Term
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Definition
Borrowing money from creditors or issuing(selling) shares of stock.
Liabilities - What is owed to Creditors
Can be a note payable or bonds payable
Common Stock - Total amount paid in by stockholders for their shares
Dividends - payments to stockholders as long as there is sufficient cash to cover payments to creditors. |
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Term
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Definition
Purchase of resources a company needs to operate. These resources are called assets.
Types of assets-
Property, plant and equiptment(fixed)
Cash
Investments(with excess cash) |
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Term
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Definition
Revenue-(Sales revenue, service revenue, and interest revenue)
Assets with shorter lives are from operating activities
Inventory and account receivable(right to expect payment from a customer in the near future)
Expenses |
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Term
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Definition
Cost of goods sold
selling expenses
marketing expenses
administrative expenses
interest expense
income taxes |
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Term
| Types of financial statements |
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Definition
Balance Sheet
Income statement
Retained earnings statement
Statement of cash flows |
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Term
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Definition
| Presents a picture at a point in time of what is owned (assets) and what it owes (liabilities) |
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Term
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Definition
| Shows revenues and expenses during a period of time |
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Term
| Retained earnings statement |
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Definition
| Shows how much of previous income was distributed to you and the other owners of the business in the form of dividends, and how much was retained in the business for future growth |
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Term
| The Basic Accounting Equation |
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Definition
| Assets = Liabilities + Stockholder' Equity |
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Term
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Definition
Provides financial info about the cash receipts and cash payments for a specific period of time.
Reports flow of cash from operating, investing, and financing activities.
Negative ammounts are in (parentheses) |
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Term
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Definition
Includes:
Income Statement
Retained Earnings Statement
Balance Sheet
Statement of Cash Flows
Management Discussion and Analysis (MD&A)
Notes to the Financial Statements
Auditor's Report |
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Term
| Management Discussion and Analysis (MD&A) |
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Definition
Covers various financial aspects of a company, including:
Its ability to pay ner-term obligations
Ability to fund operations and expansion
Its results of operations |
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Term
| Notes to the Financial Statements |
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Definition
| Clarify financial statements and provide any additional inquantifiable details. |
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Term
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Definition
Prepared by an independent outside auditor who is a CPA.
Unqualified opinion is what the auditor expresses if he is satistied with the statements' representation of the company's financial health. |
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