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Accounting 211 > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

If total assets increase

A

Common stock, liabilities, or retained earnings must increase

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2
Q

liabilities are what

A

creditors claim on assets

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3
Q

stockholders equity

A

claim on liabilities
=total assets- total liabllities

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4
Q

owners vs creditors

A

owners give money to a business and the business has to do something with it to benefit them but they are at risk when profit is lost

creditors have to be paid back by businesses can do what they want with the money

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5
Q

annual report

A

provides info to stock holders

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6
Q

examples of business entities

A

services, merchandises, manufacturing

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7
Q

examples of service business

A

Docters, housekeepers, attorneys

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8
Q

what does a merchandising business do

A

retail or wholesale that sells transformed goods

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9
Q

what do manufacturing businesses do

A

sell they goods they produce

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10
Q

income statement

A

report of profit

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11
Q

net income

A

when revenue exceeds expenses

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12
Q

net loss

A

when expenses exceed income

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13
Q

matching concept

A

pairing the revenue to the expense

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14
Q

true or false cash received from stock is revenue

A

false revenue is only earning activities

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15
Q

true or false: dividends are expenses

A

false expenses are things that go towards making revenue

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16
Q

statement of change in stockholder equity

A

summarizes transactions that effects owners equity

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17
Q

Balance sheet

A

shows company assets and claims

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18
Q

Financial liquidity

A

what assets are easier to turn to cash

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19
Q

statement of cash flow

A

how companies obtain and use cash
- receipts of cash:in flows
- payments: cash outflow

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20
Q

what are financing activities

A

things such as obtaining, paying and borrowing money

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21
Q

Investing activities

A

Buying (or receiving income) long term assets to generate revenue.

22
Q

Operating activities

A

receiving revenue, expenses and short term expenses like office supplies

23
Q

Articulation

A

The interrelationship among financial elements

24
Q

closing period

A

transferring info from revenue, expenses, and dividends to retained earnings

25
Q

what are examples of Temporary accounts

A

revenue, expenses and dividends

26
Q

OA meaning

A

operating activities

27
Q

IA meaning

A

Investing activities

28
Q

FA meaning

A

financing activities

29
Q

NC meaning

A

Net charge in cash

30
Q

NA meaning

A

Net charge not effected

31
Q

where do businesses obtain assets from

A

creditors. investors, operation

32
Q

what is common stock

A

the commitment investors make to businesses

33
Q

What is a dividend

A

the distribution of a companies wealth to shareholders

34
Q

what is retained earnings

A

the money companies dont distribute

35
Q

what is an accounting event

A

event that changes, asssets liabilities, equity

36
Q

Whats an expense

A

use of asset to generate revenue

37
Q

what is historic cost

A

the original price of something not the market value

38
Q

who is prioritized in a business liquidation

A

creditors then investors

39
Q

what is the going concern doctrine

A

it is assumed that businesses will be able to continue

40
Q

stewardship

A

A businesses duty to protect and use assets to benifit owners

41
Q

Asset source problem

A

Assets and claims increase

42
Q

asset exchange problem

A

assets +/- claims +/-

43
Q

asset use problem

A

assets - claims-

44
Q

Financial accounting

A

utilized externally

45
Q

Managerial accounting

A

Used by internal mangers and employees NOT REQUIRED TO FOLLOW GAAP

46
Q

FASB

A

Financial accounting standards board

47
Q

GAAP

A

Generally accepted accounting principles

48
Q

Who uses accounting information

A

stakeholders (resource providers, financial analysts)

49
Q

What is shareholders equity

A

it is equal to the total dollar amount that would be returned to the shareholders if the company must be liquidated

50
Q

If a company is forced to liquidate who takes the loss first

A

Owners

Accounting 211 (20 decks)

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