Professional Documents
Culture Documents
Important terms and definitions Key accounting terms Accounting equation Accounting period Accrual principle
Income, expenses and depreciation of assets Sample financial statements from the simulation Important measures of success & financial ratios
Financial Accounting
Recording of all financial transactions for a company Details of each transaction are entered into to company accounts (books). All entries are in a monetary unit (e.g., dollars, euros, ringgits, etc.)
Accounts are summarized and transferred periodically to financial statements which show the financial condition of the company (its profits or losses, its cash position, how much it owes, etc.)
PROPERTY
(Land, buildings)
INVESTMENTS
(Stocks, bonds, etc.)
ACCOUNTS RECEIVABLE
company, plus retained earnings (all of the profits less losses less dividends paid out, if any, since the start of the company). Also known as Stockholders Equity.
It is also the value of the assets remaining if all of the liabilities are paid off using available assets also known as the Book Value of the company.
Assets
Liabilities + Equity
Illustration of the Accrual Principle & the Flow of Major Expenses and Income
Product expenses Materials Labor Overhead Improving quality Depreciation
FGI Unsold FGI
Sales
Quarter 1
Cash
Quarter 2
Financial Statements
Income Statement: shows the Income (sales or revenues) and Expenses during the period and the resulting Net Income after Taxes. Balance Sheet: shows the financial condition (assets, liabilities and stockholder equity) of the company at the end of each period. Cash Flow Statement: shows the Net Cash Balance at the end of the quarter arising from the various activities of the company during the period.
Income or
Income or
In reality this is an operations BUDGET for the next quarter, based on a forecast of sales and projection of expenses.
Mogul cash flow statement shows similar information but classified as: o Cash Payments o Cash Receipts o Cash Balance
Property Loan
Inventory turnover = Sales $/ending inventory $ in period - How rapidly inventory is being turned into sales (higher values
indicate you are carrying less inventory relative to sales)
Fixed asset turnover = Sales $/ending fixed assets value - How efficiently you are using your fixed assets to generate sales Total asset turnover = Sales $/ending total assets value - How efficiently you are using your total assets to generate sales
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Property Loan
Property Loan Interest Rate Property Loan Requested 1st Property Loan Extra Payment Early Loan Payment Penalty
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