Screen Shot 2019-11-08 at 9.41.52 PM.png - Standard classifications o Assets Current assets Long term investments Property plant and equipment

Screen Shot 2019-11-08 at 9.41.52 PM.png - Standard...

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Unformatted text preview: Standard classifications: o Assets Current assets Long term investments Property, plant, and equipment Intangible assets o Liabilities and stockholders' equity Current liabilities Long term liabilities Stockholders equity Common types of assets are Cash o Investments O Receivables o Inventories o Prepaid expenses Operating cycle: average time it takes from the purchase of the inventory, to the sale of goods, to the collection of cash from customers Long term investments: o Investments in stocks and bonds of other corporations that are held for more than one year Long term assets such as land or buildings that a company is NOT CURRENTLY using in its operating activities Long term notes receivable Depreciation: allocating the cost of assets to a number of years Example: your car value decreasing everyday Accumulated depreciation: total amount of depreciation expensed thus far in assets life . Property, plant, and equipment is sometimes called fixed assets or plant assets Long useful lives Currently used for operations O Includes land, buildings, equipment, delivery vehicles, and furniture Intangible assets: assets that do not have physical substance o Ex. Patents, copyrights, trade marks, trade names Current liabilities: obligations the company is to pay within the next year or operating cycle (whichever is longer) o Examples: accounts payable, salaries, wages payable, notes payable, interest payable, and income tax payable Also included as current liabilities are current maturities of long term obligations-payments to be made within the next year on long term obligations Common stock: investments of assets into the business by the stockholders Retained earnings: income retained for use in the business Ratio analysis expresses the relationship among selected items of financial statement data A ratio expresses the mathematical relationship between one quantity and another A single ratio by itself is not very meaningful Profitability ratios measure the income or operating success of a company for a given period of time Liquidity: ability to pay obligations expected to become due within the next year or operating cycle Liquidity ratios measure short term ability of the company to pay its maturing obligations and to meet unexpected needs for cash Solvency ratios measure the ability of the company to survive over a long period of time EPS: Earnings per Share: measures the net income earned on each share of common stock Working capital is the difference between the amounts of current assets and current liabilities W.C=Current assets - Current liabilities | There is a point where a company can be too liquid Solvency: the ability to pay interest as it comes due and to repay the balance of a debt due at its maturity Current is always within one year monetary unit: only be expressed in money Economic Entity: statues that every economic entity can be separately identified and accounted for Periodicity: states that the life of a business can be divided into artificial...
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  • Spring '14
  • BrigidA.Schaffer

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