Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Prospective monkey > Accounting > Flashcards

Accounting Flashcards

1
Q

What’s the Income statement

A

Records revenue and expenses (over a period of time)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What’s the Cash Flow Statement

A

Determines the net impact on cash over a period of time by totalling all cash inflows and outflows

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What’s the Balance Sheet

A

Snapshot of company’s Assets, Liabilities and equity at a specific point in time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Revenue - COGS = ?

A

Gross Profit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are COGS

A

Direct costs of producing goods/services - Materials & labour

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Revenue - COGS - OpEx =?

A

EBITDA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What’s EBITDA

A

Earnings before Interest Taxes and D&A

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

EBITDA - D&A - Interest - Tax

A

Net income (the accounting definition of profit)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Why is CapEx not on the income statement

A

Capital Expenditure is not taxable - it appears as D&A over time (revenue matching principle)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are OpEx

A

All other expenses such as Sales and Marketing, General and Administrative and Research and Development

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is EBIT also know for

A

Operating Income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

EBTIDA - D&A = ?

A

EBIT or operating income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Why does EBIT come before EBT?

A

Because interest here is an expense that is tax deductible

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What would Stock based compensation be classified under in the IS?

A

Operating Expense

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Why do we use EBITDA

A

-easy standardisable cash flow metric
-applies to both debt&equity holders
-interest can vary a lot depending on capital structure
-tax can vary
-D&A are non-cash expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What’s the difference of EBITDA to Net Income

A

Net income only applies to equity holders, EBITDA to both (debt/equity)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What’s the Cash Flow Statement

A

accounts for all cash in- and out-flows in order to get the company’s true picture of cash

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What are the three sections of the CFS

A

Operating Activities
Investing Activities
Financing Activities

19
Q

Why’s the CFS better than the IS in reflecting cash?

A

D&A and SBC are non-cash and have to be added back

20
Q

What are the non-cash expenses we add back to Net Income in the operating part of the CFS?

A

+ D&A
+ SBC
+/- change in NWC

21
Q

What other factors affect operating cash flow other than non-cash expenses?

A

Accounts Receivable
Inventory
Prepaid expenses
Accounts Payable
Accrued Liabilities
Deferred RevenuE

22
Q

What does Operating Cash Flow show?

A

How much cash the core business operations generate

23
Q

What do we mean by Change in NWC

A

Spending on currents assets and liabilities

24
Q

Why is the Change in NWC on the Cash Flow Statement

A

Because the real cash inflow/outflow is not included on the income statement

25
Q

What’s the effect of a decrease in change in NWC

A

Source of Cash (+)

26
Q

What’s the effect of an increase in change in NWC

A

Use of cash (-)

27
Q

What’s subtracted from CF-operations to get to CF-investing?

A

Capital expenditures
Acquisitions
Proceeds from PP&E sale
Sale of investments

28
Q

Why are acquisitions accounted for in the CFS (investing)?

A

Real cash outflow not included on income statement

29
Q

What brings us from Cash Flow from Investing to Cash Flow from Financing?

A

CF from Investing
+Issuance of Long-Term debt
-Paydown of Long-Term debt

30
Q

What is Free Cash Flow?

A

The true “operating” cash flow that a company generates

31
Q

Formula for unlevered FCF

A

EBITDA
- Cash Taxes
- CapEx
- Increase in NWC
=Unlevered Free Cash Flow

32
Q

What is unlevered free cash flow?

A

The cash available to the entire business, both debt and equity holders
Leverage = debt, so unlevered refers to financials before we service debt

33
Q

Why are we interested in unlevered cash flow?

A

Because it does not include the burden on cash - capital structure neutral

34
Q

What’s the golden Balance Sheet Rule

A

Assets - Liabilities = Equity

35
Q

What’s an asset?

A

An asset is an item that will generate cash in the future

36
Q

What’s a liability?

A

YOU, no joking.
A liability is an item that will reduce cash in the future.

37
Q

What’s equity?

A

Represents ongoing net income accumulated in the business

38
Q

Name current assets on the BS

A

Cash
Short Term Investments
Accounts Receivable
Inventory
Prepaid Expenses

39
Q

Name non-current assets on the BS

A

PP&E (Property, Plant & Equipment)
Intangible Assets
Long-Term Investments
Goodwill

40
Q

Name current-liabilities

A

Revolver
Accounts payable
Accrued liabilities
Deferred revenue (can be long term too)

41
Q

Name non-current liabilities

A

Deferred revenue
Long-Term debt
Other Long term liabilities

42
Q

Name Equity items

A

Common stock, preferred stock, retained earnings

43
Q
A
43
Q
A

Prospective monkey (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions