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Description
Flashcards by Nolan Fontenot, updated more than 1 year ago
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Created by Nolan Fontenot
about 9 years ago
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| Question | Answer |
| What are the 3 types of business? | 1. Sole Proprietorship 2. Partnership 3. Corporation |
| What are the 3 operating activities of a business? | 1. Operating 2. Investing 3. Financing |
| What are some examples of operating activities? | 1. Selling products 2. Receiving revenue 3. Purchasing raw materials |
| What are some examples of investing activities? | 1. Purchasing resources needed to operate 2. Buying PPE |
| What are some examples of financing activities? | 1. Taking out a loan 2. Issuing debt securities 3. Selling shares of stock |
| What is an income statement? | Reports a comany's revenues, expenses, & net income or net loss over a specific period of time. |
| Why are users interested in income statements? | Because it provides users w/ info that helps them predict future net income. |
| What are retained earnings? | Net income used for the corporation |
| What is a retained earnings statement? | Shows the amounts and causes of change in retained earnings for a specific period of time. |
| What is a balance sheet? | Reports a users assets & claim to assets (liabilities & stockholder's equity). |
| What is the basic accounting equation? | Assets=liabilities+stockholder's equity |
| What is a statement of cash flows? | Provides info about the cash receipts and cash payments over a specific period of time. |
| What are the 4 standard setting organizations? | 1. Security & exchange commission (SEC) 2. Financial Accounting Standards board (FASB) 3. International Accounting Standards board (IASB) 4. International Financial Reporting Standards |
| What is a annual report? | Report prepared by management that presents financial info, including financial statements, a management discussion and analysis section, notes, and an independent auditor's report. |
| Management discussion & analysis | Management's view on the company's ability to pay near term obligations, fund operations and expansion, and results of operations. |
| Notes to financial statements | Notes that clarify financial statement info and provide additional detail. |
| Auditor's report | Reports and outside auditor's opinion as to the fairness of presentation of financial position and results of operations and their conformance w/ generally accepted accounting principles. |
| Classified Balance sheet | Groups similar assets & liabilities, using a number of standard classifications and sections. |
| What is included in a classified balance sheet? | 1. Current assets 2. long term investments 3. PPE 4. intangible assets 5. Current liabilities 6. long term liabilities 7. stockholder's equity |
| Current assets | Assets that a company expects to convert to cash or use up within one year or operating cycle. |
| Long term investments | 1. investments in stock and bonds that is held for more than 1 year. 2. long term assets that a company is not currently using in it's operating activities 3. long term notes receivable |
| PPE | Assets/ long useful lives that are currently in use within the operating cycle. |
| Intangible assets | Assets without physical substance |
| Current Liabilities | Obligations that a company expects to pay within the next year or operating cycle. |
| Long term liabilities | Obligations expected to pay after one year |
| Stockholder's equity | includes 1. common stock 2. retained earnings |
| Ratio analysis | Relationship among selected items of financial statement data |
| Profitability Ratios | Measures the income or operating success of a company over a given period of time |
| Liquidity ratios | Measure short term ability of company to pay maturing obligations and to meet unexpected needs for cash |
| Solvency ratos | Measure ability of company to survive over a long period of time |
| Earnings per share | 1. Net income earned on each share of common stock 2. Net income-prefered dividends/ average common shares outstanding |
| Working capital | Current assets-current liabilities |
| Current ratio | Current assets/current liabilities |
| Debt to assets ratio | Total liabilities/total assets |
| Free cash flow | Net cash provided by operating activities-capital expenditures- cash dividends |
| Qualities of useful info | 1. Relevance 2. Predict value 3. Confirmatory value 4. Size 5. Complete 6. Neutral 7. Error free |
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