Accounting Equations Flashcards
What is the basic and expanded accounting equation
Assets = Liabilities + Equity
Assets = Liabilities +Share capital + Retained earnings - Dividends + Revenues - Expenses
What is the equity equation
Equity = Share Capital + Retained Earnings
Change in equity equation different equations
(for sole proprietorship and corporation)
Sole proprietership:
Revenue - Expense + Capital Contributions (that is the same as issue of shares) - Capital Withdrawals
Corporation:
Share capital + Share Premium + Net Income - Dividends
Share capital + Share Premium +Retained earnings
Current ratio formula
Total amount of current assets/current liabilities
higher then 1 very good but not too much
lower than 1 very bad, risk of liquidity
free cash flow formula
net cash flow provided by operating activities-capital expenditures - cash dividends
interest expense
interest rate x otustanding loan (very important bc if we pay off 10000 of the loan, the interest expense decreases)
ending equity formula
EndingEquity=BeginningEquity+IssueofShares+NetIncome
Owner’s equity (ending balance) = Owner’s equity (beginning balance) + Owner’s investments + Income - Owner’s drawings
Ending retained earnings formula
Ending retained earnings = Beginning retained earnings + Net income/losses - Dividends
Income formulas
Income = Owner’s equity (ending balance) - Owner’s equity (beginning balance) - Owner’s investments + Owner’s drawings
Revenue - expenses = income
Ending inventory formula
Beggining inventory + purchases -COGS
Cash (ending balance) formula
Cash (ending balance) = Cash (beginning balance) + Net Cash from operating activities + Net Cash from investing activities + Net Cash from financing activities
WAC per unit
Cost of goods available for sale/units available for sale
total cost of production/total number of unit produced
