MTEL Business (19) cheat sheet

Accounting equation: Assets = Liabilities + Owner's Equity. Every transaction keeps it in balance; a debit raises assets and expenses, a credit raises liabilities, equity, and revenue.

Current ratio = current assets / current liabilities; quick ratio = (cash + marketable securities + receivables) / current liabilities. Higher ratios indicate stronger short-term liquidity.

Break-even units = fixed costs / (price per unit − variable cost per unit). Break-even sales dollars = fixed costs / contribution margin ratio.

Gross profit = net sales − cost of goods sold; gross margin % = gross profit / net sales. Net income = gross profit − operating expenses − interest − taxes.

Inventory cost flow: FIFO assigns oldest costs to COGS (higher profit in rising prices); LIFO assigns newest costs (lower taxable profit in inflation); weighted average smooths price swings.

Marketing mix (4 Ps): product, price, place, promotion. Price skimming sets a high launch price; penetration pricing sets a low launch price to build share.

Elastic demand: a price change produces a proportionally larger change in quantity demanded (|elasticity| > 1); inelastic demand: quantity changes less than price.

Business ownership: sole proprietorship (unlimited liability, single taxation), general partnership (shared unlimited liability), LLC (limited liability, flexible taxation), corporation (limited liability, double taxation).

Contract essentials: offer, acceptance, consideration, capacity, and legality. A minor generally may disaffirm a contract; the Statute of Frauds requires writing for land sales and contracts over one year.

Accounting equation: Assets = Liabilities + Owner's Equity. Debits increase assets and expenses; credits increase liabilities, equity, and revenue.

Current ratio = current assets / current liabilities; quick ratio = (cash + marketable securities + receivables) / current liabilities.

Break-even units = fixed costs / (unit price − unit variable cost); break-even dollars = fixed costs / contribution margin ratio.

Gross profit = net sales − cost of goods sold; net income = gross profit − operating expenses − interest − taxes.

FIFO assigns oldest costs to COGS; LIFO assigns newest costs, lowering taxable income when prices rise; weighted average smooths cost swings.

4 Ps of marketing: product, price, place, promotion. Skimming sets a high launch price; penetration pricing sets a low launch price to gain share.

Elastic demand: |price elasticity| > 1, quantity responds more than proportionally to price; inelastic demand: |elasticity| < 1.

Ownership forms: sole proprietorship and general partnership carry unlimited liability; LLC and corporation provide limited liability; corporations face double taxation.

Contract elements: offer, acceptance, consideration, capacity, legality. The Statute of Frauds requires writing for land sales and contracts not performable within one year.