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Accounting - Coggle Diagram

- - - - In this example it seems somewhat high, but it’s always important to compare a firm’s debt ratio to those of other firms in its industry because debt financing is more acceptable in some industries than it is in others.
  - - - Basic earnings per share : Net income after taxes / Number of common stock shares outstanding e.g., $49,000 / $1000,000 = $ 0.49$ per share.
    - - Return on sales: Net income / Net sales = $49,000 / $700,000.
      - Return on equity:Net income after tax / Total owners’ equity = $49,000 / $213,000
      - The inventory turnover ratio measures the speed of inventory moving trough the firm and its conversion into sales.
- - - - Net income or net loss: Revenue left over after al costs and expenses including tax, are paid.
      - Revenue - costs of sold goods = Gross profit (or gross margin)
      - Gross profit - Operating expenses = Net income before taxes.
      - Net income before taxes - Taxes = Net income (or loss)
- - - - An evaluation and unbiased opinion about the accuracy of a company’s financial statements.
    - - CIA, an accountant who has a bachelor’s degree and two years of experience in internal auditing, and who has passed an exam administered by the Institute of Internal Auditors.
    - - Enron Scandal
  - - - Accounting system for organizations whose purpose is not generating a profit but serving taxpayers, ratepayers, and others according to a duly approved budget.
        
        Government Accounting Standards are set by the Governmental Accounting Standards Board (GASB).
    - - Bookkeeping: The recording of business transactions. Bookkeeping is the part of accounting that actually deals with recording the data.
      - Journal: A computer program or record book where accounting data are first entered.
      - Double-entry bookkeeping:The concept of writing every business transaction in two places. In double-entry bookkeeping, two entries in the journal and the ledgers are required for each company transaction.
      - Ledger: A specialized accounting book or computer program in which information from accounting journals is accumulated into specific categories and posted so that managers can find all the information about one account in the same place. e.g. the Quicken computer program.
- - - - The difference between cash coming in and cash going out of a business.
    - - Investments
      - Financing
      - Operations
  - - - First in, first out (FIFO) An accounting method for calculating cost of inventory; it assumes that the first goods to come in are the first to go out. (only on an administrative basis)
      - Last in, first out (LIFO): An accounting method for calculating costs of inventory: it assumes that the last goods what come in are the first that also leave the firm. (on an administrative basis)
- - - - Equipment
      - Building
      - Land
      - Intangibles
        
        Patents
        
        Trademark
  - - - Items that can or will be converted into cash within one year. Current assets include cash, accounts, receivable, and inventory.
    - - Are long-term assets that are relatively permanent such as land, buildings, and equipment. (These assets are also referred to on the balance sheet as property, plant and equipment)
    - - Are long-term assets that have no real psychical form but do have value. Patents, trademarks, copyrights and goodwill. All examples of intangible asses.