Chapter 8- Using Financial Statements Flashcards
1
Q
Three financial statements to track your business
A
- An income statement
- A balance sheet
- A cash flow statement
2
Q
Definition of Income Statement
A
The difference between revenue (sales) and expenses (costs) is a profit or a given period.
3
Q
Ten parts of the income statement
A
- Revenue
- Cogs Cost of goods or services sold
- Gross profit
- Other variable costs
- Contribution margin
- Fixed operating costs
- Earnings before interest and taxes (EBIT)
- Pre-tax profit
- Taxes
- Net profit (loss)
4
Q
Definition of the Balance Sheet.
A
A snapshot of assets, liabilities, and equity at a point in time (net worth of a business)
5
Q
What are short term assets
A
Current assests - cash or items that could be quickly turned into cash (liquidated) or that will be used by the business within one year
6
Q
What is the relationship of the Balance Sheet and Financing?
A
6
7
Q
What is equity and how do you calculate it?
A
7
8
Q
What are current and long-term liabilities
A
9
9
Q
What are long term assets
A
(Fixed) those that will take more than one year to use, or could not be quickly liquidated
