D103 Intermediate Accounting I - Set 2 - Part 1

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The balance sheet displays the company's assets, liabilities, and equity as of a specific date, reflecting its financial health.

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The balance sheet shows the company's assets and liabilities, which helps assess its ability to meet short-term obligations.

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Liquidity measures how readily a company can meet its short-term obligations using its current assets.

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Inventory is considered a current asset because it is expected to be sold or used within one year.

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Accounts payable represents amounts owed to suppliers and is due within the current operating cycle, making it a current liability.

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Intangible assets, such as patents and trademarks, lack physical form but still provide economic benefits.

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Capital stock represents the ownership shares issued by a company to its shareholders and is part of stockholders' equity.

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The matching principle ensures that financial statements reflect the appropriate relationship between revenues and expenses.

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Working capital is a measure of a company's short-term financial health and is calculated by subtracting current liabilities from current assets.

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The Statement of Cash Flows details how cash is generated and spent across operating, investing, and financing activities.

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Current liabilities are financial obligations that a company must settle within the near term, typically within a year.

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Equity financing involves raising capital through the sale of shares, giving investors a claim on the company's assets and earnings.

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Accumulated depreciation represents the cumulative amount of an asset's cost that has been allocated as an expense over its useful life.

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This entry recognizes salaries that have been incurred but not yet paid at the end of the accounting period.

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Financial flexibility refers to a company's ability to navigate unexpected financial challenges and opportunities effectively.

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The trial balance is prepared to verify that total debits equal total credits before financial statements are generated.

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Deferred revenue is a liability that arises when payment is received before the delivery of goods or services.

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The allowance for doubtful accounts reduces the total accounts receivable reported on the balance sheet to reflect expected uncollectible amounts.

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An increase in accounts receivable indicates that more sales have been made on credit, which means cash has not been collected, reducing cash flows.

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Gains on the sale of assets need to be deducted in the cash flow from operating activities to adjust for non-cash income.