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Accounting Principles and Financial Statement Analysis, Exams of Advanced Education

Princeton UniversityAdvanced Education

A comprehensive overview of key accounting principles and financial statement components. It covers gaap guidelines, accrual accounting, depreciation, and the balance sheet equation. It also details various assets, liabilities, and equity components, including current and fixed assets, short-term and long-term liabilities, and owner's equity. The document further explains the income statement, cash flow statement, and important financial ratios, offering a structured approach to understanding financial performance and planning. It is a useful resource for students and professionals seeking to grasp the fundamentals of financial accounting and analysis. This document also covers the different stages of a company.

Typology: Exams

2024/2025

Available from 07/11/2025

Prof-Cornel
Prof-Cornel 🇺🇸

4.9K documents

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ENTR 460 Test Latest Update
GAAP - Answer guidelines that set out the manner and form for presenting accounting
information
accrual accounting - Answer the practice of recording economic activity when
recognized rather than waiting until realized
depreciation - Answer reduction in value of a fixed asset over its expected life intended
to reflect the usage of wearing out the asset
accumulated depreciation - Answer The sum of all the depreciation amounts charged to
fixed assets
balance sheet - Answer financial statement that provides a snapshot of a venture's
financial position as of a specific date
balance sheet equation - Answer total assets= total liabilities + owners equity
assets - Answer financial, physical, and intangible items owned or controlled by the
business
listing order of assets - Answer assets are listed in declining order of liquidity, or how
quickly the asset can be converted into cash
liabilities order - Answer short-term liabilities are listed first followed by long-term debts
owed by the venture
owners equity - Answer equity capital contributed by the owners of the venture is shown
after listing all liabilities
current assets - Answer cash and other assets that are expected to be converted into
cash in less than one year
fixed assets - Answer assets with expected lives of greater than one year
types of current assets - Answer cash, receivables, inventories
cash - Answer amount of coin, currency, and checking account balances
receivables - Answer credit sales made to customers
inventories - Answer raw materials, work-in-progress, and finished products which the
venture hopes to sell
types of current liabilities - Answer payables, accrued wages, and bank loans
payables - Answer short-term liabilities owed to suppliers for purchases made on credit
accrued wages - Answer liabilities owed to employees for previously completed work
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ENTR 460 Test Latest Update

GAAP - Answer guidelines that set out the manner and form for presenting accounting information accrual accounting - Answer the practice of recording economic activity when recognized rather than waiting until realized depreciation - Answer reduction in value of a fixed asset over its expected life intended to reflect the usage of wearing out the asset accumulated depreciation - Answer The sum of all the depreciation amounts charged to fixed assets balance sheet - Answer financial statement that provides a snapshot of a venture's financial position as of a specific date balance sheet equation - Answer total assets= total liabilities + owners equity assets - Answer financial, physical, and intangible items owned or controlled by the business listing order of assets - Answer assets are listed in declining order of liquidity, or how quickly the asset can be converted into cash liabilities order - Answer short-term liabilities are listed first followed by long-term debts owed by the venture owners equity - Answer equity capital contributed by the owners of the venture is shown after listing all liabilities current assets - Answer cash and other assets that are expected to be converted into cash in less than one year fixed assets - Answer assets with expected lives of greater than one year types of current assets - Answer cash, receivables, inventories cash - Answer amount of coin, currency, and checking account balances receivables - Answer credit sales made to customers inventories - Answer raw materials, work-in-progress, and finished products which the venture hopes to sell types of current liabilities - Answer payables, accrued wages, and bank loans payables - Answer short-term liabilities owed to suppliers for purchases made on credit accrued wages - Answer liabilities owed to employees for previously completed work

bank loan - Answer interest-bearing loan of one year or less from a commercial bank types of long-term liabilities - Answer long term debts and capital leases long-term debts - Answer loans that have maturities of longer than one year capital leases - Answer long-term, noncancelables leases whereby the owner receives payments that cover the cost of the equipment plus a return on investment in the equipment operating leases - Answer provide maintenance in addition to financing and are usually canclable what are often financed through operating leases? - Answer computers, copiers, and automobiles balance sheet impact for operating leases - Answer no assets or lease liabilities are recorded on the balance sheet income statement - Answer financial statement that reports the revenues generated and expenses incurred over an accounting period sales or revenues - Answer funds earned from selling a product or providing a service gross earnings - Answer net sales (after deducting returns and allowances) minus the cost of production operating income or earnings before interest and taxes (EBIT) - Answer indicates a firms profit after operating expenses, excluding financing costs have been deducted from net sales net income (or profit) - Answer bottom line measure after all operating expenses, financing costs, and taxes have been deducted from net sales cost of production schedule - Answer important for preparing the income statement cost of goods sold schedule - Answer important for preparing the income statement inventories schedule - Answer important for preparing the balance sheet statement of cash flows - Answer shows how cash, reflected in accrual accounting, flowed into and out of a firm during a specific period of operation when does net cash burn occur - Answer when the sum of cash flows from "operations" and "investing" is negative variable expenses - Answer costs or expenses that vary directly with revenues fixed expenses - Answer costs that are expected to remain constant over a range of revenues for a specific time period

receivables net working capital - Answer current assets minus current liabilities leverage ratio - Answer indicates the extent to which the venture is in debt and its ability to repay its debt obligations loan principal amount - Answer dollar amount borrowed from a lender interest - Answer dollar amount paid on the loan to a lender as compensation for making the loan profitability ratios - Answer indicate how efficiently a venture controls its expenses efficiency ratios - Answer indicate how efficiently a venture uses its assets in producing sales interest tax shield - Answer proportion of a venture's interest payment paid by the government because interest is deductible before taxes are paid ROA model - Answer the decomposition of ROA into the product of the net profit margin and the sales to total assets ratio ROE model - Answer the decomposition of ROE into the product of the net profit margin, the sales-to-total-assets ratio, and the equity multiplier development stage - Answer screen business ideas, prepare business plan, obtain seed financing startup stage - Answer Choose Organizational Form Prepare Initial Financial Statements Obtain First Round Financing survival stage - Answer Monitor Financial Performance Project Cash Needs Obtain First Round Financing Possible Actions: Liquidate v. Restructure rapid growth stage - Answer Create and Build Value Obtain Additional Financing Examine Exit Opportunities Possible Actions: Go Public v. Sell/Merge early maturity stage - Answer Manage Ongoing Operations

Maintain and Add Value Obtain Seasoned Financing

short term cash planning tools - Answer sales schedule, purchase schedule, wages and commission schedule, and cash budget

operating cycle - Answer cash-->materials/work in progress-->finished goods--> receivables (credit sales)

conversion period ratio - Answer indicates the average time it takes in days to convert certain current assets and current liability accounts into cash

operating cycle - Answer time it takes to purchase, produce, and sell the ventures products plus the time needed to collect receivables if the sales are on credit

cash conversion cycle - Answer sum of the inventory to sale conversion period and the sales to cash conversion period less the purchase to payment conversion period