Intro2Business Ch.14

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  1. GAAP
    • Generally Accepted Accounting Principles
    • (you prepare financial statements with generally accepted accounting principles)
  2. The Accounting Equation
    • liabilities + owners' equity = assets
    • -liabilities: firm's debts and obligations
    • -owners' equity: diff. btwn firm's assets & its liability
    • -assets: things of value that a firm owns
  3. INCOME Statement
    • revenue
    • cost of goods sold
    • gross margin (gross income)
    • operating expenses:
    • (-selling -general & administrative -R&D, Engineering -Interest)
    • Depreciation
    • Net Income (Profit or loss)
  4. the doc that handles the business operations summary
    Income Statement
  5. the doc that handles summary of assets, liabilities, and (minimum annual) equity
    Balance Sheet
  6. A "snapshot" of an organization's financial position at a given moment (assets, liabilities, net worth)
    The Balance Sheet
  7. Cash, Accounts receivable, Inventory
    Current Assets
  8. Property, Equipment
    Long Term Assets
  9. Assets can be current term and long term
    Assets can be current term and long term
  10. Liabilities can be short term and long term
    Liabilities can be short term and long term
  11. Owners' Equity is...
    Retained earnings & Net worth
  12. What doc leads to the Income Statement and the Balance Sheet?
    General Ledger
  13. The 5 ratio categories are:
    • 1. Profitability Ratios-margins, & returns on assets and equity
    • 2. Asset Utilization Ratios- quickly we'r'e paid, we sell, and hwo much income from equity
    • 3. Liquidity Ratios-current and quick ratios (the quick is the same as current, just minus inventory)
    • 4. Debt Ratios-(debt/total assets) & (EBIT/interest)
    • 5. Investor Ratios-earnings & dividend per share
Card Set
Intro2Business Ch.14
These attempt to cover the details that fall under the general topics listed in the study guide for this chapter.
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