Term
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Definition
| The process of collecting, recording, classifying, summarizing, reporting, and analyzing financial activities. |
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Term
| GAAP (Generally Accepted Accounting Principles) |
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Definition
| The financial accounting standards followed by accountants in the United States when preparing financial statements. |
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| FASB (Financial Accounting Standards Board) |
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Definition
| The private organization that is responsible for establishing financial accounting standards in the United States. |
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Term
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Definition
| A financial statement that summarizes a firm's financial position at a specific point in time. |
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Term
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Definition
| Things of value owned by a firm. |
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Term
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Definition
| Assets that can or will be converted to cash within the next 12 months. |
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Term
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Definition
| Long-term assets used by a firm for more than a year such as land, buildings, and machinery. |
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Term
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Definition
| Long-term assets with no physical existence, such as patents, copyrights, trademarks, and goodwill. |
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Term
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Definition
| What a firm owes to its creditors; also called debts. |
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Term
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Definition
| Short-term claims that are due within a year of the date of the balance sheet. |
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Term
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Definition
| Claims that come due more than one year after the date of the balance sheet. |
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Term
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Definition
| The total amount of investment in the firm minus any liabilities; also called net worth. |
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Term
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Definition
| The amounts left over from profitable operations since the firms beginning; equal to total profits minus all dividends paid to stockholders. |
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Term
SHORT ANSWER
Outline of Balance Sheet |
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Definition
ASSETS
-Current Assets
--Total Current Assets
-Fixed Assets
--Total Fixed Assets
-Intangible Assets
--Total Intangible Assets
TOTAL ASSETS
LIABILITIES AND OWNERS' EQUITY
-Current Liabilities
--Total Current Liabilities
-Long-Term Liabilities
--Total Long-Term Liabilities
--TOTAL LIABILITIES
-Owners' Equity
--Total Owners' Equity
TOTAL LIABILITIES AND OWNERS' EQUITY |
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Term
SHORT ANSWER
Outline of Balance Sheet |
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Definition
ASSETS
-Current Assets
--Total Current Assets
-Fixed Assets
--Total Fixed Assets
-Intangible Assets
--Total Intangible Assets
TOTAL ASSETS
LIABILITIES AND OWNERS' EQUITY
-Current Liabilities
--Total Current Liabilities
-Long-Term Liabilities
--Total Long-Term Liabilities
--TOTAL LIABILITIES
-Owners' Equity
--Total Owners' Equity
TOTAL LIABILITIES AND OWNERS' EQUITY |
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Term
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Definition
| A financial statement the summarizes a firm's revenues and expenses and shows its total profit or loss over a period of time. |
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Term
SHORT ANSWER
Income Statement |
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Definition
REVENUES
-Gross Sales
-Less: Sales Discounts
--Net Sales
COST OF GOODS SOLD
-Less: Cost of Goods Sold
GROSS PROFIT
-General and Administrative Expenses
NET PROFIT BEFORE TAXES
NET PROFIT |
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Term
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Definition
| The amount left after deducting sales discounts and returns and allowances from gross sales. |
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Term
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Definition
| The amount obtained by subtracting all of the firm's expenses from its revenues, when the revenues are more than the expenses. |
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Term
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Definition
| A financial statement that summarizes a firm's revenues and expenses and shows its total profit or loss over a period of time. |
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Term
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Definition
| A financial statement that provides a summary of the money flowing into and out of a firm during a certain period, typically one year. |
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Term
| Liquidity Ratios (Ability to Pay Bills) |
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Definition
| Rations that measure a firm's ability to pay its short-term debts as they come due. |
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Term
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Definition
| The ratio of total current assets to total current liabilities; used to measure a firm's liquidity. |
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Term
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Definition
| The ratio of total current assets excluding inventory to total current liabilities; used to measure a firm's liquidity. |
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Term
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Definition
| Ratios that measure how well a firm uses its assets. |
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Term
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Definition
| The ratio of cost of goods sold to average inventory moves through a firm and is turned into sales. |
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Term
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Definition
| Ratios that measure how well a firm is using its resources to generate profit and how efficiently it is being managed. |
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Term
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Definition
| The amount a company earns after paying to produces or buy its products but before deducting operating expenses. |
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Term
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Definition
| The ratio of net profit to net sales; also called return on sales. It measures the percentage of each sales dollar remaining after all expenses, including taxes, have been deducted. |
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Term
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Definition
| The ratio of net profit to total owners' equity; measures the return that owners receive on their investment in the firm. |
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Term
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Definition
| Ratios that measure the degree and effect of a firm's use of borrowed funds (debt) to finances its operations. |
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Term
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Definition
| The ratio of total liabilities to owners' equity; measures the relationship between the amount of debt financing (borrowing) and the amount of equity financing (owner's funds). |
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Term
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Definition
| Formal written forecasts of revenues and expenses that set spending limits based on operational forecasts; include cash budgets, capital budgets, and operating budgets. |
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Term
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Definition
| The calculation and interpretation of financial ratios using data taken from the firm's financial statements in order to assess its condition and performance. |
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Term
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Definition
| The ratio of total current assets excluding inventory of total current liabilities; used to measure a firm's liquidity. |
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