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is an entity created by law that is separate from its owners. |
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Term
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unincorporated association of two or more persons to pursue a business for profit as co-owners (no legal & unlimited liability). |
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businesses owned by one person that is not organized as a corporation (not separate legal for debt). |
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Common Stockholders usually have the general rights to |
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Definition
Vote at stockholders meetings, sell or otherwise dispose of their stock,Purchase their proportional share of any common stock later issued by the corporation,Receive the same dividend, if any, on each common share of the corporation, Share in any assets remaining after creditors and preferred stockholders are paid when, and if, the corporation is liquidated |
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is the number of shares that a corporations charter allows it to sell |
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Definition
a corporation can sell stock directly or indirectly. |
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Direct method of issuing (selling) stock |
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Definition
it advertises its stock issuance to potential buyers |
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Indirect method of issuing (selling) stock |
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Definition
a corporation pays a brokerage house to issue its stock |
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Definition
refers to issued stock held by stockholders |
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Advantages of a Corporation |
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Definition
Separate legal entity,Limited liability of stockholders,Transferrable ownership rights, Continuous life,Lack of mutual agency, Ease of capital accumulation |
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Disadvantages of a Corporation |
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Definition
Government regulations, Double Taxation |
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Term
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Definition
are corrections of material errors in prior period financial statements and are reported in Retained Earnings. |
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Term
Errors include in prior period adjustments |
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Definition
arithmetic mistakes, unacceptable accounting, and missed facts |
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Term
What do prior period adjustments do to financial statements? |
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Definition
Result in changing the beginning balance of Retained Earnings for events occurring prior to the earliest period reported in the current set of financial statements. |
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Term
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Definition
generally consists of a companys cumulative net income any net losses and dividends declared since its inception. |
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Term
The main purpose of the statement of cash flows |
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Definition
is to report cash receipts (inflows) and cash payments (outflows) during a period. Identifying the cash flows related to operating, investing, and financing activities. Detailed disclosure of individual cash flows that makes this statement useful to users. |
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Direct method of Cash Flows |
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Definition
separately lists each major item of operating cash receipts and each major item of operating cash payments. |
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Indirect Method of Cash Flows |
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Definition
reports net income and then adjusts it for items necessary to obtain net cash provided or used by operating activities. |
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The purpose of a financial analysis for INTERNAL USERS |
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Definition
is to provide strategic information to improve company efficiency and effectiveness in providing products and services |
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The purpose of a financial analysis for EXTERNAL USERS |
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Definition
to make better and more informed decisions in pursing their own goals. |
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Main purpose of a financial analysis |
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Definition
evaluate a companys performance and financial condition. |
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Term
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Definition
ability to meet short term obligations and to efficiently generate revenues. |
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ability to generate future revenues and meet using long term obligations. |
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ability to provide financial rewards sufficient to attract and retain financing. |
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Definition
ability to generate positive market expectations |
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Comparison of a companys financial condition and performance across time. |
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Term
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Definition
Comparison of a companys financial condition and performance to a base amount. |
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Definition
Measurement of key relations between financial statement items. |
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Term
Difference between HA and VA |
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Definition
Horizontal Analysis is across time whereas vertical analysis is to evaluate items or a group of items in terms of a specific base amount. |
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Term
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Definition
a form of horizontal analysis that can reveal patterns in data across successive periods (analysis period amount / base period amount) X 100 * year is base amount |
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Term
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Definition
make loans to others, purchase long term productive assets, purchase in securites |
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Term
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Definition
from contributions by owners, issuing notes and bonds, issuing its own equity stock, issuing short and long term debt |
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Term
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Definition
repay cash loans, pay withdrawals by owners, pay dividends to shareholders, purchase treasury stock |
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