Chap 13 Flashcards
Accounts Receivable Turnover
a measure of the speed with which sales on accounts are collected; the ratio of net credit sales to average receivables.
Average Collection Period
the ratio of 365 days to the accounts receivable turnover; also called the number of days’ sales in receivables.
Average Number of Days in Inventory
the average number of days for merchandise inventory to be sold after it is purchased.
Classified Financial Statement
a format by which revenues and expenses on the income statement, and assets and liabilities on the balance sheet, are divided into groups of similar accounts and a subtotal is given for each group.
Condensed Income Statement
an income statement summarizing detailed income statement accounts into a few lines of information.
Current Assets
assets consisting of cash, items that normally will be converted into cash within one year, and items that will be used up within one year.
Current Liabilities
debts that must be paid or otherwise satisfied within one year.
Current Ratio
a relationship between current assets and current liabilities that provides a measure of a firm’s ability to pay its current debts (current ratio = current assets / current liabilities)
Gross Profit
the difference between net sales and the cost of goods sold (gross profit = net sales - COGS)
Gross Profit Percentage
the amount of gross profit from each dollar of sales (gross profit percentage = gross profit / net sales)
Inventory Turnover
the number of times inventory is purchased and sold during he accounting period (inventory turn order = COGS / average inventory)
Liquidity
the ease with which an item can be converted into cash; the ability of a business to pay its debts when due.
Long-Term Liabilities
debts of a business that are due more than one year in the future.
Multiple Step Income Statement
a type of income statement on which several subtotals are computed before the net income is calculated.
Plant and Equipment
property that will be used in the business for longer than one year.
