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21 Cards in this Set
- Front
- Back
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expresses relationship among selected items of financial data; three types:
1. profitability ratio 2. liquidity ratio 3. solvency ratio |
ratio analysis
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this type of ratio analysis measures the income or operating success of a company for a given time period
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profitability ratio
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this type of ratio analysis measures the short term ability of a company to pay its maturing obligations and meet unexpected needs for cash
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liquidity ratio
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this type of ratio analysis measures the ability of the company to survive over a long period of time
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solvency ratio
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covering two years of the same company
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intracompany comparison
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covering 2 years of different companies
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intercompany comparisons
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what are the two measurements of liquidity?
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working capital and current ratio
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Who makes the accounting rules?
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FASB
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What are the accounting rules?
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GAAP
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Who enforces the accounting rules?
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SEC
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information makes a difference in decisions and must be timely
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relevance
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information must be free of bias and error; verifiable
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reliability
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ability to compare information of different companies because they use the same accounting principles
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comparability
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use of same accounting principles from year to year within the same company
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consistency
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on of the assumptions and principles of financial reporting that states only things that can be expressed in money are included in the accounting records
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monetary unit assumption
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on of the assumptions and principles of financial reporting that states every economic entity can be separately identified and accounted for
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economic entity assumption
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on of the assumptions and principles of financial reporting that states the life of a business can be divided into artificial time periods
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time period assumption
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on of the assumptions and principles of financial reporting that states the company will remain in operation for the foreseeable future
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going concern assumption
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on of the assumptions and principles of financial reporting that dictates that assets must be recorded at cost
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cost principle
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on of the assumptions and principles of financial reporting that must disclose events/ circumstances that would make a difference to financial statement users
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full discloser principle
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a constraint in accounting that states that when preparing a financial statement, a company should choose an accounting method that will be least likely to overstate assets or income
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conservatism
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