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19 Cards in this Set

  • Front
  • Back
Flow of Accounting Info
1. people make decisions
2. business transactions occur
3. Businesses prepare reports to show the results of their operations
Income Statement
difference between inflows and outflows. results in net income or net loss. revenue-expense
Statement of reatained earnings
earnings that are left in the business. Retained earnings + net income - dividends = retained earnings
Balance Sheet
Answers what the assets liabilities and stockholders equity are at a certain point in time
chronological record of all transactions listed by date
grouping of all the accounts; it shows their balances
data being copied to the ledger
Increase and Decrease in Assets
Debit increases and credit decreases
Increase and Decrease in Liabilities
Debit decreases and Credit increases
Increase and Decrease in Stockholders' Equity
Debit decreases and Credit increases
Income Statement Format
Revenues-Expenses=Net income
Income Statement Format (Multi)
(sales revenues-cost of goods sold=gross profit) - (selling and administrative expenses) = Operating income
Income statement (multi)
Earnings before taxes-income=net earnings
Acceptable current Ratio
1.5-1 Answers whether or not will get paid from selling a product to a customer
Acceptable Debt Ratio
Want as low as possible; beware of a ratio > .65-1; measures ability to pay total liabilities
Accrual Accounting
Recognizes the impact of a business even as it occurs (revs as earned and exp as incurred)
An adjustment of an asset or a liability for which the business paid or recieved cash in advance
Systematic allocation of the cost of a plant asset to expense over the asset's useful life
Recording of an expense or a revenue before paying or reveiving cash