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17 Cards in this Set
- Front
- Back
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liquidity
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the amount of time that is expected to elapse before an asset is realized or converted into cash
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solvency
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the ability of a company to pay its debts as they mature
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financial flexibility
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measures the ability of an enterprise to take effective actions to alter the amounts and timing of cash flows so it can respond to unexpected needs and opportunities
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limitations of a balance sheet
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values stated are historical not fair value. estimates have to be used in many instances, such as determination of collectibility of receivables or finding approx life of long term assets. man items are not recorded, i.e. value of a companies human resources.
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current asset
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cash and other assets a company expects to convert into cash, sell or consume either in one year or in the operating cycle
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short term investments
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held to maturity, trading, available for sale
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held to maturity short term investment
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debt securities that a company has the positive intent and ability to hold to maturity
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trading short term investment
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debt and equity securities bought and held primarily for sale in the near term to generate income on short-term price differences
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available for sale short term investment
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not trading or held to maturity investments
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long term investments
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securities, bonds, common stock, long-term notes, land held for speculation, investments in sinking funds, pensions or plant expansion funds. investments in non consolidated subsidiaries
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operating activities
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cash effects of transactions that enter into the determination of net income. ie paying wages, selling stock, purchasing office equipment
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investing activities
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making and collecting loans and acquiring and disposing of investments and property, plant, equipment. ie equipment used in business, sale of long term investments
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financing activities
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liability and OE items. obtaining resources from owners and providing them with a ROI. borrowing money from creditors and repaying the amount. ie issuance or redemption of bonds
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contingency
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material events with an uncertain future
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current ratio
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current assets / current liabilities
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allowance method
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estimating uncollectible accounts at end of each period
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net realizable value
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net amount the company expects to receive in cash
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