D366 STUDY GUIDE 100% ACCURATE
Balance Sheet - ANSWERSassets, liabilities, owner's equity
Income Statement - ANSWERSreports amount of net income earned during a period.
Net Income - ANSWERSexcess of revenues over expenses
Statement of Cash Flow - ANSWERSReports amounts of cash collected and paid out
during operating, investing, and financing activities.
capital stock - ANSWERSan owner purchased stock. also known as paid in capital and
contributed capital
retained earnings - ANSWERSnet income that has not been paid back in dividends.
capital stock - ANSWERSaka paid in capital or contributed capital. an owner buys stock
accounting equation - ANSWERSassets=liabilities+equity. can always calculate a
missing figure if you have 2 others.
components of the income statement - ANSWERSdescribes companies financial
performance for a period of time. Sales/Revenue, COGS, operating expenses,
operating income, gains, losses, taxes, resulting in net income.
Income statement: net income helps explain... - ANSWERSchanges in retained
earnings between 2 balance sheet dates
components of the cash flow statement - ANSWERSoperating(any activity on the
income statement), investing(related to the firm investing in itself, equipment purchases
etc) financing(buying/selling your stock, creditors lending you money)
what statement contains a detailed explanation of why the balance sheet cash amount
changed? - ANSWERSthe cash flow statement
what statement explains changes in retained earnings on the balance sheet? -
ANSWERSincome statement
cash from operations on the statement of cash flow is transformed into net income
through what? - ANSWERSaccounting adjustments applied to cash flow data
current ratios - ANSWERSliquidity ratios- measures firms ability to pay current liabilities
with assets that should be converted to cash within 1 year.
current assets divided by current liabilities
, debt ratios - ANSWERSmeasures level of debt burden and leverage that a company
has. ratio should be below .5-.6.
total liabilities divided by total assets
ROE - ANSWERSdollars of profit generated compared to owners investment. similar to
an interest rate the owners are earning on their investment.
net income divided by owners equity
equity - ANSWERStotal assets-total liabilities
ROA - ANSWERSmeasures the profits the firm is generating on its asset. similar to an
interest rate the company is earning by investing its asset in the business.
net income divided by total assets
asset turnover ratio - ANSWERSmeasures how well a corp is generating sales from its
assets.
sales/total assets
price per earnings ratio - ANSWERSmarket ratio. investors are trying to determine
future earnings using past income.
market value of shares/net income
accrual accounting - ANSWERSensures that only and all revenue that has been earned
in a given period is reported on the income statement and that all costs and expenses
incurred to generate that income is included on the income statement for the same
period.
Accrual accounting: when can a corp recognize revenues? - ANSWERSwhen they have
delivered the goods. they do not have to receive cash to record income. if they receive
payment before goods are delivered, cannot record it.
what is the impact of revenue transactions on statements? - ANSWERSany transaction
that involves the income statement flows to the balance sheet through retained
earnings.
pro forma - ANSWERSfuture income statement
cash flow statement: operating - ANSWERSany activity on the income statement.
includes interest expense and any revenues earned from investing in other businesses.
cash flow statement: investing - ANSWERSrelated to a firm investing in itself through
property, equipment and investing in other businesses. also includes dividends because
they are a transfer of retained earnings.
Balance Sheet - ANSWERSassets, liabilities, owner's equity
Income Statement - ANSWERSreports amount of net income earned during a period.
Net Income - ANSWERSexcess of revenues over expenses
Statement of Cash Flow - ANSWERSReports amounts of cash collected and paid out
during operating, investing, and financing activities.
capital stock - ANSWERSan owner purchased stock. also known as paid in capital and
contributed capital
retained earnings - ANSWERSnet income that has not been paid back in dividends.
capital stock - ANSWERSaka paid in capital or contributed capital. an owner buys stock
accounting equation - ANSWERSassets=liabilities+equity. can always calculate a
missing figure if you have 2 others.
components of the income statement - ANSWERSdescribes companies financial
performance for a period of time. Sales/Revenue, COGS, operating expenses,
operating income, gains, losses, taxes, resulting in net income.
Income statement: net income helps explain... - ANSWERSchanges in retained
earnings between 2 balance sheet dates
components of the cash flow statement - ANSWERSoperating(any activity on the
income statement), investing(related to the firm investing in itself, equipment purchases
etc) financing(buying/selling your stock, creditors lending you money)
what statement contains a detailed explanation of why the balance sheet cash amount
changed? - ANSWERSthe cash flow statement
what statement explains changes in retained earnings on the balance sheet? -
ANSWERSincome statement
cash from operations on the statement of cash flow is transformed into net income
through what? - ANSWERSaccounting adjustments applied to cash flow data
current ratios - ANSWERSliquidity ratios- measures firms ability to pay current liabilities
with assets that should be converted to cash within 1 year.
current assets divided by current liabilities
, debt ratios - ANSWERSmeasures level of debt burden and leverage that a company
has. ratio should be below .5-.6.
total liabilities divided by total assets
ROE - ANSWERSdollars of profit generated compared to owners investment. similar to
an interest rate the owners are earning on their investment.
net income divided by owners equity
equity - ANSWERStotal assets-total liabilities
ROA - ANSWERSmeasures the profits the firm is generating on its asset. similar to an
interest rate the company is earning by investing its asset in the business.
net income divided by total assets
asset turnover ratio - ANSWERSmeasures how well a corp is generating sales from its
assets.
sales/total assets
price per earnings ratio - ANSWERSmarket ratio. investors are trying to determine
future earnings using past income.
market value of shares/net income
accrual accounting - ANSWERSensures that only and all revenue that has been earned
in a given period is reported on the income statement and that all costs and expenses
incurred to generate that income is included on the income statement for the same
period.
Accrual accounting: when can a corp recognize revenues? - ANSWERSwhen they have
delivered the goods. they do not have to receive cash to record income. if they receive
payment before goods are delivered, cannot record it.
what is the impact of revenue transactions on statements? - ANSWERSany transaction
that involves the income statement flows to the balance sheet through retained
earnings.
pro forma - ANSWERSfuture income statement
cash flow statement: operating - ANSWERSany activity on the income statement.
includes interest expense and any revenues earned from investing in other businesses.
cash flow statement: investing - ANSWERSrelated to a firm investing in itself through
property, equipment and investing in other businesses. also includes dividends because
they are a transfer of retained earnings.
