WGU C213, Key Points Latest Updated 2022

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WGU C213, Key Points Latest Updated 2022 Debt Ratio ✔✔Total Liabilities/Total Assets Current Ratio ✔✔Current Assets/Current Liabilities. Only need a balance sheet. Return on Sales ✔✔Net Income/Sales. Only need income statement Asset Turnover ✔✔Sales/Total Assets Return on Equity ✔✔Net Income/Stockholder's equity. Balance and Income Statements used. Price-Earnings Ratio (PE) ✔✔Market Value fo Shares/Net Income Accounting is ✔✔the recording of the day-to-day financial activities of a company and the organization of that information into summary reports used to evaluate the company's financial status. Bookeeping is ✔✔the preservation of a systematic, quantitative record of an activity. Without bookkeeping, good business is impossible. An accounting system is used by a business to handle routine bookkeeping tasks and to structure the information so it can be used to evaluate the performance and financial status of the business. Accounting information is intended to be useful in making decisions about the future. The focus of financial accounting is ✔✔the three primary financial statements: the balance sheet, the income statement, and the statement of cash flows. Financial accounting information is ✔✔provided for, and used by, external users. Managerial accounting is the name given to accounting systems designed for internal users. The information provided by financial accounting is summarized in the financial statements: The balance sheet reports a company's assets, liabilities, and owners' equity. The income statement reports the amount of net income earned by a company during a period. Net income is the excess of a company's revenues over its expenses. The statement of cash flows reports the amount of cash collected and paid out by a company in the following three types of activities: operating, investing, and financing. Among the users of financial accounting information are ✔✔lenders, investors, company management, suppliers, customers, employees, competitors, government agencies, politicians, and the press. Financial accounting information helps ✔✔lenders evaluate the cash flows a business can be expected to generate in the future in order to repay loans. Investors use the same type of information to assess the attractiveness of companies as investments. Managers use financial accounting data to formulate company goals, to compute bonuses for employees, and to illuminate company weaknesses. Suppliers, customers, and employees use financial statements to tell them about the long-run prospects of a company. Competitors use financial accounting information to reveal strategic opportunities within their industry. Government agencies and politicians use financial statement data to bolster political and regulatory positions for and against companies. Reporters use financial accounting data as background information and to indicate which companies are undergoing significant changes in financial status. The practice of accounting involves adherence to ✔✔he established accounting rules as well as the use of judgment. U.S. accounting rules are established by the FASB. C213 C213

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