Fundamentals of ABM 2 - Vocabulary Flashcards (SFP, SCI, CFS, and Ratios)

VOCABULARY flashcards covering key terms from the lecture notes on SFP, SCI, SCE, CFS, and financial ratios.

Statement of Financial Position (SFP)

A financial statement that reports a company's assets, liabilities, and owner's equity at a specific point in time.

Assets

Resources controlled by the entity.

Current Assets

Assets expected to be realized within one year.

Non-Current Assets

Assets expected to be realized after one year.

Liabilities

Obligations that the entity must settle.

Current Liabilities

Liabilities due within one year.

Non-Current Liabilities

Liabilities due after one year.

Owner’s Equity

The residual interest in the assets after deducting liabilities; also known as net worth.

Liquidity

Measure of how quickly assets can be converted to cash.

Capital

Owner's investment in the business minus withdrawals.

Intangible Assets

Non-physical assets like trademarks and patents.

Cash

Current asset representing money on hand or in the bank.

Accounts Receivable

Amounts owed by customers.

Inventory

Goods held for sale.

Property, Plant, and Equipment

Non-current assets; long-term tangible assets.

Heading

Part of SFP: Includes the company name, statement name, and date.

Asset Section

Section of the SFP divided into current and non-current assets.

Liability Section

Section of the SFP divided into current and non-current liabilities.

Balance Equation

Total assets must equal total liabilities plus owner's equity.

Report Form

SFP format presented vertically with assets, then liabilities and equity.

Account Form

SFP format with assets on the left and liabilities plus equity on the right (T-account style).

Service Revenue

Revenue generated from providing services.

Revenue

The gross inflow of economic benefits from ordinary activities.

Expenses

Decreases in economic benefits during the accounting period.

Cost of Goods Sold (COGS)

Direct costs attributable to the production of the goods sold.

Gross Profit

Sales minus COGS.

Operating Expenses

Costs necessary to run the business (selling and administrative expenses).

Net Purchases

Purchases minus purchase discounts and purchase returns.

Freight-In

Costs associated with transporting goods to the seller’s location.

Freight-Out

Costs related to delivering goods to customers.

Beginning Capital

The equity at the start of the period.

Additional Investments

Any additional capital contributed by the owner during the period.

Drawings

Withdrawals made by the owner for personal use.

Ending Capital

The total equity at the end of the period.

Net Income or Loss

Profit or loss generated during the period.

Gains and Losses

Increases or decreases in economic benefits not part of regular operations.

Other Items

Includes income taxes and other comprehensive income.

Service Business

Generates revenue through services provided.

Merchandising Business

Generates revenue through the sale of goods.

Sales

Total revenue generated from selling goods.

Temporary Accounts

Accounts that accumulate balances over a period and reset at the beginning of the next period.

Permanent Accounts

Accounts that remain open and retain their balances from one period to the next.

Income Taxes

Taxes on income included as Other Items in SCI.

Direct Method

Cash flow statement method that lists major cash receipts and payments.

Indirect Method

Cash flow statement method that adjusts net income for changes in non-cash items.

Net Cash Flow

The difference between cash inflows and outflows for an activity.

Cash Equivalents

Short-term, highly liquid investments readily convertible to cash.

Operating Activities

Cash flows from primary revenue-producing activities.

Investing Activities

Cash flows related to the acquisition or disposal of long-term assets.

Financing Activities

Cash flows that affect the equity and borrowing structure.

Net Sales

Total revenue from sales (often used as base in SCI analyses).

Average Collection Period

365 divided by the Accounts Receivable Turnover.

Accounts Receivable Turnover

Measures how often a company collects its average accounts receivable.

Inventory Turnover

Cost of Goods Sold divided by Average Inventory.

Average Days in Inventory

365 divided by Inventory Turnover.

Gross Profit Ratio

Gross Profit divided by Net Sales.

Return on Assets (ROA)

Net Income divided by Total Assets.

Return on Equity (ROE)

Net Income divided by Shareholder's Equity.

Debt to Total Assets Ratio

Percentage of assets financed through debt.

Debt to Equity Ratio

Liabilities divided by Shareholders' Equity.