Essay on Econ: Generally Accepted Accounting Principles and Balance Sheet

Submitted By syjaletta
Words: 874
Pages: 4

GAAP - the standard for creating financial reports in the United States.

Income statement - shows revenues, expenses, and profit for a time period such as a month, quarter, or years.

Fiscal year - any twelve-month period that a company uses for accounting purposes.

Gross profit line - "above the line or below the line"

Sales (revenue) - the dollar value given of all the products or services a company provides to its customers during a given period of time.

Costs of goods sold - all the costs directly involved in producing a product or delivering a service

Operating expenses - costs that are required to keep a business going day to day

Net profit (Net income) - the bottom line of the income statement

ethics, passion, intuition - ______, _______, _______ are all key characteristics of an entrepreneur

Opportunities and threats - The two parts of a SWOT analysis that refer to external areas of concern for a company

Strengths and weaknesses - The two parts of a SWOT analysis that refer to internal areas of a company

Non-cash expenses - expenses charged to a period on the income statement but is not actually paid out in cash

Depreciation expense - used to spread the cost of equipment and other assets over more than one accounting period

Operating profit (EBIT) - gross profit minus operating expenses, which includes depreciation and amortization

EBITDA (earning before interest, taxes, depreciation, amortization) - Wall Street believes is a better measure of a company's operating efficiency because it ignores noncash chargers

Earnings per share - a publicly traded company's net profit divided by the number of shares outstanding

RMA report - information categorized by NAICS codes, separated by total revenues, and tabulated to provide an industry average

Balance sheet - reflects the assets, liabilities, and owner's equity at a specific point in time

Assets - come first on the balance sheet and reflect what the company owns

current assets - includes assets that can be turned into cash in less than a year

cash and cash equivalents - comes first in the current asset portion of the balance sheet

account receivables (A/R) - reflect customer balances outstanding on credit sales

Inventory - reflect items held for sales or used in the manufacturing of products that will be sold

Finished goods, raw materials - ____, ____, and work in progress are three types of inventory

long term assets - includes assets that cannot be turned into cash within the next twelve months

Capital expenditure - the purchase of an item that's considered a long-term investment, such as a building and/or equipment

Capital - refers to things such as physical capital and financial capital

Property, plant, and equipment (PPE) - a company's fixed assets and whose value is adjusted on the balance sheet by accumulated depreciation

Straight line, units of production, accelerated depreciation - Three methods of depreciation are...

Land - property used in the business

Building and leasehold improvements - ____ are amortized by the lessee over the economic life of the improvement or the life of the lease, whichever comes first.

Equipment - ___ reflects "historic costs" including delivery and installation charges, of machinery and equipment used in business operations.

accumulative depreciation - Accountants use ________________ to adjust the "historic cost" of all items, depreciated to what is known as "book value"

Other assets - refers to a multitude of other noncurrent assets on the balance sheet such as goodwill, patents, trademarks, copyrights, brand names, and…