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Finacc 10-02
Finacc 10-02
• accrued expenses are estimates like electricity bill. incurred but not paid
• deferred revenues: subscription, paid in advance by customer
liquidity ratios: short term, ability to pay currently maturing obligations with current assets
• working capital: current assets - current liabilities (converted in 1 year from balance sheet date)
• current ratio (working capital//ratio): current assets/current liabilities
• quick ratio (acid test): quick assets/current liabilities - applies only to cash>marketable
securities>accounts receivables
leverage ratios: long term, shows capital structure of the firm, contributions or debt
• debt to equity ratio: long-term debt/equity or total liabilities/equity, should be less than 1
• debt to capitalization: long-term debt/(long-term-debt + equity), should be less than 0.5
• Equity = results of operations or revenue less expenses in retained earnings and paid
Identifying transactions that need to be recognized
Assign amounts in measure
Communicate to financial statement
Economic information means monetary
Primary and other users
6 financial statements
Reports
users
time
frame standards
Current standard is PFRS – PH financial reporting standards
Quiz 1