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40 Cards in this Set

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In general terms, what does the Balance sheet show?
The balance sheet shows what a company owns and what it owes.
Name some examples of long-term debt
long term notes, bonds, mortgages, and similar obligations.
What is depreciation?
The wear and tear of items since they were originally purchased.
When deciding whether or not to recognize revenue, what are the two questions you must answer?
1) Is the promised work done?
2) Before recognizing revenue, cash must have been collected.
How would you twist the accounting equation to get Stockholder's equity?
Assets - Liabilites =Stockholder's equity.
Average receivables
Beginning receivables balance + ending balance / 2
The company's resources can also be called -
Assets
Times interest earned = income / interest expense for the period and tells you what?
The number of times the company can make its interest payments - a higher number reflects a greater likelihood that the company can meet future interest obligations
What do you call a listing of an organization's assets and of its liabilities at a certain time?
Balance Sheet
What is a company's "Financial mix?"
The percentage of total financing (liabilities plus equity) in each individual category.
What are expenses?
The amount of assets consumed from the performance of business operations; the opposite of revenues.
The do you call the money made (or lost) on activities outside the normal business of a company?
Gains and Losses
Return on Assets
net income / total assets
Return on Assets is computed as net income / total assets and tells you what?
The number of pennies made on each dollar of assets.
Focus of financial accounting is on three primary financial statement. Name them
Balance Sheet, The income statement, statement of cash flows
If the company is public, what do you call the owner's equity?
stockholder's equity
In general terms, what does the statement of cash flows show?
It outlines where a company gets its cash and how it spends that cash.
Average Collection Period
Average receivables / average daily sales
Owners withdraw assets
Company suffers a loss
These actions will...
Decrease Owner's equity
What do you call the difference between revenues and expenses?/
Net Gain or Net Loss
What do you call the difference between assets and liabilities?
Equity
The practice of accounting in the US involves adherence to established accounting rules set by...
The FASB
What do you call amounts owed to a business by its credit customers that are usually collected in cash within 10 to 60 days?
Accounts receivable
Debt ratio = total liabilities / total assets and tells you what?
the percentage of total funds, both borrowed and invested that a company acquires through borrowing.
The _________ ratio is the single measure that summarizes the financial status of a company.
Return on Equity = net income / equity
Current Ratio
Current Assets / Current Liablities
Quick Ratio
Quick Assets / Current Liabilities
Net Working Capital Ratio
Net Working Capital / Total Assets
Return on Assets (ROA)
Net Income / Average Total Assets
Return on Equity (ROE)
Net Income / Average Stockholders' Equity
Return on Common Equity (ROCE)
Net Income / Average Common Stockholders' Equity
Profit Margin
Net Income / Sales
Earnings Per Share (EPS)
Net Income / # of Common Shares Outstanding
Assets Turnover Ratio
Sales / Average Total Sales
Accounts Receivable Turnover Ratio
Sales / Average Accounts Receivable
Inventory Turnover Ratio
Cost of Goods Sold / Average Inventories
Debt to Equity Ratio
Total Liabilities / Total Stockholders' Equity
Price Earnings (PE) Ratio
Market Price of Common Stock Per Share / Earnings Per Share
Dividend Yield
Annual Dividends Per Common Share / Market Price of Common Stock per Share
Dividend Payout Ratio
Cash Dividends / Net Income