| A | B |
|---|
| 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 statements | “A report of the net income or net loss for a specific period; sometimes called a profit-and-loss statement or earnings statement.” |
| Liquidity 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 dividing the total cash and receivables 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.” |
