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29 Cards in this Set

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Operating
Cash Flow section including day-to-day expenses and revenues
Investing
Cash Flow section including buying/selling land, equipment, and buildings
Financing
Cash Flow section including bank loans, stock, and dividends
Price Earnings Ratio
Market Price of Company/NI or Price per Share/Earnings per Share
Estimates value of company
Total Assets Turnover Ratio
Sales Revenue/Average Total Assets
Sales per dollar of assets; company's effectiveness at controlling assets
Financial Leverage Ratio
Average Total Assets/Average Stockholders' Equity
1 = no risks; SE = A
2> x >1 = Takes some risk but still less liabilities than SE
2 or + = risky company; lots of liabilities
Earnings per Share
Net Income/Weighted Average of Common Shares Outstanding
Located on Income Statement
Net Profit Margin
Net Income/Net Sales (Operating Revenue)
Measures effectiveness of management at generating profit on every dollar of sales
Economic Entity Assumption
the company is its own entity
Going Concern (Continuity) Assumption
the company will continue in the future
Monetary Measure Assumption
unit of measure
Time Period Assumption
the life of businesses can be broken up into shorter time periods
Historical Cost Principles
something is recorded at what we paid for it (usually land)
Revenue Recognition
revenue must be earned before recording
Matching Principle
Expenses are recognized in the same time period as revenues
GAAP
Generally Accepted Accounting Principles
SEC
Securities Exchange Commission in charge
FASB
Financial Accounting Standards Board; sets and enforces GAAP under the SEC
AICPA
American Institute of Certified Public Accountants; members must follow code of ethics
PCAOB
Public Companies Accounting Oversight Board; regulates auditors of public companies
Relevance
Primary Characteristic; Information that people need
Reliability
Primary Characteristic; Correct and verifiable information
Comparability
Secondary Characteristic; Format the same to compare companies
Consistency
Year after year the same procedure
Operating Cycle
Time it takes to purchase goods, pay suppliers, deliver goods, and collect money
Accounting Cycle
Transactions to financial statements
Sole proprietorships
One person; taxed once, unlimited liability; most of these
Partnerships
2 or more people; taxed once, limited or unlimited liability
Corporations
can sell stock on the market; taxed twice; limited liability