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Financial Accounting
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Managerial Accounting
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Chapter 7
| Term | Definition |
|---|---|
| Financial Accounting | The area of accounting that focuses on reporting info to external users. |
| Managerial Accounting | The area of accounting that focuses on reporting info to internal users. |
| FYI – Full Disclosure | When financial statements contain all info necessary to understand a businesses financial condition. AKA Adequate Disclosure |
| FYI – Going Concern | When financial statements are prepared with the expectation that a business will remain in operation indefinitely. |
| FYI – 4 sections of Income Statement | Heading, Revenue, Expenses, Net Income/Net loss |
| FYI – 2 items Income Statement compares | Revenue vs. Expenses |
| Financial Ratio | A comparison between two components of financial info. |
| Ratio Analysis | The calculation and interpretation of a financial ratio. |
| Vertical analysis | Reporting an amount on a financial statement as a percentage of another item on the same financial statement. |
| ROS | Return on Sales |
| FYI – ROS used to determine | How much profit is being produced per dollar of sales. |
| FYI – ROS used by analysts | determine profit per dollar sold. |
| FYI – 4 sections of Balance Sheet | Heading, assets, liabilities, and owners equity. |
| FYI – Balance Sheet proves | Assets=liabilities+Owners equity |
| FYI – steps to calculate Current Capital | Add the capital amount, and the difference between the net income and the drawing account. Record the sum |
Created by:
andrew.v
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