accounting exam 1 me Flashcards
dividend
distributions of profit to the owners/shareholders
accounts payable is a what?
liability
accounts receivable is a what?
asset
Liability
a company’s obligation to provide assets, products, or services to others
Equity contains:
Contributed capital+ retained earnings
retained earnings
undistributed profits
-dividends+revenues-expenses
return on assets
net income/average total assets
common stock
reflects in flows of cash and other assets from shareholders in exchange for stock
general ledger
record of all accounts and their balances
all equity has credit balances in their accounts except for:
expense accounts and dividends
debt ratio
total liabilities/total assets
evaluates level of debt risk
(under 1, good…..over 1, bad)
profit margin
net income/net sales
current ratio
helps assess the companys ability to pay its debts in the near future
current assets/current liabilities
Assets
what you already own
accounts receivable
amount of money owed to a company by its customers (asset)
accounts payable
amount of money a company owes its suppliers and vendors (liability)
acid test ratio
quick assets/ current liabilities
average total assets=
beginning value + ending value /2
income statement
(calculating net income)
total revenue - total expenses
(if negative = net loss)
increase in dividends results in…
a decrease of the entire equity
statement of retained earnings
beginning retained earnings
+ net income
- dividends
= end retained earnings
revenues and common stock
increase equity from sales of products and services
expenses and dividends
decrease equity from costs of providing goods and services
