chapter 7- financial statements for a proprietorship

financial accounting

The area of accounting which focuses on reporting information to external users

managerial accounting

The area of accounting that focuses on reporting information to internal users

statement of owner’s equity

A financial statement that reports the changes in the capital account for a proprietorship for a period of time

financial ratio

A comparison between two components of financial information

ratio analysis

The calculation and interpretation of a financial ratio.

vertical analysis

Reporting an amount on a financial statement as a percentage of another item on the same financial statement

return on sales (ros)

The ratio of net income to total sales

stakeholders

Any persons or groups who will be affected by an action.

budget

A financial road map used by individuals and companies as a guide for spending and saving

surplus

A positive balance that remains after total expenses are subtracted from total income

deficit

A negative balance that remains after total expenses are subtracted from total income.

interim financial statements

Financial statements providing information for a time period shorter than the fiscal year