Chapter 1 Financial Accounting Flashcards Preview

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Flashcards in Chapter 1 Financial Accounting Deck (73):
1

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

Property
Plant (example nuclear plant)
Equipment
Intangible assets
Investments

2

What does GAAP stand for

Generally Accepted Accounting Principles

3

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

Accounts Payable
Salaries Payable
Taxes Payable
Short-Term Borrowings

4

Statement of Retained Earnings

Shows increases and decreases to retained earnings

5

Name the 4 types of users of accounting?

Individuals
Investors and Creditors
Taxing Authorities
Nonprofit Organizations

6

Who formulated the U.S. GAAP?

Financial Accounting Standards Board

7

Shareholders' Equity includes what 2 things?

Paid-in Capital
Retained Earnings

8

Cost

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

9

Income Statement

Measures operating performance for the period

10

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

Paid-in capital
Common Stock
Retained Earnings

11

Reliability

Accounting is based on objective evidence

12

Partnership

Two or more owners

13

What decreases retained earnings?

Expenses

14

What are two examples of intangible assets

Patent
Trademark

15

Statement of Cash Flow

shows how cash flows in and out of the company

16

Balance Sheet

Measures financial position

17

What 2 things is accounting used for?

-An information system
- Accounting is used to make decisions

18

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

Increase in net income
Decrease in dividends

19

Limited Liability Companies

Owners are called members

20

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

21

Assets

An economic resource that provides a future benieft

22

Dividends are not ----

Expenses

23

Retained Earnings

Amount earned and kept for use in the company

24

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

Report Relevant information
Report Reliable Information

25

What are two names for Owners Equity?

Stockholders Equity
Shareholders Equity

26

What is an example of notes payable?

Bank loan

27

Net income Equation

Revenues - Expenses

28

List 1 example of people who receive information by managerial accounting

Managers of a company

29

What is a positive of a limited liability company?

Members are not personally liable for business debts

30

What are three categories on a statement of cash flow?

Operating Activities
Investing Activities
Financing Activities

31

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

Cash
Short Term Investments
Accounts Receivable
Inventory

32

What is a proprietorship?

Business who has a single owner

33

What is the more complex accounting equation?

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

34

What Equation should be included on an income statement?

Revenue - Expenses = Net Income

35

What increases Retained Earnings

Revenue

36

Accounts Payable

Liability for goods or services purchased on credit

37

Owners' Equity

It is the owners' claim on a business

38

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

Relevant
Reliable
Comparable
Consistent

39

What is the general accounting equation?

Assets = Liabilities + Owners' Equity

40

What are the 5 categories on a balance sheet?

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

41

Entity

A business is separate from its owners

42

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

43

List 3 examples of people who get information by financial accounting

Investors
Bankers
Government Agencies

44

Paid-in capital

Amounts invested by stockholders

45

What determines owners' equity?

Assets - Liabilities

46

What are 2 examples of liabilities

Accounts Payable
Notes Payable

47

What 3 major things does a balance Sheet include?

Assets
Liabilities
Shareholders' Equity

48

Expenses

Represents me using up an asset

49

What is the language of business

Accounting

50

What are 5 examples of owners equity?

Revenue
Expenses
Retained Earnings
Common Stock
Dividends

51

Monetary Unit

Transactions are recorded in a stable currency

52

Dividends

Distribution of assets to shareholders

53

What are 5 examples of assets?

Cash
Inventory
Accounts Receivable
Notes Receivable
Land

54

Corporation

Owners are stockholders

55

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

56

Name the 4 financial statements in order

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

57

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

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

58

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

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

59

What is negative of a partnership?

Each partner is personally liable for business debts

60

What do dividends not impact?

Net income

61

What do dividends decrease?

Retained earnings

62

Notes Payable

Written promise to pay on a certain date

63

Intangible Assets

Non physical assets

64

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

Entity

65

What does FASB stand for?

Financial Accounting Standards Board

66

What is another name for a balance sheet?

Consolidated statement of financial position

67

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

Long-term notes payable
Mortgage payable

68

How does a net loss occur?

If expenses are greater then revenues

69

Going-Concern

Business will continue indefinitely

70

Stockholders equity

Corporation's equity

71

What are the 5 major things an income statement include?

Revenue
Expenses
Resulting net income or net loss
Gains
Losses

72

Liabilities

Future economic sacrifices

73

What are 2 positive things about a Limited Liability Company?

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

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