GAAP
The definition of GAAP
What is a common set of rules and a standard format for public companies to use when they prepare their financial reports
Product decision
What product should the company produce?
All current assets
What are Cash, Marketable Securities, Accounts receivable, Inventories?
represented by shares of stock, is how much the owners of the company actually own, taking into account not only the assets of the company but also the claims against those assets.
What is Equity?
Flat tax system
What is a system where the same tax rate is applied to all income
GAAP (acronym -> words)
What is the acronym for the Generally Accepted Accounting Principles?
Production decision/Capital budgeting decision
What productive assets will the company obtain?
All Current liabilities
What is Short-term debt and Accounts payable?
Common Stock
What is when holding this one has the right to all profits after the other claimants of the firm are satisfied, can vote for board of directors, carry residual risk?
Progressive tax system
What is a system in which income is divided into brackets, and a higher tax rate is applied to higher-income brackets
The accountant recognizes revenues when a contractual obligation occurs, such a sale, or debt is incurred.
What is the Realization Principle?
Financing decision/Capital structure decision
How will the company obtain investment capital to obtain its productive assets?
What are Long-term liabilities
What is Long-term debt, Capital lease, and Deferred taxes?
Preferred Stock
What is a claim that is senior to common stock but subordinate to liability claim and the owner has a set dividend, and do not have voting rights
Marginal tax rate
What is the tax you would pay (in percent) if you earned one more dollar?
The accountant generally records an item at cost and does not adjust its value in the accounting statements
What is the Cost Principle?
Income Statement
What is a recording of flows of funds into and out of the company and the residual, or profit, from the firms operating and financing decisions?
All Long-term assets/Capital assets
Net property, plant, equipment, property, start-up costs, and investments in long-term securities
What is the Total assets - Total Liabilities
What is Stockholders’ equity?
Average Tax Rate (formula/method)
What is it called when you dividing the total tax paid by the taxable income?
Revenues should be matched with the expenses used to produce them
What is the Accrual Method/Matching Principle?
Net operating income (NOI)
What is a firm’s gross profit less its operating expenses?
Amortization/Impairment charge
A charge that captures the change in value of acquired assets. Like depreciation, amortization is not an actual cash expense.
Book value of equity/shareholder equity (definition)
What is the difference between the book value of a firm’s assets and its liabilities, also called stockholders’ equity, it represents the net worth of a firm from an accounting perspective
The difference between accounting income and taxable income
What are Deferred taxes?