Ch. 13, 14 & 15 Key Terms

Ch. 13, 14 & 15 Key Terms - Ch. 13 Key Terms Accounting...

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Ch. 13 Key Terms Accounting equation: the statement that assets minus liabilities equals owner's equity (assets – liabilities = owners' equity) Articulate: the concept that data flows from the income statement through the statement of retained earnings and owners' equity to the balance sheet Assets: things an entity owns that are expected to have future value Balance sheet: a statement of what a business owns (assets), what it owes to others (liabilities) and how much value the owners have invested in it Bankrupt: the financial state of having more debt than assets, such that net worth is negative Budget: a financial plan for the future, based on a single level of operations. A quantitative expression of the use of resources necessary to achieve a business' strategic goals Business entity concept: the concept that a business has an existence separate from that of its owners Cash flow statement: a statement of the sources and uses of cash in a business for a specific period of time Cost: the value given up to obtain something that you want Current ratio: the value of current assets divided by current liabilities Depreciation: regular and systematic reduction in income that transfers asset value to expense over time Expense: an increase in owner's equity caused by selling your product Financial accounting: a formal, rule-based set of accounting principles and procedures intended for use by outside owners, investors, banks, and regulators Financial flexibility: an business' ability to manage cash flows in such manner that the company can respond appropriately to unexpected opportunities and needs Financial statement: formal summaries of the content of an accounting system's records of transactions Financial strength: the ability of a business to survive adverse financial events
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Financing activities: activities through which cash is obtained from and paid to owners and investors Going concern: the accounting concept that a business is expected to continue in existence for the foreseeable future Income statement: a statement that lists revenues, expenses, and show the amount of profit a business made for a specified period of time Investing activities: the purchase and sell of land, buildings, equipment, and securities also the process of borrowing and repaying money Liabilities: legal obligations to give up things of value in the future Liquidity: a measure of how quickly a company can raise money through internal sources by converting assets to cash Managerial accounting: accounting methods that are specifically intended to be used by mangers for planning, directing, and controlling a business Operating activities: activities involved in producing and selling goods and services Opportunity cost: the value of things given up in order to purchase something else. Owners' equity:
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Ch. 13, 14 & 15 Key Terms - Ch. 13 Key Terms Accounting...

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