Accounting 101
This is what GAAP stands for
What are generally accepted accounting principles?
An account that is presented on the balance sheet and represents the expenses paid in advance
What is prepaid expense?
Net Income divided by Number of Shares Outstanding
What is Earnings per Share (or EPS)?
Gross Margin appears on this statement
What is the income statement?
The most liquid asset of all
What is cash?
Commonly known to examine financial statements to verify that they are prepared according to GAAP
Who/what are auditors?
An account that records the amount of cash to be collected from customers after the business delivers its products or services
What is receivables?
Current Assets divided by Current Liabilities
What is the Current Ratio?
Gain on Disposal of Equipment appears on this statement
What is the income statement?
A reduction in assets, caused by the normal operation of the business, is usually this
What is an expense?
The three legal forms a business may take.
What are 1)sole proprietorships, 2)partnerships and 3)corporations?
An income statement account that records the cost of products sold to customers
What is cost of goods sold?
Cost of Goods Sold divided by Inventory
What is Inventory Turnover?
Accumulated Depreciation appears on this statement
What is the balance sheet?
ABC Corp. loans money to XYZ Co.; XYZ gives ABC this document, which can then be freely traded on the secondary market
What is a Marketable Security (or Debt Security)?
Creditors claims on assets
What are liabilities?
An account that represents the obligation for the business to deliver some amount of product or services because cash was received from customers in advance
What is unearned revenue?
Sales divided by Accounts Receivable
What is A/R Turnover?
Unrealized Gain on Trading Securities appears on this statement
What is income statement?
When a company sells on credit, it uses this account to set aside an amount in expectation that some or all of the receivable will eventually become uncollectible
What is "Allowance for Bad Debt"?
A balance sheet is prepared to in order to show this
What is financial position?
An account that is presented on the balance sheet and represents the cost of stock in trade purchased
What is inventory?
This ratio is 365 divided by A/R Turnover
What is Average Days to Collect?
Wages Payable to Employees appears on this statement
What is the Balance Sheet?
One of the three methods of Accelerated Depreciation mentioned in class
What is Sum-of-Years-Digits, OR Double-Declining Balance, OR MACRS?