C213 Accounting for Decision Makers WGU Verified Study Questions and Answers 2024 Top Graded

Balance Sheet - financial position of company at a moment in time Income Statement - Financial performance of the company over a period of time Statement of cash flows - cash receipts and disbursements of company over a period of time Lender - Predict ability to repay loans Investors - Predict future earnings and dividends Suppliers & Customers - ability to pay for goods and honor contracts Company management - analyze company's strengths and weaknesses Accounting equation - Assets = Liabilities + Owner's Equity Assets - resources, typically owned by the company Liabilities - Obligations or debts of the company Owners equity - direct and indirect investments owners (stockholders) have made Liquidity - the ease with which an asset can be converted into cash current assets - cash and other assets expected to be exchanged for cash or consumed within a year Accounts Receivable - Amounts owed by customers as a result of credit sales, usually collected in cash within 60 days of the sale. Short-term investments - investments in stocks or bonds of another company that the company plans to sell within 12 monts long term assets - assets the company does not expect to convert to cash or consume within 12 months Long-term investments - investments in stock or bonds of another company that the company does not plan to sell within 12 months Property, plant, and equipment (PP&E) - Land, buildings, machinery, and tools. intangible assets - assets that have to physical or tangible characteristics (patents, copyrights, and trademarks) Current Liabilities - liabilities due within a short time, usually within the next 12 months Accounts Payable - Amounts to be paid in the future for goods or services already acquired Accrued Liabilities - Expenses that the company has incurred by year end but are unpaid. (interest payable, wages/salary) short-term notes payable - Principal owed to bank or other lenders that are due within 12 months long-term liabilities - Not due within the next 12 months retained earnings - cumulative amount of a corporations profits that have been reinvested. Residual interest - owners equity Income Statement Equation - Revenues - Expenses = Net Income single step income statement - all revenues are grouped together, all expenses are grouped together, and net income is computed as the difference between total revenues and total expenses. Note that income tax expense is shown separately, to emphasize the fact that the amount of income tax expense depends on the amount of income before taxes. multi step income statement - includes multiple sub-totals (gross profit, operating income, income from continuing operations, net income) sales revenue - cash and credit sales to customers cost of goods sold (cogs) - cost of goods sold to customers (expense) COGS equation - beginning inventory + purchases - ending inventory gross profit - difference between the selling price of the product and the cost operating expense - expenses not associated with purchasing or production of product