FINANCIAL ACCOUNTING

FINANCIAL VS MANAGERIAL ACCOUNTING

INCOME STATEMENT
NET SALES
Operating costs
EBITDA
Depreciation
EBIT
Interest payments
EBT
Taxes
Dividents to preferred stocks (if any)
NI (Net income, profit, earnings)

EPS=NI/Number of shares outstanding

ACCRUAL VS CASH BASIS

DOUBLE ENTRY BOOK KEEPING

BALANCE SHEET
ASSETS
CURRENT ASSETS
Cash
Marketable securities
Accounts receivables
Inventories
Prepaid expenses

FIXED ASSETS
Machinery&Equipment
Buildings and land

OTHER ASSETS
Investments&patents

LIABILITIES (DEBT)&EQUITY
CURRENT LIABILITIES
Accounts payable
Accrued expenses
Short term notes

LONG TERM LIABILITIES

Long term notes
Mortgages

EQUITY
Preferred stock
Common stock
Paidin capital
Retained earnings

RATIOS
Liquid ratio (or quick ratio)= cash/current liabilities
Current ratio=current assets/current liabilities
Debt ratio=total debt/total assets
Inventory turnover=COGS/average inventory
Days of receivables=365xcredit sales/receivables
Average payable period=purchases/accounts payable
Return on investment=net profit/net worth
Price earnings ratio=market price per share/net income per share

COGS= Cost of goods sold

ADJUSTMENTS
prepaid deferred expenses including depreciation
unearned deferred revenues
accrued expenses
accrued revenues

ACCOUNTING PERIOD
annual
semiannual
quarterly
monthly

THE RECORDING PROCESS
transactions
journal
ledger
trial balance
financial statements

FINANCIAL STATEMENTS
Income statement
Balance sheet
Cash flow statement

T-ACCOUNTS
title of account
debit
credit

Organisaatio