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Chapter 9
| Term | Definition |
|---|---|
| Financial statements | Summarizes the changes resulting from business transactions that occur during an accounting period. |
| Income statement | Reports net income or net loss |
| Statement of changes in owners equity | Summarizes changes in owners capital account as a result of business transactions |
| Balance sheet | A report of the balances in the permanent accounts at the end of the period. |
| Report form | Lists the balance sheet section one under the other. |
| Statement of cash flows | summarizes amount of cash taken in, sources of cash, amount cash removed. |
| Ratio analysis | process of evaluating the relationship between various amounts in the financial statements |
| Profitability ratios | evaluate the earnings performance of the business during an accounting period. |
| Current assets | used up or converted to cash during normal operating cycle. |
| Current liabilites | debts of the business that mus be paid within the next accounting period |
| Working capital | amount by which current assets exceed current liabilities |
| Liquidity ratio | is a measure of the ability of a business to pay its debt as they become due |
| Current ratio | Reflects current assets and liabilites |
| Quick ratio | Measure of the relationship between short term assets and current liabilites |
| Return on sales | examine the portion of each sales dollar that represents profit |
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