Study Guide Test 1

Study Guide Test 1 - in Inventory Capital Expenditure =...

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Chapter 1 Review Balance Sheet: Assets, Liabilities, Equity at any given time **Accounting Equation: Assets = Liabilities + Equity Income Statement (Statement of Operations): Revenues, Cost of Goods Sold, Expenses and Taxes over a given period of time. **The above are related through Net Income=Retained earnings + dividends Statement of Cash Flow (Operations, Investing, Financing): **Cash Flow=Net income (loss) = non-cash expenses (depreciation) – change in current assets excluding cash + change in current liabilities Review Source and Use in terms of Gain/Loss of Assets, Liabilities, and Equity Cash from sales = Net sales – Change in Accounts Receiable Cash paid for purchases = Cost of Goods Sold – Change in Accounts Payable – Change
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Unformatted text preview: in Inventory Capital Expenditure = Change in Net Fixed Assets + Depreciation Working Capital, another name for Current assets Chapter 18 Review Cash Conversion Cycle: Days of Sales Outstanding + Days of Sales in Inventory Days of Payable Outstanding DSO: Accounts receivable / (sales/365) DSI: Inventories / (cost of goods sold/365) DPO: Accounts payable / (cost of goods sold/365) Minimize Net working capital: Increase Payable, Decrease Receivables, Increase Inventory Turns Interest: Principal x rate x time APR: (Interest / Principal) x (1 / time) APY: [(1 + (APR/number of compounding periods (1 / (time/365)))^number of compounding periods] 1 *Compounding increases cost of short-term credit...
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