Costs and Expenses Flashcards
Match the Costs with the associated Sale to determine Profits in a given period of time
Matching Principle
What is revenue ?
It is money earned not money received
What is GAAP ?
- Generally Accepted Accounting Principles
- a codification of how CPA firms and corporations prepare and present their business income and expense, assets and liabilities on their financial statements.
What is C.O.G.S ?
The cost of goods (what’s in and what is out)
example - Plastic to make cup, Persons salary to sell cups
The cost incurred daily to run the business (not in making the product or service)
Operating Expenses
Considered a long term investment, useful life, asset, over a certain amount ….
Capital Expenditures
What are the costs called below the line?
Operating Expenses
What are the costs called above the line?
Sales or COGS
A reduction in the value of an asset with the passage of time, due in particular to wear and tear.
Depreciation
The paying off of debt with a fixed repayment schedule in regular installments over a period of time - for example with a mortgage or a car loan
Amortization
List some one time charges ?
- Extraordinary Items
- Write-offs
- Write-downs
- Restructuring Charges
- Sales of Asset
Get used to reading numbers
Analyzing results
What action you might take
3 keys to financial intelligence
Difference between variable and fixed costs?
Variable costs change while fixed always stay the same
