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Balance Sheet
| Question | Answer |
|---|---|
| Current Asset | Liquid (easily converted to cash) and will be used or converted to cash within a year. Cash, IOUs, Inventory, Prepaid Expenses, Notes Receivable. |
| Marketable Securities | Things that you intend to sell within a year other than inventory. |
| Non-Current Assets | Things that cannot be easily turned into cash or that will not be sold or converted to cash within one year. Land, Buildings, Machinery, Vehicles, Furniture, Fixtures, Depreciation, Allowances for Bad Debt. |
| PPE | Property, Plant, Equipment. |
| Other Assets | Shown at the bottom of a balance sheet. Investments not converted to cash within one year. Intangible Assets |
| Intangible Assets | Patents, Copyrights, Goodwill |
| Goodwill | The extra amount paid in order to buy a company. Paid out of the belief that the company bought is worth the extra amount paid. |
| Historical Costs | PPE, Intangible costs Valuation |
| Net Realizable Value | Accounts Receivable Valuation |
| Market to Market | Value of stocks (stock prices). Marketable Securities Valuation |
| Lower of Cost or Market | Is the market price or the cost to buy the inventory higher than what you are paying or offering? Inventory and non-marketable securities valuation |
| Depreciation | Systematic and rational allocation of the cost of property and equipment to the period in which it is used to generate revenue. |
| Depreciation Calculation | Cost-SV=Depreciable Basis. Depreciable Basis/Useful Lifetime=Annual Depreciation Expense. |
| Accounts Payable | Credit purchase of inventory (retailer) or new materials (manufacturer) |
| Borrowed Funds | Bank borrowings, bank notes, bonds payable. |
| Accrued Amounts | Result of timing differences between when an unpaid expense is reported on the income statement and when it is eventually paid. Anything non-inventory |
| Unearned Revenue | Paying ahead for a service |
| Customer Deposits | Payment before receiving the product. |
| Current Liabilities | Those scheduled to be paid within a single year. Current long term debt, unearned revenue, notes payable, salaries, taxes, accounts payable. |
| Long Term Liabilities | Those to be paid over the course of multiple years; usually with interest. Mortgages, bonds, notes payable. |
| Stockholder's Equity | Residual amount remaining after subtracting liabilities from assets. It is the amount of assets that the owners have clim to: capital invested or earnings retained. |
| Treasury Stock | Owned by a company to keep shares off the market or give it to the employees. Negative on the spreadsheet. Does not effect Common Stock or APIC accounts. Is recorded in cash and shareholder's earnings. |
| Principle | Face value or amount owed |
| Interest rate | Expressed annually unless stated otherwise. |
| Contingent Liabilities | Recognized and recorded when it is determined probable that the company will pay AND the amount of the liability can be relatively determined. |
| Par Value | Minimum amount a company must leave in the business. Usually set low to allow flexibility. |
| Common Stock Amount | Par Value X # Shares |
| APIC | Additional Paid in Capital. (Price of Stock-Par Value) X # Shares |
| Dividends | Payable when declared by board of directors. When declared goes into expense. When paid, go in retained earnings. |
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