Int. Acct. I Notes
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Earnings per Share:
(Net Income - Preferred Dividends)/Avg. # of Commmon Shares Outstanding
Times interest earned ratio is a way to gauge a company's ability to pay fixed debts by comparing interest chargest with income available to pay charges.
Permanent accounts represent shareholder's equity, liabilities, and assets.
Vertical analysis expresses items as a percentage of appropriate corresponding total within the same year.
Equity has two parts: contributed capital and retained earnings.
Operational risk: How adept a company is at withstanding various events and circumstances that might impair its ability to earn profit.
Default Risk: A company's ability to pay its obligations when they come due.
Horizontal analysis compares each item as a percentage of some item in another year's financial statements.
Irregularities are intentional distortions of financial statements.
Intangible assets are reported net of accumulated amortization.
Pro forma earnings: Actual GAAP earnings reduced by any expenses the reporting company feels should be excluded.
Earnings quality refers to the ability of reported earnings to predict a company's future earnings.
If a discontinued item is "held for sale," it means that it is likely to be sold within a year.
Net Income + Other Comprehensive Income (Loss) = Comprehensive Income.
Interest = Principal x Interest Rate x Time Period
Income = Revenue - Expenses
Depreciation Journal Entry:
: Depreciation Expense
: Accumulated Depreciation: Account Name
Temporary accounts (revenues, expenses, gains, and losses) are closed out to Income Summary which is then closed out to Retained Earnings.
Information is "material" if it can have an effect on user decisions.
Assets = Liabilities + Equity
Equity is made up of Contributed Capital and Retained Earnings
Int. Acct. I Notes
Chapters 1 through 4