The flashcards below were created by user
nyc1970
on FreezingBlue Flashcards.
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accounting
summary and analysis of a firm's financial condition
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public accountants
accountants who provide accounting services for a variety of firms for a fee
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certified public accountants (CPAs)
accountants who meet specific educational requirements and pass a national examination
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bookkeeping
the recording of a firm's financial transaction
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financial accounting
accounting performed for reporting purposes
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managerial accounting
accounting performed to provide information to help managers of a firm make decisions
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auditing
an assessment of the records that were used to prepare a firm's financial statements
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internal auditors
specialize in evaluating various divisions of a business to ensure that they are operating efficiently
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income statement
indicates the revenue, costs, and earnings of a firm over a period of time
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balance sheet
reports the book value of all assets, liabilities, and owner's equity of a firm at a given point in time
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net sales
total sales adjusted for any discounts
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cost of goods sold
the cost of materials used to produce the goods that were sold
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gross profit
net sales minus the cost of goods sold
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operating expenses
composed of selling expenses and general and administrative expenses
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earnings before interest and taxes (EBIT)
gross profit minus operating expenses
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earnings before taxes
earnings before interest and taxes minus interest expenses
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net income (earnings after taxes)
earnings before taxes minus taxes
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asset
anything owned by a firm
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liability
anything owed by a firm
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basic accounting equation
assets = liabilities + owners equity
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current assets
assets that will be converted into cash within one year
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fixed assets
assets that will be used by a firm for more than one year
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depreciation
a reduction in the value of fixed assets to reflect deterioration in the assets over time
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accounts payable
money owed by a firm for the purchase of materials
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notes payable
short-term loans to a firm made by creditors such as banks
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owner's equity
includes tha par (or stated) value of all common stock issued, additional paid-in capital, and retained earnings
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ratio analysis
an evaluation of the relationships between financial statement variable
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liquidity
a firm's ability to meet short-term obligations
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debt-to-equity ratio
the measure of the amount of longterm financing provided by debt relative to equity
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times interest earned ratio
measures the ability of a firm to cover its interest payments
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net profit margin
a measure of a net income as a percentage of sales
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return on assets (ROA)
measure's a firm's net income as a percentage of the total amount of assets utilized by the firm
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return on equity (ROE)
measures the return to the common stockholders (net income) as a percentage of their investment in the firm; earnings as a proportion of the firm's equity
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