is a fundamental concept that states that transactions should be recorded in the accounting period in which they occur, regardless of when the actual cash flows happen.

is a fundamental concept that states that transactions should be recorded in the accounting period in which they occur, regardless of when the actual cash flows happen.

specifies that costs and expenses are established when incurred, even before actual payments are made.

Expenses are recognized by matching them with the revenue generated in a given account ing period.

The assets of a company are always equal to the claims against it. This principle states that a company's assets are always equal to the sum of its liabilities and owner's equity.

ASSETS = LIABILITIES + OWNER'S EQUITY

All relevant information is disclosed to the users of the company’s financial reports.

Assets are to be recorded at the lowest value consistent with objectivity

As stated in Section 7.1, it is assumed that the company’s business will go on forever. This assumption justifies the current practice of using historical data and a reasonable method of depreciation (e.g., straight line) by which the book value of corporate tangible assets is defined.

is the total revenue realized by the firm during an accounting period.

an accounting report that matches sales revenue with pertinent expenses that have been incurred. Sometimes it is also called the profit or loss statement, earnings statement, or operating and revenue statement.

cost of goods that have been actually sold during an accounting period. calculated as the opening inventory at the beginning of an accounting period, plus labor costs, material costs, and manufac turing overhead incurred during the period, and minus the closing inventory at the end of the period.

the sales revenue minus the CGS. The gross margin percentage is the ratio of gross margin divided by sales revenue.

those expenditures chargeable against sales revenue during an accounting period.

process by which the cost of a fixed, long-lived asset is converted into expenses over its useful life.

the earnings before interests and taxes.

the earnings before interests and taxes.

the excess of sales revenue over all expenses (e.g., CGS, all items under (4), and corporate tax) in an accounting period.

the amount per share paid out to stockholders in an accounting period

the net income of a firm during an accounting period minus dividends on preferred stock, divided by the number of common shares outstanding.

can be defined as follows: while all _____ are also expenditures, not all _____ are expenses. Only expenses are chargeable against revenues in a given accounting period.

is defined as net income plus noncash charges (such as depreciation). It represents the net inflow of cash to a company at the end of an accounting period.

items of value with a measurable worth. They are resources of economic value possessed by the company.

an accounting report that lists the assets owned by a company and the ways in which these assets are financed through liabilities and owners’ equity.

convertible to cash within 12 months.

money on hand or in bank checks and is the most liquid form of assets.

the category of revenue recognized prior to payment collec tion. It is money owed to the company, usually by its customers or debtors, as the result of a credit transaction.

designates stock of goods yet to be sold that is valued at cost, includ ing direct materials, direct labor, and manufacturing overhead.

are paid before receiving the expected benefit (e.g., rent, journal subscription fee, or season’s tickets). They are a CA.

are tangible assets of long, useful life (more than 12 months), such as land, buildings, machines, and equipment.

are tangible assets of long, useful life (more than 12 months), such as land, buildings, machines, and equipment.

valuable assets that are neither current nor fixed.valuable assets that are neither current nor fixed.

the sum of all annual depreciation charges taken from the date at which the fixed asset is first deployed up to the present

the net value of the firm’s tangible assets: original acquisition cost minus accumulated depreciation.

obligations that need to be discharged by the company in the future.

describes amounts due for payment within 12 months.

an expense recognized before payment.

income received in advance of being earned and recognized

the amount of tax due to be paid in the future, usually within 12 months.

are long-term debt certificates secured by the assets of the issuing entity

defined as the amounts due to be paid in more than 12 months.

unsecured bonds issued by the firm

are those debt certificates issued by a company that are allowed to be converted into common stocks according to a set of specifications

the shareholders’ original investment plus accumulated retained earnings.

a certificate of ownership of a company

the premium price per share above the par value of the stock.

the accumulated earnings retained by the company, not to be paid out as dividends, for the purpose of reinvestment.

defined as the tangible assets (such as fixed assets) minus liabilities and the equity of preferred stocks.

the market value of a firm’s stock.

called the statement of changes in financial position or the statement of sources and uses of funds.

also called the Statement of Financial Position - serves as a snapshot, providing the most comprehensive picture of an organization's financial situation

is the firm’s capability to satisfy its CLs, such as buying materials, pay ing wages and salaries, paying interests on long-term debt, and other necessary expenditures.

defined as CAs minus CLs.

the ratio of CAs to CLs.

the ratio of quick asset to CLs. is defined as cash plus marketable securities and accounts receivable.

The changes in sales and inventory.

The sum of the company’s long-term liabilities and owners’ equity

also known as return on sales (ROS) indicates the company’s overall operational efficiency in creating profitability based on sales.

is not a sure basis for projecting the company’s condition in the future.

measures a company's economic profit by subtracting the cost of capital from after-tax net operating income.

REFERS TO ACTIVITIES UNDERTAKEN BY A COMPANY TO RAISE CAPITAL FOR SHORT TERM AND LONG-TERM INVESTMENT PURPOSES

the liabilities incurred by the company to make contractual payments (e.g., interest payments) under specified terms.

denotes the use of debts in financing corporate projects. The company is said to be highly leveraged if its leverage ratio is more than 0.5 (Mathis 2014).