Welcome to the Accounting Flashcards Tool. This is designed as a simple supplementary resource for the textbook ‘Short Introduction to Accounting’, and aims to help students grasp the meaning of the core essential terms within the book. Each term will appear on its own, and you can then click to check the definition. Click or press [space] to begin.

Investing activities [ click for answer ] term: 1 of 11

The acquisition and disposal of long- term assets and other investments, reported as a category in the cash flow statement. [ click for next term ] definition: 1 of 11

Leverage, or gearing (financial) [ click for answer ] term: 2 of 11

The relationship between debt and equity in a company’s capital structure, defined as debt/capital employed. [ click for next term ] definition: 2 of 11

Leverage, or gearing (operating) [ click for answer ] term: 3 of 11

The relationship between variable costs and fixed costs, defined as fixed costs/total costs. [ click for next term ] definition: 3 of 11

Liability [ click for answer ] term: 4 of 11

An amount owed by the reporting entity. [ click for next term ] definition: 4 of 11

Liquidity [ click for answer ] term: 5 of 11

Nearness to cash; an asset or liability more readily convertible into cash is more liquid. [ click for next term ] definition: 5 of 11

Market capitalization, or shareholder value. [ click for answer ] term: 6 of 11

The value on the stock market of the publicly traded equity of a company, defined as share price * number of shares traded. [ click for next term ] definition: 6 of 11

NOPAT [ click for answer ] term: 7 of 11

Net operating profit after tax, defined as operating profit * (1- tax rate). [ click for next term ] definition: 7 of 11

Net assets [ click for answer ] term: 8 of 11

The total value of assets less liabilities. Net assets in the balance sheet must be equal to equity. [ click for next term ] definition: 8 of 11

Operating activities [ click for answer ] term: 9 of 11

The principal revenue-producing activities of the entity and other activities that are not investing or financing activities, reported as a category in the cash flow statement. [ click for next term ] definition: 9 of 11

Opportunity cost [ click for answer ] term: 10 of 11

The value foregone by choosing one course of action over another. [ click for next term ] definition: 10 of 11

PE ratio [ click for answer ] term: 11 of 11

A valuation measure, defined as the ratio of share price to earnings per share (share price/eps). [ End of flashcard 4 ] definition: 11 of 11