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Direct Method
Lists cash receipts and disbursements by source/use of funds; primarily used for cash flow statements.
Indirect Method
Reconciles net income with operating cash flows by adjusting for noncash items and changes in working capital.
GAAP
Generally Accepted Accounting Principles; a framework of accounting standards, rules, and procedures.
Operating Activities
Cash flows associated with a company's main business operations.
Investing Activities
Cash flows associated with the purchase and sale of long-term assets.
Financing Activities
Cash flows related to debt and equity financing.
Noncash Items
Items that do not involve cash transactions, such as depreciation and amortization.
Working Capital
The difference between a company's current assets and current liabilities.
Accounts Receivable
Money owed to a company by its customers for goods or services delivered.
Depreciation Expense
A noncash charge that reduces the value of an asset over time.
Assets
Resources owned by a company that have economic value.
Liabilities
Obligations or debts that a company owes to outside parties.
Equity
The owner's claim on assets after liabilities are deducted.
Revenue
Income earned from the sale of goods or services.
Expenses
Costs incurred in the process of earning revenue.
Cash Flow
The net amount of cash being transferred in and out of a business.
Financial Statements
Reports that summarize a company's financial status, including the income statement, balance sheet, and cash flow statement.
Balance Sheet
A statement that shows a company's assets, liabilities, and equity at a specific point in time.
Income Statement
A report that summarizes revenues and expenses over a specified period, resulting in net income or loss.
Cash Flow Statement
A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives.
Net Income
The total profit of a company after all expenses and taxes have been deducted from revenue.
Gross Profit
Revenue minus the cost of goods sold (COGS).
Cost of Goods Sold (COGS)
The direct costs attributable to the production of the goods sold by a company.
Accounts Payable
Money a company owes to its suppliers for purchases made on credit.
Accounts Receivable
Monies owed to a company by customers for goods or services delivered.
Inventory
Goods and materials that a business holds for the purpose of resale.
Depreciation
A systematic reduction in the recorded cost of a fixed asset.
Amortization
The gradual reduction of a debt through periodic payments over time.
Financial Ratio
A quantitative relationship between two numbers to evaluate financial performance.
Liquidity
The ability of a company to meet its short-term financial obligations.
Solvency
The ability of a company to meet its long-term financial commitments.
Operating Profit
Revenue from operations after subtracting operating expenses.
Return on Equity (ROE)
A measure of financial performance calculated by dividing net income by shareholders' equity.
Return on Assets (ROA)
A profitability ratio that measures how efficiently a company can manage its assets to generate earnings.
Debt-to-Equity Ratio
A financial ratio that indicates the relative proportion of shareholders' equity and debt used to finance a company's assets.
Budget
A financial plan that estimates income and expenses over a specified period.
Forecasting
The process of estimating future financial outcomes based on historical data and analysis.
Taxable Income
The amount of income used to calculate how much tax an individual or company owes to the tax authorities.
Dividends
Payments made by a corporation to its shareholder members, typically from profits.
Shareholder
An individual or institution that owns shares in a corporation.
Stock
A share of ownership in a company.
Market Capitalization
The total market value of a company's outstanding shares of stock.
Initial Public Offering (IPO)
The first sale of stock by a private company to the public.
}]} The generated flashcards cover a range of essential financial concepts. If you need further information or specific adjustments, let me know! Just a reminder that these concepts can fit within various accounting or finance courses. Just ask if you need anything adjusted or have special needs.What is GAAP?
Generally Accepted Accounting Principles; a framework of accounting standards, rules, and procedures.
What are operating activities?
Cash flows associated with a company's main business operations.
What are investing activities?
Cash flows associated with the purchase and sale of long-term assets.
What are financing activities?
Cash flows related to debt and equity financing.
What are noncash items?
Items that do not involve cash transactions, such as depreciation and amortization.
What is working capital?
The difference between a company's current assets and current liabilities.
What is accounts receivable?
Money owed to a company by its customers for goods or services delivered.
What is depreciation expense?
A noncash charge that reduces the value of an asset over time.
What are assets?
Resources owned by a company that have economic value.
What are liabilities?
Obligations or debts that a company owes to outside parties.
What is equity?
The owner's claim on assets after liabilities are deducted.
What is revenue?
Income earned from the sale of goods or services.
What are expenses?
Costs incurred in the process of earning revenue.
What is net income?
The total profit of a company after all expenses and taxes have been deducted from revenue.
What is gross profit?
Revenue minus the cost of goods sold (COGS).
Note 
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