Financial Statements: Financial statements are the reports that summarize the financial activities and position of a business entity. These statements provide an insight into the financial performance of a company and are fundamental for decision-making and analysis.
Accounting Principles: Accounting principles are the guidelines and rules that govern the field of accounting. They provide a framework for recording, analyzing, and reporting financial transactions in a consistent and accurate manner, ensuring transparency and reliability.
Double-Entry Bookkeeping: Double-entry bookkeeping is a method of recording financial transactions that requires every transaction to have an equal and opposite entry in at least two accounts. This system helps maintain the balance of the accounting equation and allows for accurate financial reporting and analysis.
Assets and Liabilities: Assets are resources owned by a company that have monetary value, such as cash, inventory, or property. Liabilities, on the other hand, are the financial obligations or debts of a company, such as loans or accounts payable. Measuring knowledge of assets and liabilities helps assess a candidate's understanding of a company's financial position.
Income and Expense Recognition: Income and expense recognition is the process of recording and reporting revenue and expenses in the appropriate accounting period. It ensures that revenue is recognized when it is earned and expenses are recognized when they are incurred, accurately reflecting the financial performance of a company.
Financial Ratios: Financial ratios are mathematical calculations used to evaluate a company's financial performance, liquidity, solvency, and profitability. These ratios provide meaningful insights into the efficiency and effectiveness of a company's operations and help in financial decision-making and analysis.
Cash Flow Statement: A cash flow statement is a financial statement that shows the inflows and outflows of cash within a company during a specific period. It provides a summary of how cash is generated and used, allowing for analysis of a company's liquidity and ability to meet its financial obligations.
Inventory Valuation: Inventory valuation is the process of assigning a monetary value to a company's inventory. It is important for financial reporting purposes and helps in assessing a company's profitability, inventory turnover, and overall financial health.
Depreciation and Amortization: Depreciation and amortization are accounting methods used to allocate the costs of tangible and intangible assets over their useful lives. They help in determining the true cost of using assets and accurately reflecting their value in the financial statements.
Financial Analysis: Financial analysis involves examining financial statements, ratios, and other financial data to evaluate the performance and health of a company. It helps in identifying trends, strengths, weaknesses, and making informed decisions about investment, credit, and overall financial strategies.
