Accounting Cheat Sheet

Topics: Income statement, Balance sheet, Generally Accepted Accounting Principles Pages: 1 (1265 words) Published: November 18, 2014
Revenues measure the inflow of net assets resulting from selling products or services. Failure to adjust for depreciation results in the overstatement of assets and the understatement of net income. (FALSE). Which of the following transactions would not affect owners’equity? Purchasing supplies for cash. Increased earnings do not always generate an increase in cash flow. CFO includes: selling goods, not: buildings, dividends, long-term debt. Depreciation reduces net income but is not related to a cash expenditure during the period (ignoring income tax effects). Current liabilities Are obligations that a firm expects to pay or discharge during the normal operating cycle of the firm, usually one year as of the date of the Balance Sheet. Usually includes liabilities to merchandise suppliers and employees. Includes notes and bonds payable to the extent that they will expect to be paid off within the next year. Balance sheet measures financial leverage and liquidity. Cash paid for employees salaries creates an expense when cash is paid for work done in current period. If a company has $100 COGS, $100 other exp, $100 profit, sales = $200 ($100 cogs + $100 profit), net margin = 0%. Short term liquidity ratios measure the ability of a company to pay off short term debts due in the very near future. Working capital = total current A – total current L. Net Sales – gross profit = COGS. Balance sheet + income statement show total costs of merchandise that remains and total sold. Accounting: a process of identifying, analyzing, recording, summarizing, and reporting economic information to decision makers. Financial accounting: focuses on specific needs of decision makers external to the org (stockholders, suppliers, banks, govt agencies) used for evaluating past performance, assess future prospects, bus. Relations. 10k report: letter to shareholders, description of bus./strategy, management’s discussion and analysis: covers liquidty, cap structure, results from operations....
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