Unit 1: Statement of Financial Position
This shows a company's financial condition as of a given period. It shows the assets, liabilities, and equity of a business.
what is a STATEMENT OF FINANCIAL POSITON?
This is a financial record that presents a business's performance in terms of profitability. It may include both the Income Statement and Other Comprehensive Income (OCI).
What is a STATEMENT OF COMPREHENSIVE INCOME (SCI)?
A form of business organization that is owned and managed by one person.
What is SOLE PROPRIETORSHIP?
This is a formal report that categorizes cash inflows (receipts) and outflows (disbursements) into an entity's operating, investing, and financing activities over a certain period. It is prepared through direct and indirect methods.
What is the STATEMENT OF CASH FLOWS?
These are metrics used to measure a company's ability to meet its long-term financial obligations.
What are SOLVENCY RATIOS?
These are things a business owns and are used to make goods or render services, giving a business revenue.
What are ASSETS?
The _______ approach is the simpler way of presenting a business’s income statement. It is ideal for presenting the financial performance of service businesses.(Rev-Exp)
What is SINGLE-STEP?
A financial statement that measures the changes that occurred in a business’s owner’s equity portion during a specific accounting period.
What is the STATEMENT OF CHANGES IN OWNER'S EQUITY?
The _____ method of cash flow lies in presenting the cash flows from operating activities.
What is an INDIRECT (METHOD)?
These are obligations to other companies, such as debts, loans, and other things that the business should pay.
What are LIABILITIES?
The ________ approach reports the same profit/loss performance of a business. However, it is more detailed in presenting revenues and expenses.
What is MULTI-STEP?
These are the opposite of additional investments. In this type of transaction, the business owner is taking resources away from the business.
What are WITHDRAWALS?
The ______ approach in cash flow records cash receipts and payments from specified operating transactions (i.e., every action in the entity's normal operation, such as customer collections, payment of running expenses such as salaries, utilities, and supplies, and interest on bank deposits, among others).
What is a DIRECT (METHOD)?
These are the foundation and starting point in financial statement analysis.
What are FINANCIAL STATEMENTS?
This is the sum of all investments from the owner and the business's net income, decreased by the owner’s drawings from the business.
What is EQUITY?
This is the total cost incurred in producing the goods sold to customers.
What is COGS?
The ______ is computed by adding the profit and additional investments to the beginning balance and deducting any withdrawals made by the owner.
What is ENDING EQUITY?
Companies that use the accrual method rather than the cash method in their accounting system typically use the ________ approach.
What is INDIRECT?
this is the number of times a company sells and replenishes inventory over a specific period; the number of days it takes to sell an existing inventory
What is the Inventory Turnover Ratio?
These are obligations need to be settled within 12 months.
What are CURRENT LIABILITIES?
These are the accounts that are being credited as an opposite to the normal balance of purchases. Therefore, they decrease purchases.
What are CONTRA PURCHASES?
This is the value of the owner’s equity from the previous accounting period.
What is the BEGINNING BALANCE OF OWNER'S EQUITY?
This format/method starts with net income and reconciles the actual cash flows from operating activities based on the noncash items and increases/decreases in the balance sheet line items.
What is an INDIRECT METHOD?
This assesses a company's financial leverage; calculated by dividing the total company debt by the total equity.
What is Debt-to-equity Ratio?