Term
| What is the recording, classifying, summarizing, and interpreting of financial events and transactions in an organization to provide management and other interested parties the financial information they need to make good decisions about its operation? |
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Definition
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Term
| What is the method we use to record and summarize accounting data into reports? |
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Definition
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Term
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Definition
| Generally accepted accounting principles |
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Term
| Who would use a tax return report? |
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Definition
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Term
| Who would have required reports for a business? |
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Definition
| Government regulatory agencies |
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Term
| Who would be interested in financial statements found in annual reports? |
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Definition
| Owners, creditors, financial analysts, and suppliers |
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Term
| Who would be interested in financial statements and various internal financial reports? |
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Definition
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Term
| What is the six-step procedure that results in the preparation and analysis of major financial statements? |
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Definition
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Term
| T/F The accounting cycle relies on both a account and a bookkeeper. |
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Definition
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Term
| What is the recording of business transactions? |
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Definition
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Term
| Who uses the information that bookkeeping provides? |
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Definition
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Term
| T/F Accountants suggest strategies for improving the financial condition of a company. |
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Definition
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Term
| T/F Accountants prepare income tax returns. |
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Definition
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Term
| What is the first step in the accounting cycle? |
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Definition
| Analyze source documents (Sales slips/travel records) |
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Term
| What is the second step in the accounting cycle? |
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Definition
| Record transactions in journals |
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Term
| What is the third step in the accounting cycle? |
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Definition
| Transfer journal entries into a ledger |
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Term
| What is the fourth step in the accounting cycle? |
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Definition
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Term
| What is the fifth step in the accounting cycle? |
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Definition
| Prepare 3 financial statements (income statement, balance sheet, and statement of cash flow |
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Term
| What is the sixth step in the accounting cycle? |
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Definition
| Analyze financial statements |
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Term
| What is the first task of a bookkeeper? |
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Definition
| Categorize financial statements |
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Term
| What is the record book or computer program where accounting data is first entered? |
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Definition
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Term
| What is the practice of writing all business transactions in 2 places? |
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Definition
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Term
| What is a specialized accounting book or computer program in which information from accounting journals is categorized, so information can be found quickly? |
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Definition
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Term
| What is a summary of all the financial data in the account ledgers that ensures the figures are correct? |
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Definition
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Term
| Computerized accounting programs help which size of business the most? |
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Definition
| Small businesses (they have less specialized staff to do so) |
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Term
| What is a summary of all the transactions that have occurred over a particular period? |
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Definition
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Term
| What are the 3 financial statements? |
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Definition
| Balance sheet, income statement, and statement of cash flows |
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Term
| What reports the firms financial condition on a specific date? |
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Definition
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Term
| What summarizes revenues, cost of goods sold, and expenses for a particular period and highlights the total profit or loss the firm experienced during that period? |
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Definition
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Term
| What provides a summary of money coming into and going out of the firm. It also tracks a company's cash receipts and cash payments. |
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Definition
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Term
| What details what the company owns and owes on a certain day? |
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Definition
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Term
| What shows the revenue a firm earned selling its products compared to its selling costs over a specific period of time? |
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Definition
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Term
| What highlights the difference between cash coming in and cash going out of a business? |
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Definition
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Term
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Definition
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Term
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Definition
| Assets = Liabilities + owners' equity |
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Term
| What is the fundamental accounting equation? |
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Definition
| Assets = Liabilities + owners' equity |
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Term
| What is the basis of a balance sheet? |
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Definition
| The fundamental accounting equation |
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Term
| Who enforces the generally accepted accounting principles? |
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Definition
| Securities and Exchange Commission (SEC) |
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Term
| What are equipment, buildings, land, furniture, and motor vehicles considered? |
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Definition
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Term
| What are patents, trademarks, copyrights, and goodwill considered? |
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Definition
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Term
| What is the firm's reputation, location, and superior products considered? |
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Definition
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Term
| What is usually included on a balance sheet only when one firm acquires another and pays more for it than the value of its tangible assets? |
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Definition
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Term
| What is the ease that an asset can be converted into cash? |
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Definition
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Term
| What is an amount of money owed to the firm that it expects to receive within 1 year? |
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Definition
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Term
| What type of asset are accounts receivable? |
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Definition
| Liquid assets because they can be quickly converted to cash |
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Term
| What type of asset is land considered? |
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Definition
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Term
| What are items that can or will be converted into cash within one year? |
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Definition
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Term
| What 3 things are considered current assets? |
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Definition
| Cash, accounts receivable, and inventory |
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Term
| What are considered fixed assets? |
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Definition
| Land, buildings, and equipment |
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Term
| What are long-term assets that have no physical form but do have value? |
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Definition
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Term
| What are debts that are due in one year or less? |
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Definition
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Term
| What are liabilities not due for a year or more? |
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Definition
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Term
| What are current liabilities involving money owed to others for merchandise or services purchased on credit but not yet paid for? |
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Definition
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Term
| What are short-term or long-term liabilities that a business promises to repay by a certain date? |
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Definition
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Term
| What are long-term liabilities that represent money lent to the firm and must be paid back? |
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Definition
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Term
| What is the value of things you own minus the amount of money you owe others? |
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Definition
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Term
| What is the amount of the business that belongs to the owners minus any liabilities owed by the business? |
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Definition
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Term
| Owners' equity in a firm is called what? |
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Definition
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Term
| What are the accumulating earnings from a firm's profitable operations that were reinvested in the business and not paid out to stockholders in dividends? |
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Definition
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Term
| What's the statement that shows the business bottom line? |
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Definition
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Term
| What is revenue left over after all costs and expenses, including taxes, are paid? |
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Definition
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Term
| How do you calculate gross profit? |
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Definition
| Revenue - cost of goods sold |
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Term
| How do you calculate the net income or net loss? |
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Definition
| Gross profit - operating expenses - taxes |
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Term
| What are gross sales minus returns, discounts, and allowances? |
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Definition
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Term
| What are gross sales minus returns, discounts, and allowances? |
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Definition
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Term
| What are gross sales minus returns, discounts, and allowances? |
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Definition
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Term
| What is the monetary value of what a firm received for goods sold, services rendered, and other payments? |
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Definition
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Term
| What's the difference between revenue and sales? |
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Definition
| Revenue also includes rent payments, money used from patents, and interest earned |
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Term
| What are all sales a firm completes called? |
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Definition
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Term
| What is a measure of the cost of merchandise sold or cost of raw materials and supplies used for producing items for resale? |
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Definition
| Cost of goods sold (or cost of goods manufactured) |
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Term
| What is how much a firm earned by buying/making and selling merchandise? |
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Definition
| Gross profit (or gross margin) |
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Term
| What are the costs involved in operating a business, such a rent, utilities, and salaries? |
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Definition
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Term
| What does FIFO stand for? |
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Definition
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Term
| What does LIFO stand for? |
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Definition
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Term
| What is the systematic write-off of the cost of a tangible asset over its estimated useful life? |
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Definition
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Term
| What are related to the marketing and distribution of the firm's goods or services, such as advertising, salespeople's salaries, and supplies? |
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Definition
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Term
| What are the administrative expenses of the firm such as office salaries, insurance, and rent? |
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Definition
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Term
| What are the three major activities of a firm? |
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Definition
| Operations, investments, and financing |
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Term
| What are cash transactions associated with running a business? |
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Definition
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Term
| What are cash used in or provided by the firm's investment activities? |
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Definition
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Term
| What is cash raised by taking on new debt, or equity capital or cash used to pay business expenses, past debts, and company dividends? |
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Definition
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Term
| What's the difference between cash coming in and going out? |
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Definition
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Term
| What is the act of shifting sales from a quarter to another quarter? |
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Definition
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Term
| What is the assessment of a firm's financial condition using calculations and interpretations of financial ratios developed from the firm's financial statements? |
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Definition
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Term
| What measure a company's ability to turn assets into cash to pay short-term debts? |
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Definition
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Term
| WHat are the 2 liquidity ratios? |
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Definition
| Current ratio and acid-test ratio |
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Term
| What is the current ratio formula? |
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Definition
| Current assets divided by current liabilities |
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Term
| What is another name for the acid-test ratio? |
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Definition
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Term
| What measures the cash, marketable securities (stocks/bonds), and receivables of a firm, compared to its liabilties? |
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Definition
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Term
| What measures the cash, marketable securities (stocks/bonds), and receivables of a firm, compared to its liabilties? |
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Definition
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Term
| What is the formula for the acid-test ratio? |
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Definition
| Cash + accounts receivable + marketable securities divided by current liabilities |
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Term
| What ratio is important to companies that have a hard time converting inventory into quick cash? |
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Definition
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Term
| What measures the degree to which a firm relies on borrowed funds in its operations? |
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Definition
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Term
| What measures the degree to which the company is financed by borrowed funds that they must repay? |
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Definition
| Debt to owners' equity ratio |
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Term
| What is the formula for the debt to owners' equity ratio? |
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Definition
| Total liabilities divided by owners' equity |
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Term
| What measures how effectively a firm's managers are using its various resources to achieve profits? |
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Definition
| Profitability (performance) ratios |
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Term
| What are 3 of the most important ratios to a business? |
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Definition
| Earnings per share, return on sales, and return on equity |
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Term
| What measures the amount of profit earned for each share of outstanding common stock? |
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Definition
| Diluted earnings per share |
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Term
| What's the formula for basic earnings per share? |
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Definition
| Net income after taxes divided by number of common stock shares outstanding |
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Term
| What tells us whether the firm is doing as well as competitors by generating income from sales? |
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Definition
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Term
| What's the formula for return on sales? |
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Definition
| Net income divided by set sales |
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Term
| What indirectly measures risk by telling is how much a firm earned for each dollar invested by its owners? |
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Definition
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Term
| What % or above is considered a good return on equity? |
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Definition
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Term
| What is the formula for return on equity? |
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Definition
| Net income after tax divided by total owners' equity |
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Term
| What measures the speed with which inventory moves through the firm and gets converted into sales? |
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Definition
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Term
| What is the formula for inventory turnover? |
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Definition
| Cost of goods sold divided by average inventory |
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Term
| What are the four main categories of financial ratios? |
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Definition
| Liquidity ratios, leverage (debt) ratios, profitability (performance) ratios, and activity ratios |
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Term
| What are the 5 key working areas of the accounting profession? |
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Definition
| Financial accounting, managerial accounting, auditing, tax accounting, and governmental and not-for-profit accounting |
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Term
| What is accounting information and analyses prepared for people outside the organization? |
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Definition
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Term
| What is a yearly statement of the financial condition, progress, and expectations of an organization? |
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Definition
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Term
| What is an accountant who works for a single firm, government agency, or nonprofit organization? |
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Definition
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Term
| What is an accountant who provides services to individuals or businesses for a fee? |
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Definition
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Term
| What is a person called that passed a series of examinations established by the American Insitute of Certified Public Accountants (AICPA)? |
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Definition
| Certified public accountant |
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Term
| What is the act called that brought increased accountability to accountants? |
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Definition
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Term
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Definition
| Public Company Accounting Oversight Board (PCAOB) |
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Term
| What type of accounting is concerned with measuring and reporting costs of production? |
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Definition
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Term
| What is the job of reviewing and evaluating the information used to prepare a company's financial statements? |
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Definition
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Term
| What is a evaluation and unbiased opinion about the accuracy of a company's financial statements? |
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Definition
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Term
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Definition
| Total liabilities divided by owners' equity = Debt to owners' equity ratio |
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Term
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Definition
| Net income after taxes divided by total owners' equity = Return on equity |
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Term
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Definition
| Gross profit - operating expenses - taxes = Net income or net loss |
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Term
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Definition
| Cost of goods sold divided by average inventory = Inventory turnover ratio |
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Term
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Definition
| Net income divided by set sales = Return on sales |
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