Chapter 4 Flashcards

1
Q

Assets

A

Financial, physical, and intangible items owned by the business.

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2
Q

Generally accepted accounting principles (GAAP)

A

Guidelines that set out the manner in form of presenting accounting information.

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3
Q

Accrual accounting

A

The practice of recording economic activity when it is recognized rather than waiting until it is realized.

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4
Q

Balance sheet

A

Financial statement that provides a snapshot of a businesses financial position as of a specific date.

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5
Q

Liquidity

A

How quickly and asset can be converted into cash.

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6
Q

Current assets

A

Cash and other assets that are expected to be converted into cash less than one year.

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7
Q

Cash

A

The amount of coin, currency, and checking account balances.

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8
Q

Marketable securities

A

Short term, high-quality, high liquid investments, that typically pay interest.

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9
Q

Receivables

A

Credit sales made to customers.

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10
Q

Inventories

A

Raw materials, work process, and finish products that the venture hopes to sell.

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11
Q

Fixed assets

A

Assets with expected lives of greater than one year.

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12
Q

Depreciation

A

Production and value of a fixed asset over its expected life, intended to reflect the usage or wearing out of the asset.

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13
Q

Accumulated depreciation

A

The sum of all previous depreciation amounts charge to fix assets.

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14
Q

Other long-term assets

A

Intellectual property rides or intangible assets that can be patented or owned.

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15
Q

Payables

A

Short term liabilities, go to suppliers for purchases made on credit.

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16
Q

Accrued wages

A

Liabilities owed to employees were previously completed work.

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17
Q

Bank loan

A

‘interest-bearing loan from the commercial bank.

18
Q

Other current liabilities

A

Catchall account that includes borrowing in the form of cash advances on credit cards.

19
Q

Long-term debts

A

Loans that have maturities of longer than one year.

20
Q

Capital leases

A

Long-term, non-cancelable leases, whereby the owner receives payments that cover the cost of equipment plus a return on investment in the equipment.

21
Q

Operating leases

A

Leases that provide maintenance in addition to financing and are also usually cancelable.

22
Q

Owners equity

A

Equity capital contributed by the owners of the business.

23
Q

Stockholders equity

A

Book value of owners equity in a corporation.

24
Q

Common stock account

A

Book value of ownership interest in a corporation.

25
Q

Additional paid in capital account

A

Additional book value of ownership interest in a corporation when the common stock has a par value.

26
Q

Retained earnings account

A

Accumulated profits or losses, retained in the business from operations.

27
Q

Income statement

A

Financial statement that reports to revenues generated and expenses incurred over an accounting period.

28
Q

Cost of good sold

A

Cost of materials and labor encourage to produce the products that were sold.

29
Q

Gross earnings

A

Net sales minus the cost of production.

30
Q

Operating income

A

Also called earnings before interest and taxes (EBIT) the firms profit after all operating expenses, excluding financial cost, have been deducted from net sales.

31
Q

EBIT

A

Earnings before interest and taxes, also called operating income

32
Q

Net income or profit

A

Bottom line measure of what’s left from the firms net sales after operating expenses, financing cost, and taxes have been deducted.

33
Q

Statement of cash flows

A

Financial statement that shows how cash, as reflected in accrual accounting, flowed into an out of a company during any specific period of operation.

34
Q

Variable expenses

A

Cost or expenses that very directly with revenues.

35
Q

Fixed expenses

A

Cost that are expected to remain constant over a range of revenues for a specific time.

36
Q

EBITDA

A

Earnings before interest, taxes, depreciation, and amortization.

37
Q

EBDAT

A

Earnings before depreciation, amortization, and taxes.

38
Q

EBDAT breakeven

A

Amount of revenues needed to cover adventures, cash operating expenses.

39
Q

Cash flow break even

A

Cash flow at zero for a specific.(EBDAT=0)

40
Q

Survival revenues

A

Amount of revenues just of upsetting variable and cash fixed cost

41
Q

Contribution profit margin

A

Portion of the sale of a product that contributes to covering the cash fixed costs.