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