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13 Cards in this Set
- Front
- Back
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Acquisition of assets comes from:
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1) Debt-funds from creditors. 2)Equity-from owners. Debt is riskier because it is a legal obligation.
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Current vs non current liabilities
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1 year or less, more than 1 year
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Quick ratio
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Quick assets/Current Liabilities
(Quick assets- cash, marketable securities, and accounts receivable) |
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Current Liabilities
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Accounts payable OR Trade accounts payable-used to pay for basic operating expenses
Accrued Liabilities OR accrued expenses- obligations related to expesnes that haven’t been paid at the end of accounting period Notes Payable- Contractual obligations Deferred Revenues OR Unearned revenues- obligations where cash is received prior to the revenue being earned |
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Accounts payable turnover
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measures how quickly management pays accounts
Cost of goods sold/ average accounts payable Or, more intuitively Average Age of payables= 365 days/ turnover ratio |
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Payroll taxes=
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Gross pay – (S.S. tax, Medicare, fed. Income tax, state and local taxes, voluntary deductions)= net pay
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Interest=
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Principal x interest rate x time
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Deferred revenues are reported as ______
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liability
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Contengent liabilites
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potential liabilities that are created as a result of a past event.
Probable =80%, remote is less than 1% |
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working capital
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Current Assets- Current Liabilities
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Operating lease vs capital lease
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Operating lease-short term lease; no liability or asset recorded
Capital lease-Long term lease meets one of the 4 criteria below; results in recording an asset and a liability 1. lease term is 75% or more of the asset’s expected economic life 2. ownership of the asset is transferred to the lessee at the end of the lease. 3. Lease permits lessee to purchase the asset at a prifce that is lower than its fair market value. 4. The present value of the lease payments is 90% or more of the fair market value of the asset when the lease is signed |
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Deferred taxes
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exist bc of timing differences caused by reporting revenues and expenses according to gaap on a company’s income statement and according to the IR code on the tax return
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INSERT SLIDE ABOUT PV AND FV here
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here
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