Accounting for Decision Makers - C213 Refresher

The ability to compare financial data of a company over different time periods. This allows investors to analyze trends and performance.

A principle where companies prioritize recognizing potential losses and delaying the recognition of gains. It encourages a cautious approach in financial reporting.

The importance of an item being large enough to impact a decision or how someone interprets the financial information.

The relationship or connection between the balance sheet, income statement, and cash flow statement. They tell the same story, just from different perspectives.

A financial statement that shows a company's assets, liabilities, and equity at a specific point in time.

The excess of net assets at the end of an accounting period over the net assets at the beginning of the accounting period, excluding the effects of transactions with owners.

The process of adjusting raw transaction data to provide refined measures of a company's economic performance.

Income from continuing operations minus below-the-line categories like discontinued operations and extraordinary gains/losses. Represents a company's overall economic performance for a specific period.

The value of resources used to generate revenue.

The value of goods and services provided by a company in its regular business operations.

A measure of a company's performance that includes all items expected to continue into the future.

Increase in actual physical resources or productive capacity.

Increase in the dollar amount of a company's net assets excluding inflation.

Analyzing financial statements where each item is expressed as a percentage of a common base, revealing trends and comparisons between different companies or periods.

A framework used to analyze a company's financial performance by breaking down return on equity (ROE) into profitability, efficiency, and leverage.

A financial ratio that measures a company's profitability by showing how much net income is generated for every dollar of sales.

A financial ratio that measures how efficiently a company uses its assets to generate sales.

A financial ratio that measures a company's leverage by indicating the proportion of assets financed by equity.

A financial ratio that measures the percentage of net income that is generated from cash flow operations, highlighting the impact of accrual accounting adjustments.

A financial ratio that indicates a company's ability to finance its capital expansion through cash generated from operations.

A financial ratio that assesses a company's ability to meet its interest payments using cash flow from operations.

A financial statement that reports a company's revenues and expenses over a period of time. It shows the company's profitability.

A financial statement that shows the company's cash inflows and outflows over a period of time. It provides insights into the company's cash management and liquidity.

An accounting method that recognizes revenues and expenses when they are earned or incurred, regardless of when cash is received or paid.

An accounting method that recognizes revenues and expenses only when cash is received or paid.

A financial statement that presents financial information that is not subject to Generally Accepted Accounting Principles (GAAP), used for forecasting and planning.

A method of investment valuation that calculates the present value of future cash flows.

A financial metric that measures a company's profitability by subtracting its cost of capital from its operating profit.

The process of comparing actual performance with expected results, usually in the form of a budget.

The process of analyzing results, providing feedback, rewarding performance and identifying problems.

The process of setting targets for future performance and creating a plan to achieve them.

Costs that change in direct proportion to changes in the level of sales or production, such as raw materials and direct labor.

Costs that remain constant regardless of the level of sales or production, such as rent, salaries, and depreciation.

A financial model that shows how much revenue is needed to cover all costs and break even.

Detailed information focused on the company's internal decision-making, often kept secret within the company.

Summarized information used by external parties like investors and creditors, usually following standardized accounting principles.

A grouping of similar overhead costs that are associated with a specific activity, like setting up a production line.

The analysis of how changes in revenue, costs, and activity levels affect a company's profitability.

The range of production where variable costs are roughly linear. This is a useful assumption for CVP analysis.