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Accounting 12-14
Chapters 12,13,14 acct 1020
| Question | Answer |
|---|---|
| What is a horizontal analysis | Is a trend analysis for evaluating a series of finacial statement data over a period of time |
| What is the purpose of horizontal analysis | To determine the increase or decrease that has taken place |
| Horizontal analysis formula____ computation of change since base year | current year-base year amount/ base year amount |
| Horizontal analysis formula____computation of current year to base year | current years amount/base year amount |
| What is vertical analysis | also called common size analysis is a technique for evaluation finacial statment data that express each intem as a percentage of base amount |
| What are tow things a vertical analysis shows a fincancial statment user | relative size of each catagory, percent change in the indivudual asset. |
| What is a liquidity ratio | measure short term ability of a company to pay obligations |
| Current Ratio --- Formula---Expressed | Measures ability of a company to pay current liablilities with current asset, current asset/current liability, ratio |
| Current Cash Debt Coverage Ratio----Formula----Expressed | tells a comp;anies abilit to pay curren tliabilities from cash from operating activties with going into debt, cash provided by operations/average current liabilites, ratio |
| Days in inventory=----formula----expressed | Tells you the average days a company has its inventory before its sold, 365days/inventory turnover ratio, number of days |
| Inventory turnover ratio---formula---express | tells how quickly a company sells its goods, cost of goods sold/average inventory, number of times |
| Receivalbes turnover ratio---formula---expressed | measures the number of times the company collects its recivable, net credit sales/average net receivables, number of times |
| average collection period===formula---expressed | measure the time your AR is not paid, 365days/receivables turn over ratio, number of days |
| What are solvency ratios | solvency is supposed to measure the ability of the company to survive over a long period of time |
| Debt to total asset ratio---formula----expressed | measuring the percentage of financing provided by creditors (paying debt with loans0, total liablities/total assets, percentage |
| Cash debt coverage ratio---formula---dexpressed | companies ability to repay liablilties with cash from operating activites with out acquiring debt, cash provided by operations/total assets, number of times |
| what are profitibility ratios | measuring the income or operating success of a company |
| Earnings per share---formula-expressed | measures the net income earned per share of acommon stock----net income- perfered stock dividents/average common shares outstanding, $amount |
| Price earnings ratio---formula---expressed | Tel you the reflecitn ginvestors view in a company future earnings, stok market pricer per common share/ earnings per share, number |
| Gross profit ratio---formula---expressed | shows relationship between gross profit and net sales, gross profit/net sales, percentage |
| profit margin ratio---formula----expressed | net income/net sales, shoes the extent to which selling price covers all of a companies expenses, percentage |
| return on assets---formula---expressed | what percentage of each dollar a copmany invested in its assets by net income, net incomme/avg. total assets, percentage |
| asset turn over ratio----formula---expressed | $ of sales a company generates for each $ invested in its assets, net sales/avg. total assets, number of times |
| Return on equity=====formula----expressed | shows how mnay $ of net income a compnay earned for each dollar common share quitiy it has, net income-perfered stock dividends/avg. common stock holders equity, percentage |
| what is the statment of cashflow | reports all cash receipts in oif activites during a period |
| what are the four primary things the scf helps users access | 1. the companies entry ability to generate futre cash flows, 2. the entitys ability to pay dividens and meet obligations. 3. the reason for the difference between net income and net cash by opperating activites 4. investing and financing |
| three activites | operating--anything on income statement investing-- buying selling ppe and lending money to others Fiancaing-- dealign with issuing debt/payment of dividentds |
| most important activite | op activites are most imoratn bcuz thats where cahs went or came |
| prepared sources scf 3 sources | 1. comparative balance sheet-indicates the amounts in change in assets, liability, and stockholders equity 2. current income statement-info statement 3.additional info |
| what is the direct method | shows operating cash receipts and payments you adjust every item on income statment from accrual to cash base fasb prefers thsi method |
| what is the indirect method | adjust net income for any items that do not affect cash to determine net cash provided by OP activities |
| Managerial account | is a feild of accounting that provides economic and financial info for managers and other internal users |
| 6 primary activites of the management accountant | 1.manufacturing and non manufacturing cost 2.computting th ecost of providing a service of manufacturing a product 3.determining the behavior of costs and expses 4.profit planning and formulizing these plans 5.providing a basis control cost 6.predata |
| What is financial accounting | external users, financial statments, general puropose of reports, reports contain pretain to company as a whole, limited to double entry, GAAP, audited by CPA |
| What is managerial accounting | internal users, internal reports, special purpose for specific decisions, reports pretian to sub of business, very detailed, extends beyound double entry, no audit |
| three classificiations of manufacturing cost | Direct Material DM, Direct Labor DL, Factory Overhead, FOH |
| Raw materials | are the peices purchased to make an items |
| two classification of raw materials | direct material, indirect material |
| What are direct material | are materials physically associted to the item |
| what are indirect materials | items used to make itme but extras |
| what is direct labor | the work of employees that is physicaly associated with the product |
| What is indirect labor | has no physical association |
| What is manufacturing overhead | FOH all cost inidreclty associated with a product |
| what are product coast | is the cost associated with providing a product |
| manufactured coast | are direct material, dl, foh |
| What are period cost | all cost that do not directly relate to the product made |
| COGSM= | begining inventory+purchased goods avail sale-ending invv. |
| cogs= | finsihed goods+ begining bal+cogsm/ cost of goods avail sale-finish good end balance |
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