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Accounting Chapter 9
Term | Definition |
---|---|
Balance Sheet | A report of the balances in the permanent accounts on a specific date. |
Report Form | A balance sheet format that lists classifications one under another. |
Statement of Cash Flow | A financial statement that summarizes the cash receipts and cash payments resulting from business activities during a period. |
Ratio Analysis | The process of evaluating the relationship between various amounts in the financial statements. |
Profitability Ratio | A ratio used to evaluate the earnings performance of a business during the accounting period. |
Return on Sales | A ratio that examines the portion of each sales dollar that represents profit; calculated by dividing net income by sales. |
Current Assets | The assets that are either used up or converted to cash during the normal operating cycle of the business. |
Current Liabilities | The debts of the business that must be paid within the next accounting period. |
Working Capital | The amount by which current assets exceed current liabilities. |
Liquidity Ratio | The measure of a business’s ability to pay its current debts as they become due and to provide for an unexpected need for cash. |
Current Ratio | The relationship between current assets and current liabilities; calculated by dividing current assets by current liabilities. |
Quick Ratio | A measure of the relationship between short-term assets and current liabilities; calculated by dividing the total cash and receivables by the current liabilities. |