Upgrade to remove ads
Only $35.99/year

Quiz 4

Terms in this set (22)

What is articles of incorporation?
document submitted by incorporators when applying for a charter
What are the steps to coming a corporation?
1) submit articles of incorporation drawn up by an attorney
2) charter is issued to incorporators
3) stock is issued by corporation to the owners
4) the stockholders meet to elect a board of directors, and adopt the bylaws of the corporation.
What are incoporators?
person responsible for getting the corporation formed.
What is a charter?
document issued to a cooperation by the state that includes certificate of incorporation along with articles of incorporation
What is limited liability?
freedom of stockholders from personal liability for the debts of the cooperation
What is common stock?
part of paid-in capital representing the basic ownership equity if the corporation. If the corporation has only one class of stock, it will be common stock
What is an acid ratio test?
a liquidity ratio, those assets that are most easily converted to cash are divided by current liabilities to indicate ability to pay off short- term debt. Also called quick ratio
What is the Net-purchases formula?
Gross Purchases- Purchases returns & allowances- purchase discounts= net purchases
What are accounts receivable?
an asset that indicates owed by customers
What is average collection period?
a ratio that shows how quickly moneys owed are received from customers and thereby measures how effectively a company collects its accounts receivables
articles of partnership
legal documents that set forth the basic agreement between partners
Liquidity Ratios
measures of a businesses ability to pay debts in the short term
Inventory Turnover ratio
an assets management that indicates how quickly inventory moves off the shelf and therefore how a company sells its product
vertical analysis
comparing items in a financial report by expressing each item as a percentage of a certain base total
Horizontal Analysis
amounts of items compared on the same line of comparative financial reports. Horizontal analysis can also be called trend analysis
Gross Profit Rate
a profitability ratio that indicates how well net sales cover administrative and selling expenses
debt to total assets ratio
a ratio that shows how much of a companies assets' are financed through creditors
debt to stockholder equity ratio
a ratio in which total liabilities are divided by the amount of stock that is owned to measure the risk creditors run in comparison to stockholders
Corporation
a type of business organization that is owned by stockholders. Stockholders usually are not personally liable for the corporations debts.
Partnership
a form of business organization that has at least two owners. The partners usually are personally liable for the partnerships debts
What is a ratio?
a relationship of two quantities or number, one divided by others
What are the articles of partnership?
the written contract that spells out the details of the agreement among the partners
Students also viewed