Accounting

Accounting has been used both in business and in Quantum Sotierology as a rhetorical theological device.

www.jesus-saves-all.com's Reaction:

Here’s a list of some Accounting Formulas that I put on here.

Romans 14:12 So then each of us will give an account of himself to God.

Luke 14:28 For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it?

Accounting Formulas List

Operating Revenue -> money org makes from main business activities

= Revenue - Cost of Goods Sold - Operating Expenses.

Net Income

-> leftover money org has after all costs

= Gross Profit – Operating Expenses – Income Tax Expense

= Sales – Cost of Goods Sold - Operating Expenses – Income Tax Expense

Net Profit Margin / Profit Margin

-> profit from each dollar of revenue. higher better

=  (Net Income )/(Total Revenue)

Statement of Income or “ Operations or “ Profit & Loss or “ Financial Result”

Revenue – Expenses = Net Income

Statement of Financial Position or Balance Sheet

Regular: Assets = Liabilities + Shareholder’s Equity or Stockholder’s Equity

Sole Proprietorship: Assets = Liabilities + Owner’s Equity

Working Capital

-> org’s ability to meet duties

= current assets – current liabilities

Current Ratio

-> org’s ability to pay duties

=  (current assets)/(current liabilities)

Acid Test Ratio or Quick Ratio

-> conservative ver. of Current Ratio cuz inventory excluded

=  (cash + marketable securities + accounts receivable)/(current liabilities)

=  (current assets - inventory)/(current liabilities)

Receivables Turnover Ratio

-> how fast org’s accounts receivable are/were collected

=  (credit sales for same year)/(average balance in accounts receivable for same year)

Average Collection Period or Days' Sales in Receivables

-> average days to get org's accounts receivable

= (360 or 365 days)/(receivables turnover ratio)

Inventory Turnover Ratio

-> times org's inventory turns over a year

=(cost of goods sold for same year )/(average inventory during for same year)

= (cost of sales )/(average inventories)

Days' Sales in Inventory or Days to Sell

-> how many days of sales are in inventory

=(360 or 365 days )/(inventory turnover ratio)

Free Cash Flow

-> cash org makes excluding necessary outflows

net cash flow from operating activities - necessary capital expenditures

Times Interest Earned

-> org's ability to pay the interest on its debt

=(income before interest expense and income tax expense )/(interest expense)

= (Profit before Tax+Finance Costs )/(Finance Costs)

Gross Profit or Gross Margin (in dollars)

-> amount before removing org's selling, general & administrative expenses and (+/-)ing nonoperating items

-> how much you sell product for minus how much it costs to make it

= net sales - cost of goods sold

= sales – cost of goods sold

= revenue - cost of goods sold

Gross Profit Percentage or Gross Profit Margin as a Percentage

-> profitability of org

=(gross profit )/(dollars of net sales)

Return on Assets

-> how profitably a company has used its assets

=(org's net income for same year )/(average amount of assets during for same year)

Return on Equity

-> profitability from equity

=( corporation^' s net income for same year)/(average amount of stockholders' equity during year)

Asset Turnover Ratio

-> efficiency of org's assets in making revenue

=( net sales for same year)/(average amount of assets for same year)

Semi-annual interest payments

-> stated interest rate won’t change thus fixed rate

face interest rate X face value of the bond X 6/12 of a year.

Break Even

-> gains and losses are balanced. no

Revenue = Expenses

Net Income = 0

Contribution Margin Per Unit

-> related to break even point

= selling price per unit – variable expenses per unit

= Sales Price – Variable Cost

Contribution Margin Ratio (per unit amounts)

=( contribution margin per unit)/(average amount of assets for same year)

= ( price-variable cost per unit)/price

Total Contribution Margin

= Total Sales – Total Variable Expenses

Contribution Margin Ratio (using totals)

  =(total contribution margin)/(total sales)

Variable Expense Ratio

  =(total variable expenses)/(total sales)

Variable Expenses Per Unit

= Sales Price * Variable Cost

Variable Cost

= 1 – Contribution Margin Ratio Decimal

= 100 - Contribution Margin Ratio %

CM Contribution Margin Ratio

  =(total  revenue-variable costs)/(total revenue)

  =(total revenue – cost of goods sold – any other variable expenses)/(total revenue)

Break Even Point in Units (for the year):

  =(Total fixed expenses for the year)/(contribution margin per unit)

= (Fixed Expenses)/(Unit Contribution Margin)

Break Even Point in Sales Dollars (for the year):

  =(Total fixed expenses for the year )/(contribution margin ratio)

  =(Fixed Expenses )/(CM Ratio)

Present Value

-> money today worth more than money tomorrow, inflation reduces overall value. CF: Cash Flow. R: Discount Rate. N: Number of Years

  =(CF )/((1+R) .^N )

Compound Interest

-> interest accrued over interest

  =10 000*(1+(0.05 )/1)

Average Cost

= (total unit cost )/(total unit amount)

Weighted Average Unit Cost = (Cost of Goods Available for Sale)/(Units Available for Sale)

Compounding Interest Table

-> interest is spread equally throughout the year

Present Value for a Single Amount

-> how much money you started with, initial investment

Present Value with Table

-> replace square brackets with value found from given table

Number of Compounding Periods

-> how many times interest is recalculated

= Number of Years * Number of Compounding Periods Per Year

Interest per Compounding Period

-> interest percentage added calculated as decimal

= (Interest  )/(number of compounding periods )

Present Value Factor Formula

-> divide both sides by FV to isolate for PV Factor. then check table based on decimal value.

Present Value Table

-> n: number of compounding periods. %: interest rate for whole year. replace decimal value with square brackets in PV formula.

n                1%         2%         3%         4%             5%         6%         8%        10%          12%

1            0.990     0.980     0.971              0.962     0.952     0.943              0.926     0.909     0.893

2            0.980     0.961     0.943              0.925     0.907     0.890              0.857     0.826     0.797

3            0.971     0.942     0.915              0.889     0.864     0.840              0.794     0.751     0.712

4            0.961     0.924     0.888              0.855     0.823     0.792              0.735     0.683     0.636

5            0.951     0.906     0.863              0.822     0.784     0.747              0.681     0.621     0.567

6            0.942     0.888     0.837              0.790     0.746     0.705              0.630     0.564     0.507

7            0.933     0.871     0.813              0.760     0.711     0.665              0.583     0.513     0.452

8            0.923     0.853     0.789              0.731     0.677     0.627              0.540     0.467     0.404

9            0.914     0.837     0.766              0.703     0.645     0.592              0.500     0.424     0.361

10          0.905     0.820     0.744              0.676     0.614     0.558              0.463     0.386     0.322

11          0.896     0.804     0.722              0.650     0.585     0.527              0.429     0.350     0.287

12          0.887     0.788     0.701              0.625     0.557     0.497              0.397     0.319     0.257

13          0.879     0.773     0.681              0.601     0.530     0.469              0.368     0.290     0.229

14          0.870     0.758     0.661              0.577     0.505     0.442              0.340     0.263     0.205

15          0.861     0.743     0.642              0.555     0.481     0.417              0.315     0.239     0.183

16          0.853     0.728     0.623              0.534     0.458     0.394              0.292     0.218     0.163

17          0.844     0.714     0.605              0.513     0.436     0.371              0.270     0.198     0.146

18          0.836     0.700     0.587              0.494     0.416     0.350              0.250     0.180     0.130

19          0.828     0.686     0.570              0.475     0.396     0.331              0.232     0.164     0.116

20          0.820     0.673     0.554              0.456     0.377     0.312              0.215     0.149     0.104

21          0.811     0.660     0.538              0.439     0.359     0.294              0.199     0.135     0.093

22          0.803     0.647     0.522              0.422     0.342     0.278              0.184     0.123     0.083

23          0.795     0.634     0.507              0.406     0.326     0.262              0.170     0.112     0.074

24          0.788     0.622     0.492              0.390     0.310     0.247              0.158     0.102     0.066

25          0.780     0.610     0.478              0.375     0.295     0.233              0.146     0.092     0.059

26          0.772     0.598     0.464              0.361     0.281     0.220              0.135     0.084     0.053

27          0.764     0.586     0.450              0.347     0.268     0.207              0.125     0.076     0.047

28          0.757     0.574     0.437              0.333     0.255     0.196              0.116     0.069     0.042

29          0.749     0.563     0.424              0.321     0.243     0.185              0.107     0.063     0.037

30          0.742     0.552     0.412              0.308     0.231     0.174              0.099     0.057     0.033

Cost of Goods Available for Sale

-> cost of inventory org hasn’t sold yet.

= Cost of Goods Sold + Ending Inventory

= Beginning Inventory + Purchases

   

Lowest Cost Net Realizable Value (LCNRV)

-> so org’s don’t get sued overstating assets to investors

= choose lowest value between cost and NRV.

Financial Forecasting

-> amount that must be plugged into balance sheet to balance

External Funding Required = Total Assets – (Liabilities + Owner’s Equity)

Break Even Contribution

-> P: selling price per unit Q: number of units sold VC: variable costs per unit

Profits = (Sales – Variable Expenses) – Fixed Expenses

Profits = (P * Q) – (VC * Q) – Fixed Expenses

Profits = (CM * Q) – Fixed Expenses

Profit Equation

-> CM: Contribution Margin

Profits = (CM * Q) – Fixed Expenses

Target Profit

-> modified from profit equation with $0

Units Sold to Attain Target Profit = (Fixed Expenses + Target Operating Profit  )/(Unit Contribution Margin)

Target Profit Sales Dollars

-> margin replaced with ratio

Dollar Sales to Attain Target Profits = (Fixed Expenses + Target Operating Profit  )/(CM Ratio)

After Tax Analysis

-> t: tax rate B: operating profits before taxes. after tax profit = b(1-t)

Profit After Taxes = Before-Tax Profit – Taxes

B = (Profit After Taxes  )/((1-t))

Target Profit with Tax Rate

-> answer is profit after taxes

Units Sold to Attain Target Profit = (Fixed Expenses +[(Target Operating Profit)  / (1-Tax Rate)]  )/(Unit Contribution Margin )

Margin of Safety

-> excess of budgeted (or actual) sales over break even volume of sales

= Total Budgeted (or Actual) Sales – Break Even Sales

Margin of Safety Percentage

-> same as above but %

= (Margin of Safety in Dollars  )/(Total Budgeted (or actual)  Sales)

Keep Product or Segment

-> decision rule, keep if making money

CM lost (all products/segments) > Fixed costs avoided+ CM gained (other

products/segments).

Drop Product or Segment

-> decision rule, drop if losing money

CM lost (all products/segments) < Fixed costs avoided+ CM gained (other

products/segments)

Make If

-> decision rule, cheaper to make in house

Total relevant costs of making < Outside purchase price

Buy if

-> decision rule, cheaper to buy externally

= Total relevant costs of making > Outside purchase price

Total Relevant Costs

-> avoidable costs incurred only when making specific business decisions

= Incremental costs+ Opportunity costs

Accept Special Order

-> one time order not part of org’s regular business

Incremental revenues > Total relevant costs

Reject Special Order

-> extra costs not worth

Incremental revenues < Total relevant costs

Process Further

-> more money to keep raw wool and refine it yourself into detailed fabric to sell

Incremental revenues > Incremental costs of further processing

Sell at Split-Off Point

-> more money to sell raw wool

Incremental revenues < Incremental costs of further processing

Market value added

-> capitalization is share price.

= market capitalization – capital invested

Economic value added

-> org’s financial performance based on residual wealth

= modified profit – (WACC x modified capital invested)

= after tax operating income – (actual percentage cost of capital x total capital

employed)

Net Income

-> in the black

Revenues > Expenses

Net Loss

-> in the red

Revenues < Expenses

Debt to Total Assets Ratio

(Total Liabilities)/(Total Assets)

Average Sales per Day

-> related to Average Collection Period

Revenue/(360 or 365 days)

Capital Assets Turnover

-> non current assets like Property, Planet and Equipment (PPE)

Revenue/(Non Current Assets)

Total Asset Turnover

-> related to asset turnover

Revenue/(Total Assets)

Profit Margin on Revenue

-> EBIT: Earnings Before Income Tax

(Operating Revenue aka EBIT)/Revenue

Return on Total Assets

-> compares org’s earnings vs investment into it

=(Profit for Year)/(Total Assets)

Return on Equity

= financial measure of annual return

=(Profit for Year)/Equity

Days of Working Capital

-> what org must hold in order to meet average daily sales requirement

=((Inventories+Trade Receivables)-Trade Payables)/(Revenue+365)

Cash Conversion Efficiency

-> efficiency with which org converts revenue to cash flow from operations

=(Cash Flow from Operations)/Revenue

Total Cost

-> all costs together

= Total Fixed Cost + Total Variable Cost

= Total Fixed Cost + (Variable Rate * Output)

Variable Cost

-> costs that change based on how much units produced. fixed is always static amount.

= Variable Rate * Output

Operating Income

-> profit gained from org operations

= Contribution Margin – Fixed Costs

Variable Cost Ratio

-> helps org balance revenue vs production cost

= (Variable Cost Per Unit )/Price

Prime Cost

-> firm's expenses directly related to materials and labor used in production

= Direct materials cost + direct labour cost.

Conversion cost

-> all manufacturing costs except for the cost of raw materials

= Direct labour cost + manufacturing overhead cost

Inventory Accounts

-> balance equation

Beginning Balance + Additions to Inventory = Ending Balance + Withdrawals from Inventory

Cost of Goods Sold

-> direct costs of producing the goods sold by a company

= Beginning Finished Goods Inventory + Cost of Goods Manufactured – Ending Finished Goods Inventory

Cash Paid for Dividends

-> part of cash flow from financing activities

= Dividends + Decrease in Dividends Payable

Return on Investment ROI

-> investment with a profit of $100 and a cost of $100 would have a ROI of 1, or 100%. less 0, less min roi. 0 is min roi. over 0, greater than min roi.

=(profit earned on investment  )/(cost of investment)

= (operating income EBIT  )/(average operating assets)

(operating income EBIT  )/((Beginning assets+Ending assets)/ 2)

Average Operating Assets

-> normal amount of those assets needed to conduct ongoing operations of org

=  (Beginning assets + Ending assets) / 2

= margin ((operating income )/sales) x turnover ((sales )/(average operating assets)

Residual Income

-> income one continues to receive after completion of income-producing work, like royalties

= operating income – (minimum rate of return x average operating assets)

Negotiate Value-Based Selling Price

-> Once seller computes EVC, it seeks to negotiate a value-based selling price with customer that falls within following range:

Reference value ≤ Value-based price ≤ EVC

Economic value to customer (EVC)

= Reference value + Differentiation value

Target cost

-> maximum allowable cost for a new product

= Anticipated selling price - Desired profit

Increase in EBIT

-> expected % increase in operating income

= Degree of Operating Leverage * Wanted Sales Increase

2 Kings 22:7 But no accounting shall be asked from them for the money that is delivered into their hand, for they deal honestly.”

Proverbs 22:7 The rich rules over the poor, and the borrower is the slave of the lender.