Chapter 4

Balance Sheet

A snapshot of a company's financial position.

debt/equity

All companies finance their assets with a mixture of ______ and _______

Liabilities

Assets = ______ + Shareholders Equity.

Fixed

Assets are assets that are expected to provide a benefit to the firm for more than one year

current

Assets are listed first on the balance sheet and are the assets that can easily be converted to cash.

Long-term Debt Retained Earnings Preferred Stock Inventory Accrued fExpenses Prepaid Expenses Accounts Receivable Accounts Payable Common Stock Marketable Securities Notes Payable Plant and Equipment Capital in Excess of Par Cash

BS

creditors

Capital contributions come from two main sources: ______ and common stockholders.

Non cash

Depreciation is a ________ expense that results in a inflow of cash

MACRS

Depreciation method accelerated the depreciation write off by pushing a greater option of the tot expense to the front of the assets life

Operating

EBIT is also called ________ income

COGS

Gross profits equals revenue minus

Interest Expense Preferred Stock Dividends Paid Operating Income Sales Depreciation Expense Cost of Goods Sold Net Income

IS

retained earnings

In addition to the income statement, many firms prepare a short statement of ___ _____ that records dividend and retained earning information

retained earnings

In addition to the income statement, many firms prepare a short statement of _________ that records dividend and retained earnings information.

liquidity

In the U.S., the balance sheet lists assets and liabilities according to their degree of ______, from most to least liquid.

GAAP

In the US, all public corporations must follow the guidelines and rules known as

No

Is net profit equivalent to the net cash flow at the end of an accrual period?

10-K

Report contains audited financial statements submitted annually to the sec for distribution to the public

10-Q

Reports contain unaudited financial statements and are submitted quarterly to the SEC

Balance Sheet

Shows assets, liabilities and equity at a given point of time

Marginal

Tax rate changes as the level of taxable income changes

21%

The 2017 Tax Cuts and Jobs Act (TCJA) created a flat rate tax for corporations of

1986

The 2017 tax cuts and jobs act was the first major federal tax code revision since

income

The Statement of Cash Flows distinguishes between _______ and cash flow

in, out

The Statement of Cash Flows records cash how cash flows ______ and _____ a company over a given period of time.

Securities, Exchange

The ____ and ________ Commission requires all public corporations to file financial statements, and to make them available to the public.

straight line

The ______ _______ depreciation method involves dividing the cost of the asset by its useful economic life

retained

The ______ earnings figure represents the sum of all the net income of a business during its entire history, minus the sum of all the common stock dividends that it has ever paid.

equity

The ______ section of the balance sheet contains common stock, capital in excess of par, and retained earnings.

income

The ______ statement shows revenues, expenses, and income.

FASB

The ________ publishes the GAAP rules governing how public corporation must account for their business activities.

income

The ________ statement measures a firm's profitability over a period of time

total assets

The common-size balance sheet shows each item as a percentage of ______ ______.

sales

The common-size income statement shows each item as a percentage of ______.

Retained Earnings

The equity section of the balance sheet contains three items: common stock, capital in excess of par and ______ ______.

cash flow

The financial manager is concerned with how depreciation will impact ______ ______.

retained earnings

The last entry in the common stock equity section of the balance sheet

financed

The liabilities and equity section of the balance sheet show how the company's assets are ______.

par value

The stated value printed on the stock's certificate

capital

The sum of liabilities and equity is the total ______ contributed to the business.

IRS

While federal tax rates are set by congress, the _____ determines the amount of federal income a firm owes

Common size

______-______ financial statements help financial managers in the decision-making process.

Net Working Capital

current assets - current liabilities

MACRS

specifies the percent of the cost assets that will be charged each year as a depreciation expense during the assets life as dictated by the Tax Reform Act of 1986