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Accounting Chapter 9
Term | Definition |
---|---|
balance sheet | A report of the balances in the permanent accounts on a specific date. |
current assets | The assets that are either used up or converted to cash during the normal operating cycle of the business. |
current liabilities | The relationship between current assets and current liabilities; calculated by dividing current assets by current liabilities. |
current ratio | The debts of the business that must be paid within the next accounting period. |
financial statements | Reports prepared to summarize the changes resulting from business transactions that occur during an accounting period. |
income statement | A report of the net income or net loss for a specific period; sometimes called a profit-and-loss statement or earnings statement. |
liquidity ratio | The measure of a business’s ability to pay its current debts as they become due and to provide for an unexpected need for cash. |
profitability ratio | A ratio used to evaluate the earnings performance of a business during the accounting period. |
quick ratio | A measure of the relationship between short-term assets and current liabilities; calculated by dividing the total cash and receivables by the current liabilities. |
ratio analysis | The process of evaluating the relationship between various amounts in the financial statements. |
report form | A balance sheet format that lists classifications one under another. |
return on sales | A ratio that examines the portion of each sales dollar that represents profit; calculated by dividing net income by sales. |
statement of cash flows | A financial statement that summarizes the cash receipts and cash payments resulting from business activities during a period. |
Statement of flow in owner’s equity | The value of the stockholders claims to the corporation. |
working capital | The amount by which current assets exceed current liabilities. |