Accounting Basics

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Accounting Basics by Mind Map: Accounting Basics

1. Purpose

1.1. Detailed Information for Decision Making

1.2. Monitor Business Activities

1.3. Accountability and Transparency

1.4. Prevent Fraud

2. Ratio Analysis

2.1. Solvency

2.1.1. Total Assets Turnover - Revenue/Total Assets

2.1.2. Debt Ratio = Total Debt/Total Assets

2.2. Liquidity

2.2.1. Current Ratio = Current Assets/Current Liabilities

2.2.2. Quick Ratio = Current Assets - Inventory/Current Liabilities

2.3. Profitability

2.3.1. Net Profit Margin = Net Income/Revenue

2.3.2. Earnings Per Share = Net Income/No. of Share Outstanding

2.3.3. Return on Total Assets = Net Income/Total Assets

3. Profit and Loss Report

3.1. Revenue/Sales

3.2. Cost of Goods Sold

3.3. Expenses (Overhead)

3.4. Net Income/Loss

4. Balance Sheet Report

4.1. Assets

4.1.1. Current

4.1.2. Long-Term

4.2. Liabilities

4.2.1. Current

4.2.2. Long Term

4.3. Owner's Equity

4.3.1. Paid-in Capital

4.3.2. Retained Earnings