P5 Flashcards
tools that managers use to help them in their decision-making considering financial implications.
FINANCIAL STATEMENTS
4 basic fs are:
- INCOME STATEMENT
- BALANCE SHEET
- STATEMENT OF CHANGES IN OWNER’S EQUITY
- CASH FLOW STATEMENT
now called statement of comprehensive income, it details the revenues earned and expenses incurred by a company
INCOME STATEMENT
Are the cost of direct materials, direct labor, and overhead, also called manufacturing cost.
PRODUCT COSTS
Are variable costs or costs that change in volume.
DIRECT MATERIALS % DIRECT LABOR
Are materials, directly incorporated into the product like lumber for furniture, leather for shoes and bags, and cloth for clothing (dress, pants, shirt).
DIRECT MATERIALS
Covers the wages paid to all direct workers. These workers handle jobs such as sewing for shoes.
DIRECT LABOR
Covers all manufacturing costs other than direct materials and direct labor. Includes;
1 Indirect materials (screws and bolts)
2 Manufacturing supplies (gasoline, oil)
3 Salaries of factory or plant managers and supervisors, salaries of factory staff, rent for the plant or factory site, among others
OVERHEAD (MANUFACTURING/FACTORY OVERHEAD)
________ a change in volume while
______ remains constant irrespective of volume
- VARIABLE
- FIXED
Refer to costs incurred during a particular time period and reported either as selling or marketing expenses, and administrative or general expenses.
PERIOD COSTS
corporate expense that changes in proportion to how much a company produces or sells, they vary depending on the profit of the business.
VARIABLE COSTS
Expenses that a company must pay regardless of the level of goods or services produced or sold. Include rent for office building, depreciation expense for the office building and office equipment and furniture and salaries of the office managers and staff.
FIXED COSTS
called statement of financial position shows the assets, liabilities and owners equity of a business. It shows the financial condition or financial position of the business.
BALANCE SHEET OR THE STATEMENT OF FINANCIAL CONDITION
refers to a firm’s ability to meet its maturing obligations in the short run.
LIQUIDITY
refers to the firm’s ability to meet maturing obligations in the long run.
SOLVENCY
TWO ASSETS ARE:
CURRENT ASSETS & NON-CURRENT ASSETS
the resources that will be used for current operations or within the current
operating cycle.
CURRENT ASSETS
refers to the resources of the firm that are durable or will last longer than a year like land, building, equipment, furniture and fixture, and long-term investments.
NON-CURRENT ASSETS
TOTAL LIAB ARE DIVIDED INTO TWO:
CURRENT LIABILITIES & NON-CURRENT LIABILITIES OR LONG-TERM LIABILITIES
________ for sole proprietorship
_________ for partnership
__________ for corporation
- owner’s equity
- partners’ equity
- stockholders’ equity
two types of balance sheet
ACCOUNT FORM & REPORT FORM
Details the changes that occurred in the owner(s)’ equity. It shows the beginning owner(s)’ equity with additional investments for a sole proprietorship or partnership or, for a corporation, additional issuances of corporate stock.
STATEMENT OF CHANGES IN OWNERS’ EQUITY -
Details the beginning retained earnings, the profit/loss of the corporation, dividends declared, retained earnings appropriated, and return of appropriation.
RETAINED EARNINGS ACCOUNT
Are the appropriation of the company’s accumulated earnings for such purposes as plant expansion, building construction, land acquisition, bond retirement, and other purposes as the corporation sees fit.
RETAINED EARNINGS APPROPRIATED
