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
