Term
| Earnings before interest and taxes |
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Definition
| another term for operating profit |
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Term
| The change in cash on the balance sheet equals: |
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Definition
| the sum of net cash from OPERATING, FINANCING and INVESTING activities |
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Term
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Definition
| Earnings Before Interest and Taxes |
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Term
| To calculate the effective tax rate: |
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Definition
| Income taxes divided by EBIT |
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Term
| n the example discussed in class the “P without C” company what does P and C stand for? |
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Definition
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Term
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Definition
| a tangible asset that will not be depreciated over its service life |
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Term
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Definition
| the difference between TAXES REPORTED and TAXES PAID |
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Term
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Definition
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Term
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Definition
| deduction from the original sales invoice price |
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Term
| Revenues, expenses and net profit (loss). |
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Definition
| What can be found on an income statement? |
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Term
| The amount of cash dividends paid and the amount of net profit (loss) generated |
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Definition
| What information can be found on a statement of shareholders' equity? |
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Term
| The amount by which the original IPO sales price of stock exceeded its par value |
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Definition
| What does the additional paid-in capital account represent? |
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Term
| Basic earnings per share is GREATER than diluted earnings per share |
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Definition
| In a typical company what is true about earnings per share? |
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Term
1)Categorized by operating, investing and financing activities
2)can use direct or indirect method
3)the changes in all of the BS accounts are calculated and then listed as inflows or outflows (except for cash) |
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Definition
| What are 3 truths regarding the preparation of a cash flow statement? |
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Term
| Treasury stock, accumulated other comprehensive income, and retained earnings |
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Definition
| what accounts can be found in a statement of stockholders equity? |
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Term
| net income and payment of dividends |
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Definition
| what 2 factors affect the change in retained earnings? |
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Term
- Assets
+ Liabilities (debt)
+ Equity |
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Definition
| On a statement of cash flow which account changes fall under the INFLOW category? |
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Term
+ Assets
- Liabilities (debt)
- Equity |
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Definition
| On a statement of cash flow which account changes fall under the OUTFLOW category? |
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Term
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Definition
T/F
The direct method has the recognition of income from investments in voting companies to the extent of cash dividends received |
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Term
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Definition
| What are repurchased shares of a company’s own common stock. |
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Term
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Definition
T/F
Dividend per share has net income divided by the number of shares outstanding. |
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Term
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Definition
T/F
Net earnings is the difference between sales revenue and expenses associated with generating sales |
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Term
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Definition
T/F
Interest expense or interest income is the difference between EBIT and EBT. |
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Term
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Definition
T/F
Liabilities are the claims against assets by the owner of the business. |
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Term
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Definition
T/F
The direct method is the way of converting net income to cash flow from operating activities. |
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Term
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Definition
T/F
Potential liabilities, such as damages from a pending lawsuit are an example of a contingency. |
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Term
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Definition
T/F
Preferred stock is a security with characteristics of both debt and equity |
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Term
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Definition
T/F
Stock splits are the issuance of additional shares of stock in proportion to the current shares owned. |
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Term
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Definition
| The change in retained earnings, from the beginning and the ending balance sheet can be affected by what 2 factors? |
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Term
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Definition
| what is the common denominator for each item on the income statement when preparing a common size income statement? |
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Term
| Commonstock and additional paid-in capital |
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Definition
| The actual dollars that stockholders paid for ownership of stock is represented by what 2 factors on the balance sheet? |
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Term
| (net profit / net sales)x 100 |
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Definition
| what is the formula for net profit margin? |
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Term
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Definition
| In which version of the income statement do you group all revenues together and then deduct all categories of expenses to determine net income? |
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Term
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Definition
| What does preferred stock have that common stock does not? |
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Term
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Definition
T/F
Cost of goods sold is the largest expense for many firms |
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Term
| Advertising, selling, administrative, repairs, and maintenance |
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Definition
| Which items are classified as operating expenses? |
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Term
| Gross profit, operating profit, net profit |
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Definition
| What are three dollar ($) profit measures calculated on the income statement? |
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Term
1)Cash flows are categorized by operating, investing, and financing activities.
2) The changes in all income statement accounts are calculated and then listed as cash inflows or outflows
3) The changes in all of the balance sheet accounts are calculated and then listed as inflows or outflows, except for cash |
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Definition
| What are three truths regarding the preparation of a cash flow statement? |
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Term
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Definition
| Funds a company has chosen to reinvest in the operations of a business rather than pay out to stockholders in dividends are called what? |
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Term
| The operating performance of the firm for an accounting period. |
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Definition
| What does the income statement measure for a firm? |
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Term
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Definition
T/F
Equity earnings may never result in the actual receipt of cash.. |
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Term
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Definition
| Recognition of income from investments in voting companies to the extent of cash dividends received |
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Term
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Definition
| Repurchased shares of a company’s own common stock. |
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Term
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Definition
| Net income divided by the number of shares outstanding. |
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Term
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Definition
| Difference between sales revenue and expenses associated with generating sales |
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Term
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Definition
| Difference between EBIT and EBT. |
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Term
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Definition
| Claims against assets by the owner of the business. |
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Term
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Definition
| A way of converting net income to cash flow from operating activities. |
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Term
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Definition
| Potential liabilities, such as damages from a pending lawsuit. |
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Term
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Definition
| Security with characteristics of both debt and equity |
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Term
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Definition
| The issuance of additional shares of stock in proportion to the current shares owned. |
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Term
| Common stock and additional paid-in capital |
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Definition
| On the balance sheet the ________ and __________ represent the actual dollars that stockholders’ paid for ownership of stock |
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Term
| statement of stockholders' equity |
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Definition
| The __________________ details the transactions that affect the balance sheet equity accounts during an accounting period. |
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Term
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Definition
| 3. Companies provide two amounts of earnings per common share; ____ earnings per share and ______ earnings per share. |
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Term
| operating profit (or EBIT) |
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Definition
| __________ measures overall performance of company’s operations: sales revenue less expenses associated with generating sales |
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Term
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Definition
| Cost of Goods Sold is also called ________ |
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Term
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Definition
| _____________ are recorded when investment ownership is less than 50% |
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Term
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Definition
| Sales are generally reported net of sales ______ and sales __________. |
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Term
| operating, investing and financing |
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Definition
| The statement of cash flows segregates cash inflows and cash outflows by ______, ______, and _____ activities. |
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Term
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Definition
| A firm's ________ income tax rate is income taxes divided by earnings before taxes. |
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Term
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Definition
| The following three terms are used interchangeably net income, _________, and net profit |
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Term
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Definition
What can be found on an income statement?
A)Revenues, expenses and net income (loss).
B)Assets, revenues and expenses.
C)Revenues, expenses, and stockholders' equity.
D)Assets, liabilities and stockholders' equity. |
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Term
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Definition
What is the common denominator for each item on the income statement when preparing a common size income statement?
A)Net sales.
B)Operating income.
C)Gross income.
D)None of the above |
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Term
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Definition
Regardless of format, certain special items, if they occur during an accounting period, must be disclosed separately on an income statement, these include?
A)Discontinued operations.
B)Extraordinary transactions.
C)Cumulative effect of changes in accounting principles
D)All of the above. |
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Term
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Definition
Which items below would not be classified as operating expenses?
A)Advertising.
B)Interest expense
C)Depreciation
D)All of the above classified as operating expense |
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Term
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Definition
A share of common stock outstanding for Pepsi
A)Is a fixed income investment
B)Is required to receive dividends
C)Trades at its market value on the New York Stock Exchange.
D)None of the above. |
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Term
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Definition
The following items would be classified as operating activities on the statement of cash flows:
A)Acquisitions of equipment, payment of dividends, revenue.
B)Payments for inventory, payments for salaries, cash received from sale of goods.
C)Proceeds from borrowing, payments of dividends, purchases of supplies.
D)Payments on loans, payments for taxes, payments for rent. |
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Term
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Definition
If company separates marketable securities into two accounts: cash/cash equivalents and short-term investments, the short-term investments are classified as :
A)Sales on the income statement
B)Investing activities on the cash flow statement.
C)Current liabilities on the balance sheet
D)None of the above |
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Term
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Definition
The change in retained earnings is affected by which of the following?
A)Net income and common stock
B)Paid-in capital and treasury stock
C)Paid-in-capital and common stock
D)Net income and payment of dividends |
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Term
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Definition
| Recognition of income from investments in voting companies to the extent of % of net income. |
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Term
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Definition
| Difference between all revenues and all expenses. |
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Term
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Definition
| Earnings per share based on current number of shares outstanding |
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Term
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Definition
| difference between sales revenue and expenses associated with generating sales |
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Term
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Definition
| allocation of intangible assets |
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Term
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Definition
| allocation of acquisition and development of natural resources |
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Term
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Definition
| replaced the statement of changes in financial position in 1988 and is developed from the balance sheet and income statement data |
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Term
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Definition
| security with characteristics of both debt and equity |
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Term
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Definition
| the issuance of additional shares of stock in proportion to the current shares owned |
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Term
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Definition
| shares of the company's stock that are repurchased by the company |
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