D103 Intermediate Accounting I - Set 4 - Part 1

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The balance sheet provides a snapshot of a company's assets, liabilities, and equity as of a specific date, reflecting its financial position.

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Current assets include cash, accounts receivable, inventory, and other assets expected to be converted to cash or consumed within a year.

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Non-current assets, or long-term assets, include items like equipment and property that provide value over a long period, typically more than one year.

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Working capital measures a company's short-term financial health and its efficiency in using current assets to cover current liabilities.

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The revenue recognition principle dictates that revenue should be recognized when it is earned, not necessarily when payment is received.

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Goodwill is an intangible asset that arises when a company acquires another company for more than the fair value of its identifiable net assets and is classified as a non-current asset.

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Accrued revenue represents income that has been earned but has not yet been collected or recorded in the accounts receivable.

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Deferred revenue, also known as unearned revenue, is cash received for services or goods that have yet to be provided, creating a liability.

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The accounting equation expresses the relationship between a company's assets, liabilities, and equity, ensuring that the balance sheet is balanced.

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Cash flows from purchasing equipment are classified as investing activities, while cash received from customers, cash paid to suppliers, and salaries are operating activities.

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The statement of stockholders' equity provides a summary of changes in equity accounts, including contributions, distributions, and retained earnings.

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COGS includes all costs directly tied to the production of goods that a company sells during a period, such as materials and labor.

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Expense accounts typically carry a debit balance, reflecting the costs incurred by a company during a period.

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Financial flexibility indicates a company's capacity to adapt and respond to changing financial conditions and unexpected events.

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Depreciation spreads the cost of tangible fixed assets over their useful lives, matching expenses to revenues generated.

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Accounts payable represent a company's obligation to pay off short-term debts to its creditors and are classified as liabilities.

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The time period assumption allows businesses to report financial performance and position in shorter intervals, such as quarterly or annually.

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Intangible assets, such as patents and trademarks, do not have physical substance but provide long-term value to a company.

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A high current ratio suggests that a company has sufficient current assets to cover its current liabilities, indicating good liquidity.

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Capital stock refers to the total value of shares issued by a company, representing ownership in the company.