Flashcards in Financial & Risk Management Deck (103)
General ledger statements
Provides statements of firm's overall financial status so owners can make decisions crucial to firm's profitability
Project cost accounting
Tracks revenue, expenses, profits by individual projects
Resources of a business that are converted into cash w/in 1 yr.
Resources firm uses + maintains for long periods of time like equipment and property
Direct personnel expense
Expense of employee salaries plus cost of mandatory + discretionary expenses and benefits like payable taxes + health benefits
All revenue generated by a business during a given period of time
Labor not charged to a specific project or revenue producing account
Claims against the assets of a business
$ that remains from billing after deducting fees and expenses
Expenses incurred to keep a business operating whether or not any revenue is being generated
What are 2 examples of overhead ?
2. Software licenses
What are 2 types of accounting methods?
2. Accrual accounting
Income received and all salaries and expenses paid
Revenue + expenses are recognized at time the business receives the cash or pays the bill
Revenue + expenses are recognized at time they are earned or incurred whether or not cash changes hands
Modified accrual basis method
Records revenue earned and billed from fees and expenses including outside project consultant fees and expenses incurred. This means revenue is based only on invoiced fee and expense amounts sent and / or received
Advantages of cash accounting
1. Better at tracking actual cash flow
3. Best for small business /individual
Advantages of accrual accounting
Gives better idea of long term financial status
Summarizes all assets and liabilities and shows financial position of a business - all assets must equally match liabilities
Total assets minus the total liabilities
$ invested by owners/ stockholders
Profit and loss statement
Lists all income and expenses for certain periods of time
Project progress report
Shows hours and labor costs for each phase of the project and compares it to the estimated hours and cost
Office earnings report
Summarizes projects in terms of amount of revenue generated and expenses incurred , billed services etc
Aged accounts receivable
Status of all invoices for all projects whether or not they have been paid and "age' of each invoice
What is the average collection period for invoices?
What generates a chargeable ratio or utilization rate?
Time analysis report
% Of time on direct labor / total time spent on indirect labs and direct labor, PTO. sick time, etc.
What % is the breakeven point for a chargeable ratio?
List the 4 types of financial ratios
1. Current ratio
2. Net profit before tax
3. Overhead rate
4 quick ratio