The Balance Sheet
The Income Statement
Miscellaneous Terms
Comparing Financial Data
Pot Pourri
100

The ease with which an asset can be converted into cash

What is liquidity?

100
The dollar amounts earned by a firm from selling goods, providing services, or performing business activities
What are revenues?
100
Illustrates the company's operating, investing and financing activities affect cash during an accounting period
What is the statement of cash flows?
100
The number of times the firm ells its merchandise inventory in one year
What is inventory turnover?
100
A report distributed to stockholders and other interested parties that describes the firm's operating activities and its financial condition
What is an annual report?
200

Assets that can be converted quickly into cash or that will be used within one year or less

What are current assets?

200
The total dollar amount of all goods and services sold during the accounting period
What are gross sales?
200
The difference when revenues exceed expenses
What is net income?
200
The ratio that determines how effectively a firm is transforming sales into profits
What is return on sales (or profit margin)?
200
Land, buildings and equipment used in the continuing operation of the business
What are fixed assets?
300

The other name for the balance sheet?

What is the Statement of Financial Position?

300
The actual dollar amounts received by the firm for the goods and services it has sold after adjustment for returns, allowances, and discounts
What are net sales?
300
The difference when expenses exceed revenues
What is net loss?
300
A financial ratio that is used to evaluate a firm's ability to pay its currently liabilities
What is current ratio?
300

An individual who has met state requirements for accounting education and experience and has passed a rigorous accounting examination

What is a certified public accountant (CPA)?

400

The process of apportioning the cost of a fixed asset over the period during which it will be used (i.e., its useful life)

What is depreciation?

400
All business costs other than the cost of goods sold
What are operating expenses?
400
A summary of a firm's revenues and expenses during a specified accounting period--one month, three months, six months or a year
What is an income statement?
400
Shows the relationship between two elements of a firm's financial statements
What is the financial ratio?
400
The portion of a business's profits not distributed to stockholders
What are retained earnings?
500
Assets that do not exist physically but that have a value based on the rights or privileges they confer on a firm
What are intangible assets?
500
Price reductions offered to customers who accept slightly damaged or soiled merchandise
What are sales allowances?
500
An examination of a company's financial statements and the accounting practices that produced them
What is an audit?
500
Calculated by dividing net income after taxes by net sales
What is return on sales (or profit margin)?
500
The ratio that is approximated by dividing the cost of goods sold in one year by the average value of the firm's inventory
What is inventory turnover?
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