Term
|
Definition
| balance sheet accounts balances carry forward from year to year |
|
|
Term
|
Definition
| income statement accounts, withdrawals account balances are moved each year (added or subtracted from Owner's Equity) |
|
|
Term
| dual effect of transactions |
|
Definition
| when one account changes, another account (or accounts) must change so that the equation remains the same |
|
|
Term
|
Definition
|
|
Term
| gross profit percentage = |
|
Definition
|
|
Term
| goals of "closing entries" |
|
Definition
"zero out" temporary accounts (revenue, expense, and withdrawal) so they can be used to count next periods' r, e, w
update owner's capital account |
|
|
Term
|
Definition
current
long-term
property and equipment
intangible |
|
|
Term
|
Definition
| resources the company expects to use up or turn into cash during the next year |
|
|
Term
|
Definition
| marketable securities the company intends to hold for more than one year |
|
|
Term
|
Definition
| physical assets the company uses in its operations for more than one year |
|
|
Term
|
Definition
| long-term assets that do not have a physical substance |
|
|
Term
|
Definition
|
|
Term
|
Definition
| debts or obligations the company expects to pay off or satisfy within the next year |
|
|
Term
|
Definition
| debts or obligations the company does NOT expect to pay off or satisfy within the next year |
|
|
Term
|
Definition
| the owner's current investment in (or claim to) the assets of the company |
|
|
Term
|
Definition
current assets / current liabilities
evaluates liquidity |
|
|
Term
|
Definition
quick assets / current liabilities
evaluates liquidity |
|
|
Term
|
Definition
total liabilities / total assets
evaluates financial flexibility |
|
|
Term
|
Definition
(net income + interest expense) / average total assets
evaluates profitability |
|
|
Term
| return on owner's equity = |
|
Definition
net income / average owner's equity
evaluates profitability |
|
|
Term
|
Definition
COGS / average inventory
evaluates operating capability |
|
|
Term
| # days in selling period = |
|
Definition
# days in business year / inventory turnover
evaluates operating capability |
|
|
Term
| accounts receivable turnover = |
|
Definition
net credit sales/ average accounts receivable
evaluates operating capability |
|
|
Term
| # days in collection period = |
|
Definition
# days in business year / accounts receivable turnover
evaluates operating capability |
|
|
Term
|
Definition
current assets - current liabilities
evaluates liquidity |
|
|
Term
why cash flow statement is important
(1) changes in cash balance from |
|
Definition
1) shows changes in company's cash balance during the accounting period from:
operating activities
investing activities
financing activities |
|
|
Term
why cash flow statement is important
(2) provides information about |
|
Definition
| a company's ability to remain solvent |
|
|
Term
why cash flow statement is important
(3) provides information to |
|
Definition
| help assess a company's need for additional financing or its ability to make additional investments |
|
|
Term
| Cash flows from OPERATING activities can be broken up into: |
|
Definition
cash inflows
cash outflows |
|
|
Term
|
Definition
- collections from customers
- collections of interest
- other operating receipts
- cash inflows from operating activities |
|
|
Term
|
Definition
- payments to suppliers
- payments to employees
- other operating payments
- cash outflows for operating activities |
|
|
Term
|
Definition
- payments for property and equipment
- payments for investments in stocks and bonds
- receipts from sale of P&E
- receipts from sale of investments in stocks and bonds |
|
|
Term
|
Definition
- receipts from issuance of notes and bonds (IOUs)
- receipts from sale of company's own stock ("owner investment")
- payments of notes and bonds
- payments to reacquire company's own stock
- payments of dividends (owner withdrawl) |
|
|
Term
| Operating cash flow margin = |
|
Definition
| net cash flow from operating activities / net sales |
|
|
Term
| net cash flow from cash return on total assets = |
|
Definition
| (Operating activities + interest paid) / net sales |
|
|
Term
| cash return on owner's equity = |
|
Definition
| net cash flow from operating activities / average owner's equity |
|
|
Term
| operating cash flow margin = |
|
Definition
| net cash flow from operating activities / net sales |
|
|
