(17) Using Management and Accounting Information

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(17) Using Management and Accounting Information
2013-12-04 17:06:11
Chapter 17

Chapter 17
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  1. Accounting
    The process of systematically collecting, analyzing and reporting financial information
  2. Audit
    An examination of a company's financial statements and the accounting practices that produced them
  3. GAAPs (Generally accepted accounting principles)
    An accepted set of guidelines and practices for companies reporting financial information and for the accounting profession
  4. Managerial Accounting
    Provides managers and employees with the information needed to make decisions about a firm's financing, investing, marketing, and operating activities
  5. Financial Accounting
    Generates financial statements and reports for interested people outside an organization
  6. Assets
    • Are the resources that a business owns
    • ex: everything such cash, inventory, equipment,
  7. Liabilities
    A Firm's debts and Obligations
  8. Owners' Equity (Net Worth)
    The difference between a firm's assets and it's liabilities
  9. Accounting Equation
    Assets=Liabilities+Owners' Equity (Net Worth)
  10. Balanced Sheet (statement of financial position)
    A summary of the dollar amounts of a firm's assets, liabilities and owners' equity accounts at the end of a specific accounting period
  11. Liquidity
    The ease with which an asset can be converted into cash
  12. Current Assets
    Assets that can be converted quickly into cash or that will be used in one year or less
  13. Fixed Assets
    Assets that will be held or used for a period longer than one year
  14. Depreciation
    The process of apportioning the cost of fixed assets over the period during which it will be used
  15. Intangible Assets
    Assets that do not exist physically but that have a value based on the rights or privileges they confer on a firm
  16. Current Liabilities
    Debts that will be repaid in one year or less
  17. Long-term Liabilities
    Debts that need not be repaid for at least one year
  18. Retained Earning
    The portion of a business's profits not distributed to stockholders
  19. Income Statement
    A summary of a firm's revenues and expenses during a specified accounting period
  20. Revenues
    The dollar amounts earned by a firm from selling goods, providing services, or performing business activities
  21. Gross Sales
    The total dollar amount of all goods and services sold during the accounting period
  22. Net Sales
    The actual dollar amounts received by a firm for the goods and services it has sold after adjustment for returns, allowances, and discounts
  23. Cost of Good Sold
    The dollar amount equal to beginning inventory plus net purchases less ending inventory
  24. Gross profit
    A firm's net sales less the cost of goods sold
  25. Operating Expenses
    All business costs other than the cost of goods sold
  26. Net income
    Occurs when revenues exceed expenses
  27. Net Loss
    Occurs when expenses exceed revenues
  28. Statement of Cash Flow
    A statement that illustrates how the company's operating, investing, and financing activities affect cash during an accounting period
  29. Financial Ratio
    A number that shows the relationship between two elements of a firm's financial statements 
  30. Return on Sale (or Profit Margin)
    A financial ratio calculated by dividing net income after taxes by net sales  
  31. Current Ratio
    A financial computed by diving current assets by current liabilities 
  32. Inventory Turnover 
    A financial ratio calculated by dividing the cost of goods sold in one year by the average value of the inventory