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Accounting
| Question | Answer |
|---|---|
| What is accounting? | a measure of business activities, communicating results to decision makers, tracking/ reporting finances. |
| Managerial accounting | Analysis for internal decision making, budgeting, and company forecasts. |
| GAAP | Generally Accepted Accounting Principals |
| Balance sheet | A snapshot of a companies finances at any point in time. |
| Income statement | summary of a period of time |
| Cash flow statement | summary of cash moving in and out over time, separated by activity type. |
| Accounting equation | Assets = liabilities + stockholder equity |
| Common stock | amounts invested by stockholders. beginning common stock + stock issuance = ending common stock |
| Retained earnings | Past earnings not distributed to stockholders. beginning retained earnings + net income - dividends = ending retained earnings |
| Journal entry | A list of the accounts impacted by an event. Recorded in the order they occur. |
| General ledger | list of all accounts, their activities, and totals. |
| Accrual accounting | Record the events after they are completed. |
| Capitalize an expense | If benefit for a cost extends to future periods: report the cost as asset (as benefits used up, reduce asset and report as expense) |
| Deferred revenue | Receiving the money before the task is completed. |
| Accrued revenue | The amount has been earned (tasks completed) but the costumer hasn't paid yet. |
| Depreciation (define) | Spreading the expense of an asset over its useful life. |
| Straight line depreciation | (Principal cost - residual cost) / useful life |
| Contra-asset account | A separate account used to reduce the value of a specific asset on a company's balance sheet. Carries a credited/negative balance. |
| Current assets | Assets that last a year or less. |
| Current liabilities | Debts expected to be paid within the year or within that accounting cycle. |
| Operating activities | Transactions related the the core operations of a company. The day to day costs. |
| Revenue | (units sold x price per unit) - expenses |
| Gross profit | Revenue - COGS |
| Cost of goods sold (COGS) | The cost it takes to produce/obtain a product |
| Operating income | Gross profit - operating expense |
| Net income | total revenue - total expenses |
| Bonds: face value | the issuance price is equal to the market value. |
| Bonds: premium | the issuance price is greater than the market value. |
| Bonds: discount | the issuance price is below the market value. |
| What is time value of money? | Money is worth more today due to its interest earning potential. Protects it from the impact of inflation. |
| PV= | PV= Present value |
| FV= | FV= Future value |
| i= | i= interest rate |
| n= | n= Number of periods |
| FV of lump sum formula | FV=PV(1+i)'n |
| PV of a lump sum formula | PV= FV/(1+i)'n |
| Current ratio | Current assets/ current liabilities |
| Acid-test ratio | (Current assets - inventory)/ current assets |
| Preferred stock (pros) | Receives priority in the issuance of dividends. Can easily be converted into common stock. |
| Preferred Stock (cons) | Typically doesn't receive voting rights. |
| Stockholders' equity | Stockholders' equity= assets - liabilities |
Created by:
user-2010896