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financial statment
vocabulary(ENT)
| Term | Definition |
|---|---|
| Four basic statement contained in the annual report | the balance sheet the income statements,income statement of retained earnings and the statement of cash flows .investors use the information provided in these statement to form expectations about the future levels of earnings |
| Balance sheet | shows its assets on the left side and the liabilities and the equity or the claims against assets on the right side .the balance sheet may be thought of as a snapshot of the firms financial position at a particular point in time |
| income statement | reports the result of operation over a period of time and it shows earning per share as its ''bottom line'' |
| statement of retained earnings | shows the change in retained earnings between the balance sheet dates . retained earnings represents a claim against assets |
| operating cash | flows differ from reported accounting profits .investor should be more interested in a firms projected cash flow than in the reported earnings because it is cash not paper profits that is paid out as dividend |
| Cash flow cycle | is a way in which actual net cash as opposed to accounting net income flows into or out of a firm during some specific period |
| Statement of Cash flows | reports the impact of its operating ,investing and financing activities on cash flows over accounting period |
| Value | of any assets depends on the stream of after taxes cash flows it produces tax rate and other aspects of our tax system are changed by congress every year or so |
| Income Tax rate | are progressive the higher ones income the larger the percentage paid in taxes up to a point |
| assets | such as stocks ,bonds,and real estate are defined as capital assets .if a capital assets sold for a loss it is called a capital gain .If the capital assets is sold for a loss it is called a capital loss.Assets held for over a year provided long term L/G |
| operating income | paid out as a dividend is a subject to double taxation the income is first taxed at the corporate level and then share holder must pay personal taxes on their dividends |
| Interest Income | Received by a corporation is taxed as ordinary income however 70 percent of the dividends received by one corporation from another are excluded from taxable income .The reasons for this exclusion is to reduce double or triple taxation of cooperation |
| cooperate operating losses | can be carried back to each of the proceeding three years and carried forward for the next 15 years to offset taxable income in those years |
| S corporation | are small business which have the limited liability benefits if the cooperation form a organization yet obtain the benefits of being taxed only once at the individual level like a partnership pr proprietoship |
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