Chapter 1 Financial Accounting Flashcards by Jeremy Harmon

What are 5 examples of long term assets that go on a balance sheet?

Property
Plant (example nuclear plant)
Equipment
Intangible assets
Investments

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What does GAAP stand for

Generally Accepted Accounting Principles

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What are 4 examples of current liabilities that go on a balance sheet?

Accounts Payable
Salaries Payable
Taxes Payable
Short-Term Borrowings

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Statement of Retained Earnings

Shows increases and decreases to retained earnings

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Name the 4 types of users of accounting?

Individuals
Investors and Creditors
Taxing Authorities
Nonprofit Organizations

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Who formulated the U.S. GAAP?

Financial Accounting Standards Board

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Shareholders’ Equity includes what 2 things?

Paid-in Capital

Retained Earnings

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Cost

Assets are recorded at cost (not fair value or appraised value)

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Income Statement

Measures operating performance for the period

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Stockholders Equity on a balance sheet include what 3 major things?

Paid-in capital
Common Stock
Retained Earnings

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Reliability

Accounting is based on objective evidence

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Partnership

Two or more owners

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What decreases retained earnings?

Expenses

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What are two examples of intangible assets

Patent

Trademark

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Statement of Cash Flow

shows how cash flows in and out of the company

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Balance Sheet

Measures financial position

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What 2 things is accounting used for?

An information system

- Accounting is used to make decisions

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(Ask Matt) What does 2 major things does the statement of retained earnings show?

Increase in net income

Decrease in dividends

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Limited Liability Companies

Owners are called members

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What is a positive of a corporation

business is legally distinct from the owners

- someone can only sue the corporation not go after someone’s personal assets like a car

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Assets

An economic resource that provides a future benieft

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Dividends are not —-

Expenses

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Retained Earnings

Amount earned and kept for use in the company

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By the Ethics of Accounting what are US companies required to do? (2 things)

Report Relevant information

Report Reliable Information

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What are two names for Owners Equity?

Stockholders Equity | Shareholders Equity

What is an example of notes payable?

Bank loan

Net income Equation

Revenues - Expenses

List 1 example of people who receive information by managerial accounting

Managers of a company

What is a positive of a limited liability company?

Members are not personally liable for business debts

What are three categories on a statement of cash flow?

Operating Activities Investing Activities Financing Activities

What are 4 examples of assets that go on a balance sheet?

Cash Short Term Investments Accounts Receivable Inventory

What is a proprietorship?

Business who has a single owner

What is the more complex accounting equation?

Assets = Liabilities + Common Stock + Revenues - Expenses - Dividends

What Equation should be included on an income statement?

Revenue - Expenses = Net Income

What increases Retained Earnings

Revenue

Accounts Payable

Liability for goods or services purchased on credit

Owners' Equity

It is the owners' claim on a business

FASB conceptual framework states that accounting should be: (what 4 things)

Relevant Reliable Comparable Consistent

What is the general accounting equation?

Assets = Liabilities + Owners' Equity

What are the 5 categories on a balance sheet?

``` Current Liabilities Long-Term Liabilities Current assets Long term assets Stockholders Equity ```

Entity

A business is separate from its owners

What is the difference between financial and managerial accounting

Financial accounting provides information to users outside the company - Managerial accounting provides information for people inside the company

List 3 examples of people who get information by financial accounting

Investors Bankers Government Agencies

Paid-in capital

Amounts invested by stockholders

What determines owners' equity?

Assets - Liabilities

What are 2 examples of liabilities

Accounts Payable | Notes Payable

What 3 major things does a balance Sheet include?

Assets Liabilities Shareholders' Equity

Expenses

Represents me using up an asset

What is the language of business

Accounting

What are 5 examples of owners equity?

``` Revenue Expenses Retained Earnings Common Stock Dividends ```

Monetary Unit

Transactions are recorded in a stable currency

Dividends

Distribution of assets to shareholders

What are 5 examples of assets?

``` Cash Inventory Accounts Receivable Notes Receivable Land ```

Corporation

Owners are stockholders

What is a negative of a proprietorship?

The owner is personally liable for business debts such as someone can sue for the business owners house

Name the 4 financial statements in order

Income Statement Statement of Retained Earnings Balance Sheet Statement of Cash Flows

How is accounting used as an information system? (3 things)

- Measures business activities - Processes data into reports - Communicates results to people and organizations

What Equation should be included on the statement of retained earnings?

Retained Earnings Beginning + Net Income - Dividends = Retained Earnings End

What is negative of a partnership?

Each partner is personally liable for business debts

What do dividends not impact?

Net income

What do dividends decrease?

Retained earnings

Notes Payable

Written promise to pay on a certain date

Intangible Assets

Non physical assets

Kathy Jones owns a coffee shop. Her personal expenses are included in accounting records. What concept is violated?

Entity

What does FASB stand for?

Financial Accounting Standards Board

What is another name for a balance sheet?

Consolidated statement of financial position

What are 2 examples of long term liabilities that go on a balance sheet?

Long-term notes payable | Mortgage payable

How does a net loss occur?

If expenses are greater then revenues

Going-Concern

Business will continue indefinitely

Stockholders equity

Corporation's equity

What are the 5 major things an income statement include?

``` Revenue Expenses Resulting net income or net loss Gains Losses ```

Liabilities

Future economic sacrifices

What are 2 positive things about a Limited Liability Company?

Offer limited liability to members in LLC | -LLCs are not taxed

Chapter 1 Financial Accounting Flashcards

(73 cards)