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Accounting Exam 1
Terms in this set (28)
Profit remaining after paying your direct product costs but before paying your overhead and general expenses.
Revenue-Costs of Goods Sold-Direct Expenses.
Used to determine how much money the company is bringing in from normal, ongoing operations.
Gross profit-overhead expenses
Represents a period of time like a month, quarter, or a year. Measures the revenues and expenses DURING the year.
Financial statement that summarizes a company's assets, liabilities, and owners equity at a specific time. Assets on one side, and liabilities plus owners equity on the other side.
Company resources on hand at the end of the period.
Current Assets: cash, accounts receivable, inventory, prepaid expenses.
Long-Term Assets: long-term investments, fixed assets, intangible assets, property and equipment, income taxes.
What the company still owes at the end of the period.
Current Liabilities: current portion of long term debt, bank debt, interest payable, rent, tax, utilities, accounts payable, depreciation.
Difference between cost of resources on hand and the total liabilities.
Preffered and common stock, additional paid in capital, retained earnings, total.
Cash Flow Statement
Financial statement that records the amounts of cash and cash entering and leaving a company.
Cash Flows from Operating Activities
How much money the company received from their business' operations.
Starts with net income, then adds in any depreciation expenses, deferred taxes, accounts payable, and accounts receivable, and one time charges.
Cash Flows from Investing Activities
How much money the company has received or lost from its investing activities.
Money the company has made or lost by investing cash in different investments, money the company has made or lost by buying or selling subsidiaries, and the money the company has spent on physical property; buildings.
Cash Flows from Financing Activities
Where the company reports the money that it took in and paid out in order to finance its activities.
Any dividend payments that the company made to its shareholders, any money that it made by selling shares, any money it spent by buying shares back, any money it borrowed, and any money it used to repay money.
Five areas where accountants work
Industry, public accounting, governmental accounting, nonprofit accounting, and education.
Responsibilities of Industry Accountants
CVP, budgeting, cost accounting, financial reporting, integrated accounting system, internal auditing, management accounting, non-financial positions, tax planning.
Purposes: helps owner see interrelated aspects of a business, serves as a benchmark, nd used to help obtain financing.
Components: description of the company, marketing plan, operating plan, and financial plan.
Description of the company (business plan)
Location, products/services, customers, and how organized.
Marketing plan (business plan)
Market research, demand, competition, pricing, sales forcasts.
Operating Plan (business plan)
Produce/purchase, sales, service, support, protect.
Capital requirements, sources of capital, CVP analysis, budgets, projected financial statements.
Occurs when revenues=costs, and contribution margin=fixed costs.
Fixed costs + wanted profit / CBM = required units to sell.
Total revenues-total variable costs.
Selling price per unit-variable costs per unit.
Number of unit sales to achieve a target profit
Fixed costs + total costs / contribution margin per unit.
Contribution Margin * Units Sold - total fixed costs.
Units to be sold, sales revenue, cash collections from sales.
Units to be purchased, costs of payments, cash payments for purchases.
Selling/General Admin expenses budget
Fixed and variable operating expenses, cash payments for the expenses.
Cash receipts and cash payments for operating, investing, and financing activities.
Projected income statement
sales revenue, variable costs, fixed costs, profit.
Projected balance sheet
assets, liabilties, owners equity.
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