Balance Sheet Flashcards
current assests compared to current liabilities is commonly known as
current ratio
some basic terms of accounting that the contractor should understand are
-cash basis of accounting
-profit and loss statement
-net worth
in bidding a job, it is neccessary that a contractor considers the overhead or indirect costs and add his proper overhead percentage to the cost of the job. which of the following is not part of a contractors overhead
labor costs
contractors must include a profit in every bid, especially if the bid has a low profit margin and there is any chance of underestimating. Insufficient profits threaten both ____ and ____ to the extent that bankrupcy may be the result
camptalization and cash flow
it is best to buy materials by
buying from a few vendors and taking cash discounts when offered
in using the cash basis of accounting, a contractor only enters revenue when
enters revenue into his books when the monies are actually paid
the contractor uses the balance sheet that an accountant has prepared for him to determing
his equity in the company on a certain date
depreciation is part of the liabilities of a company as shown on the balance sheet (T/F)
False
as shown on a balance sheet, assets minus liablilites equals net worth (T/F)
True
an example of a current liability or short term debt, as shown on a balance sheet
-an account payable
-a note payable
the ratio of total liabilities to net worth compares the amount invested in a business by creditors with the amount invested by
both owners or stockholders
long term creditors, such as banks or insurance companies, tend to consider carefully the ratio of total liabilities to
net worth
current assets include accounts recevable and
inventory retentions and prepaid expenses
three methods of comparison of financial relationships are comparison of current financial data with that of prior years, with that of other businesses in the same industry and with the
-ratio analysis of past data
-ratio analysis of current data
the claim of the owners on the assets of the business is known as
stockholders equity
