BUS-A 201 Chapter Notes - Chapter 5: Financial Ratio, Financial Statement, Earnings Before Interest And Taxes
Document Summary
Revenue recognition - the formal recording and reporting of revenues in the financial statements. Matching principle - expenses should be matched with revenues to determine net income for an accounting period. Cost of goods sold - any expenses directly involved in producing or selling a good or service during a given time period. Gross profit (gross margin) - a firms"s revenues (gross sales) subtracted by the cost of the goods sold. Operating expenses - costs incurred by a firm other than those included in cost of goods sold. Operating income - compares the gross profit from business operations against operating expenses. Net income (net profit/earnings) - a firm"s gross profit minus its operating expenses and income taxes. Statement of cash flows - a financial statement that describes a firm"s generation and use of cash during a given period. Budget - detailed statement of estimated receipts and expenditures for a future period of time.
