Financial Accounting Formulas Cheat Sheet

Every key financial accounting formula in one printable sheet: profit, ratios, depreciation and adjusting entries.

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1. Foundations and profit

Measure	Formula
Accounting equation	Assets = Liabilities + Equity
Equity	Assets − Liabilities
Cost of goods sold	Opening inventory + Purchases − Closing inventory
Gross profit	Revenue − Cost of goods sold
Net profit	Revenue − All expenses (including interest and tax)
Closing retained earnings	Opening retained earnings + Net profit − Dividends
Closing capital (sole trader)	Opening capital + Net profit − Drawings

Ratio	Formula
Working capital	Current assets − Current liabilities
Current ratio	Current assets ÷ Current liabilities
Quick ratio	(Current assets − Inventory) ÷ Current liabilities
Inventory turnover	Cost of goods sold ÷ Average inventory
Days in inventory	365 ÷ Inventory turnover
Receivables turnover	Net credit sales ÷ Average receivables
Average collection period	365 ÷ Receivables turnover
Debt-to-equity	Total liabilities ÷ Total equity (definitions vary)

Measure	Formula
Depreciable amount	Cost − Residual value
Straight-line depreciation	(Cost − Residual value) ÷ Useful life
Reducing balance	Rate × Opening book value
Book value	Cost − Accumulated depreciation
Gain or loss on disposal	Sale proceeds − Book value

Situation	Debit	Credit
Accrued expense (cost incurred, not paid)	Expense	Accrued liability
Prepaid expense used up	Expense	Prepaid expense (asset)
Revenue earned, not yet received	Accrued revenue (asset)	Revenue
Advance payment now earned	Unearned revenue (liability)	Revenue
Depreciation for the year	Depreciation expense	Accumulated depreciation

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