current assets divided by current liabilities |
Current assts divd by curr liab |
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Gross profit |
Sales less cost of goods sold |
Sales less cost of goods sold |
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Gross profit margin |
The gross profit divided by the net sales expressed as a percentage |
Grss prfit div net Sales exprs as % |
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Luquidity |
The ability to turn an asset into cash in the normal course of business operations |
Turn an asset into cash |
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Materiality |
The magnitude of an accounting information omission or misstatement that will affect the judgement of someone relying on the information |
Magnitude of an acct info omission or misstatement |
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Multiple-step income statement |
An income statement that shows classification of revenues and expenses as well as important subtotals |
Classification of revenues and expenses |
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Net income |
The bottom line of the income statement representing the net profits of the business after considering all revenues and expenses |
Representing the net profits of the business |
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Non-Operating items |
Any revenue or expense not related to the central, on-going activities of the business. E.g. interest expenses of a merchandising business, income tax expense |
Any revenue or expense NOT related to the central |
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Operating cycle |
The period of time between the purchase of inventory and the collection of any receivable from the sale of the inventory |
Period of time between the purchase of inventory |
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Operating expense |
The expenses incurred in operating the business on a day to day basis related to the central, on-going activities of that business |
Operating on a day to day basis |
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Operating income |
The income generated from the central, on-going activities of the business; calculated as a gross profit less the operating expenses |
Calculated as gross profit |
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Profit margin |
Net income divided by sales expressed as a percentage |
Net income div by sales exp % |
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Single-step income statement |
An income statement in which all expenses are added together and subtracted from all revenues |
Expenses are added together and subtracted |
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Solvency |
The ability of a company to pay its debt as they come due |
Pay debts as they come due |
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Working capital |
Current assets minus current liabilities |
Cur asst - cur liab |
