Accounting and Financial Management Practice Quiz Flashcards

A set of vocabulary flashcards covering basic accounting principles, financial statements, accrual accounting, business taxation, and financial modeling based on lecture quiz materials.

Revenue

An account found on the Income Statement reflecting earnings.

Statement of Financial Position

Another name for the Balance Sheet.

Profit and Loss Statement

Another name for the Income Statement.

Balance Sheet and Cash Flow Statement

The two financial statements where the account of cash appears.

Debit

The type of transaction entry that increases Assets or Expenses.

Credit

The type of transaction entry that increases Liabilities, Revenue, or Equity.

Accounting Equation

$$\text{Assets} = \text{Liabilities} + \text{Shareholders' Equity}$$

Deferred Revenue

Also known as unearned revenue, this is a liability account on the balance sheet where cash is received before the revenue is recognized.

Deferred Expenses

Also known as prepaid expenses, this is an asset account on the balance sheet where cash is spent before the expense is recognized.

Accounts Receivable

An account representing future payments from customers.

Accounts Payable

An account representing future payments to vendors.

Accrued Revenues

Also known as unbilled receivables, these are recognized before cash is received.

Accrued Expenses

Expenses that are recognized before cash is spent.

Net Income

A specific metric that acts as a link between the income statement, the balance sheet, and the cash flow statement.

Net Cash Flow

The sum of Cash Flow from Operations, Investing, and Financing; for example, \$100,000 + (-\200,000) + \$25,000 = -\$75,000.

Gross Profit

$$\text{Revenue} - \text{Cost of Goods Sold}$$

Double-taxation

A tax characteristic where an entity, such as a C-corporation, is taxed at both the corporate and shareholder levels.

Property Taxes

Taxes commonly paid on a household or home that an individual owns.

Articles of Incorporation

The document required to be filed to form a C-Corporation.

Articles of Organization

The document required to be filed to form a multi-member LLC.

S-Corp Ownership Limit

A specific entity type that cannot have over $100$ shareholders or owners.

Wayfair vs. South Dakota

The landmark court case that created precedent for new sales tax treatment for U.S. based businesses.

FICA Taxes

Taxes composed of both Social Security and Medicare.

Form 941

The IRS tax form that employers must file quarterly for federal taxes, including income taxes, FICA taxes, and withheld taxes.

Sales Tax Nexus

Generally dictated by physical presence in a state and/or reaching a certain threshold of economic activity in that state.

Budget

A financial operating framework of an organization that helps it properly allocate resources within a set of constraints.

Leveraged Buyout (LBO) Model

A model primarily used by private-equity investors to determine the value of a company being acquired using debt as part of the capital structure.

Cash Burn Rate

A KPI representing the total cash spent on operating activities plus cash earned.

Cash Runway

A KPI indicating how many months of cash a business has remaining or on-hand.

EBITDA

Earnings before Interest, Taxes, Depreciation, and Amortization.

Vertical Analysis

A type of financial analysis used to derive metrics such as gross profit margin.