Notes On Understanding Financial Statements Essay

955 Words Jul 13th, 2015 4 Pages
Chapter 4 notes Understanding Financial Statements Includes the understanding of balance sheet and income statement through an analytical standpoint A classified balance sheet seperates assets and liabilities into sub groups. These groups are considered to help further analyze financial and business decisions Groups are known as long term liabilities and long term assets. Corporate social responsibility is the act of a company to assess and take responsibility for the company’s effect on the environment. Where company efforts promote positive social changes towards the environment. Companies invest in ethical and more environmentally friendly activities that would benefit them financially and socially Normal operating cycle: is the period of time in which cash is being use or collected by service. For the average business, a normal operating cycle last typically less than one year Key points of the Balance Sheet: Assets: cash, accounts receivable, inventory and supplies etc Long term assets: PPE, intangible assets etc Liabilities: Accounts payable, expense payable, and short term notes payable, etc Long term liabilities: Long term notes payable Currents assets: Are known to be cash or assets that can be converted into cash. They are used up within a normal operating cycle or one year, whichever is the longer time frame
Example:
Cash-----------------------------20000
Accounts receivable -------30000
Inventory----------------------7000
Liquidity: measures the…

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