accounting ch 1 Flashcards
(33 cards)
financial accounting
accounting info provided to external users
what are the 2 functions of financial accounting?
to measure business activities and to commute those measurements to external parties for decision making purposes
financing activities
transactions the company has with investors & creditors
investing activities
transactions involving the purchase & sale of resources that are expected to benefit the company for several years
operating activities
transactions that relate to the primary operations of a company
a corporation
a company that is legally separate from owners
a sole proprietorship
a business owned by one person
a partnership
a business owned by two or more people
assets
total resources of the company
revenues
the amounts recognized when the company sells products or provides service s to customers
liabilities
amounts owned to creditors
stockholders equity
owners’ claims to resources
expenses
costs of providing products/services and other business activities during the current period
net income
the difference between revenues and expenses
dividends
cash payments to stockholders
not expenses
only corporations have them
accounting equation
A = L + SE
net income equation
R - EX = NI
what is the connecting link to all 4 financial statements?
net income/loss
whats included in the income statement?
revenues & expenses
whats included in the statement of stockholder’s equity?
changes in SE over a period of time
stockholders equity equation
SE = common stock + retained earnings
whats included in the balance sheet?
assets, liabilities, and stockholders equity
whats included in the cash flow statement?
measures cash receipts & cash payments over a period of time
operating cash flow
cash transactions involving revenue & expense activities
