comm 101 chapter 17

The process of systematically collecting, recording, classifying, analyzing, and reporting financial information and activities.

Financial accounting is the process of preparing standardized financial statements that are used by people outside the organization.

To provide financial information that managers inside the organization can use to evaluate and make decisions.

The financial accounting rules, standards and usual practices followed when preparing financial statements.

Publicly traded companies and those private companies who chose to adopt them.

Accounting standards for private enterprises (ASPE).

A report that shows the assets, liabilities, and owners equity at a specific point in time.

owners belongings after debt is paid (assets-liabilities)

A debt obligation due within 1 year.

An asset that is expected to be converted into cash or used within one year.

assets that will be used + generate revenue for longer than 1 year

debts that don't need to be repaid for at least 1 year

The ease at which an asset can be converted to cash

The positive reputation of a company that provides economic value.

A financial statement that shows revenues, expenses, and profits over a period.

Gross sales are the total sales revenue before any deductions; net sales are after deductions.

Total revenue from sales before deductions

Sales revenue minus sales returns and allowances

Fixed or variable.

The direct costs attributable to the production of the goods services sold by a company

Expenses incurred during the regular operations of a business

obligation, subtracted after all expenses have been subtracted

Total revenue minus total expenses is in the +

Total expenses exceed total revenue.

To show how cash flows in and out of a business over a specific period.

To provide information about the cash inflows and outflows of a business

revenue in: sales of goods and services

Buying and selling long-term assets, like property, plant, and equipment

Issuing stocks

Cash related to the production of goods and services

Cash related to the purchase and sale of long-term (fixed) assets

Cash related to debt and equity financing

A method to examine the relationship between different financial statement items

A mathematical relationship between two financial figures.

The ability to quickly sell an asset without losing value and pay short-term debts

how effectively a firm is using it's various resources to achieve profits

The effectiveness of a firm's management in using available assets

The degree to which a firm relies on borrowed funds in it's operation