| A | B |
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| balance sheet | A report of the balances in the permanent accounts on a specific date |
| current assets | The assets that are either used up or converted to cash during the normal operating cycle of the business |
| current liabilities | The debts of the business that must be paid within the next accounting period |
| current ratio | The relationship between current assets and current liabilities; calculated by dividing current assets by current liabilities |
| financial statements | Reports prepared to summarize the changes resulting from business transactions that occur during an accounting period |
| income statement | A report of the next income or net loss for a specific period; sometimes called a profit-and-loss statement or earnings statement |
| liquidy ratio | The measure of a business's ability to pay its current debts as they become due and to provide for unexpected needs of cash |
| profitability ratio | A ratio used to evaluate the earnings performance of a business during the accounting period |
| quick ratio | A measure of the relationship between short-term assets and current liabilities; calculated by dividng the total cash and reveivables by the current liabilities. |
| ratio analysis | The process of evaluating the relationship between various amounts in the financial statements |
| report form | A balance sheet format thAt lists classifications one under another |
| return on sales | A ratio that examines the portion of each sales dollar that represents profit; calculated by dividing net income by sales |
| statement of cash flows | A financial statement that summarizes the cash receipts and cash payments resulting from business activities during a period |
| statement of changes in owner's equity | A financial statement that summarizes changes in the owner's capital account as a result of business transactions during the period |
| working capital | The amount by which current assets exceed current liabilities |
