MGMT 1 Lecture Notes - Lecture 10: Gross Profit, Current Liability, Quantitative Easing
Document Summary
Accounting is the recording, classifying, summarizing and interpreting of financial events to provide financial information needed to make good decisions. Double entry bookkeeping is when each transaction requires two entries. Fundamental accounting equation is assets= liabilities + owner"s equity. Owner"s equity is net worth of company. Assets are listed in terms of their liquidity. Liquidity is how easily asset can be turned into cash. Current liabilities are due within one year or less. Balance sheet lists assets and liabilities and what"s leftover. Income statement reports bottom line over a period of time. Gross profit= revenues - cost of goods sold. Net income before taxes= gross profit- operating expenses. Net income/loss= net income before taxes- taxes. Statement of cash flows includes cash receipts or disbursements for operations, investments, financing. Quantitative easing is when the fed pumps $ into economy. M1 is coings, paper bills, checking accounts, travelers checks. M2 is m1 and savings accounts, money market accounts, mutual funds.
