Uses
A company's ability to convert its assets to cash to meet its current liabilities
What is liquidity?
Cash and other assets that will be consumed or converted into cash within one year of the balance sheet date or within one operating cycle, whichever is longer
What are current assets?
Accounts Payable is a...
What is a current Liability?
Amounts shareholders have invested in the company such as common stock and additional paid-in capital
Shareholders are
issued $100,000 of
Common Stock in
Exchange for Cash
Debit cash for
100,000;credit
common stock for
100,000
The ability of a company to alter cash flows in order to satisfy unexpected needs or take advantage of unexpected investment opportunities
What is financial flexibility?
Current assets are listed in decreasing order of...
liquidity
Bonds payable is a...
What is a long term liability?
Accumulated net income reported by the company since its inception minus dividends distributed to shareholders.
What are retained earnings?
Inflow of assets
from ongoing or
major activities
What is revenue?
a company's ability to pay all its liabilities, short-term and long-term
What is solvency?
Accounts receivable is a...
What is a current asset?
Obligations expected to be satisfied through the use of existing current assets or the creation of new current liabilities.
What are current liabilities?
similar to retained earnings but includes only other comprehensive income items that are not included in net income
What is accumulated other comprehensive income?
Purchased $1,800 of
supplies using cash
Debit supplies 1,800
Credit cash 1,800
What is net realizable value?
the amount expected to be collected.
Gross A/R - allowance for uncollectible accounts
Land is...
What is plant property and equipment? (or long term asset)
Obligations that are due to be settled in more than one year (or operating cycle, if longer)
What are Long-term liabilities?
amounts resulting from buying back previously issued shares of the company's stock but not retiring them
2 fundamental
characteristics of the
conceptual
framework
What is relevance
and faithful
representation?