Accounting
Basics
Basics
This type of accounting focuses on providing information to external users such as investors and creditors.
What is financial accounting?
This financial statement shows a company's assets, liabilities, and equity at a specific point in time.
What is the balance sheet?
This point represents where total revenues equal total costs, resulting in zero profit.
What is the break-even point?
This ratio measures a company's ability to pay its short-term obligations.
What is the current ratio?
This type of financing involves borrowing money that must be repaid with interest.
What is debt financing?
These two groups are the primary internal users of managerial accounting information.
Who are managers and employees?
This financial statement shows a company's revenues and expenses over a period of time.
What is the income statement?
This cost remains constant regardless of production volume.
What is fixed cost?
This profitability ratio shows how much profit is generated from each dollar of sales.
What is profit margin?
This financing method involves selling ownership shares in a company.
What is equity financing?
Unlike financial accounting, this type of accounting is not required to follow GAAP.
What is managerial accounting?
Found on the balance sheet, this equation states that Assets = Liabilities + Owner's Equity.
What is the accounting equation?
To calculate break-even point in units, you divide fixed costs by this amount.
What is contribution margin per unit?
This leverage ratio compares total liabilities to total equity.
What is the debt-to-equity ratio?
This debt instrument requires regular interest payments and repayment of principal at maturity.
What is a bond?
These are the three main activities reported in a Statement of Cash Flows.
What are operating, investing, and financing activities?
The income statement follows this concept, showing revenues earned during a period regardless of when cash is received.
What is the accrual basis of accounting?
When calculating break-even point, this type of cost changes proportionally with production volume.
What are variable costs?
This efficiency ratio measures how many times inventory is sold and replaced over a period.
What is inventory turnover?
Unlike common stock, this type of stock typically pays a fixed dividend and has priority in dividend payments.
What is preferred stock?