Chapter 14 financial statements

the recording, measurement, and interpretation of financial information

an individual who has state certified to provide accounting services ranging form the preparation of financial records and the filling of tax returns to complex audits of corporate financial records

accountants employed be large corporations, government agencies and other organizations to prepare and analyze their financial statements

private accountants who, after rigorous examination, are certified by the national association of accountants and who have some managerial responsibility

the internal use of accounting statements by mangers in planning and directing the organizations activities

the movement of money through an organization over a daily, weekly, monthly, or yearly basis

an internal financial plan that forecasts expenses and income over a set period of time

summary of firms financial information, products, and growth plans for owners and potential investors

a firms economic resources or items of value that it owns, such as cash, inventory, land, equipment, buildings, and other tangible, and intangible things

debts that a firm news to others

all the money that has ever been contributed to the company that never has to be paid back

assets equal liabilities plus owners equity

a system of recording and classifying business transactions in separate accounts to maintain the balance of the accounting equations

the four step procedure of an accounting system, examining source documents, recording, transactions in an accounting journal, posting

a time ordered list of account transactions

a book or computer program with separate files for each account

a financial report that shows an organization's probability over a period of time- month, quarter, or year

the total amount of money received from the state of goods or services as well as from related business activities

the amount of money a firm spent to buy or produce the products it sold during the period to which the income statement applies

revenues minus the cost of goods sold required to generate the revenues

the costs incurred in the day-to-day operations of an organization

the total profit after all expenses, including taxes, have been deducted from revenue, also called net earnings

the process of spreading the costs of long-lived assets such as buildings and equipment over the total number of accounts periods in which they are expected to be used

a snapshot of an organizations financial position at a given moment

assets that are used or converted into cash within the course of a calendar year

money owed a company by its clients or customers who have promised to pay for the products at a later date

a firms financial obligations to short term creditors, which must be repaid within one year

the amount a company owes to suppliers for goods and services purchased with credit

an account representing all unpaid financial obligations incurred by the organization

explains how the company's cash changed from the beginning of the accounting period to the end

calculations that measure an organization's financial health

ratios that measure the amount of operating income or net income an organization is able to generate relative to its assets, owner's equity, and sales

net income divided by sales

net income divided by assets

net income divided by owners equity; also called return on investment

ratios that measure how well a firm uses its assets to generate each $1 of sales

sale divided by accounts receivable

sales divided by total inventory

sales divided by total assets

ratios that measure the speed with which a company can turn its assets into cash to meet shot-term debt

current assets divided by current liabilities

a stringent measure of liquidity that eliminates inventory

ratios that measure how much debt an organization is using relative to there sources of capital, such as owners equity

a ratio indicating how much of the firm is financed by debt and how much by owners equity

operating income divided by interest expense

data used by the investors to compare the performance of one company with another on an equal, per-share basis

net income or profit divided by the number of stock shares outstanding

paid by the corporation to the stockholders for each share owned