chapter 12.2 financial records and financial statements Flashcards Preview

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Flashcards in chapter 12.2 financial records and financial statements Deck (49):
1

the value of the owner's investment in the business

owner's equity

2

contains info on all employees of the company, their compensation and benefits

payroll records

3

used to record and analyze the financial performance of a business

financial records

4

the value of the buildings and equipment owned by a business can be determined in the

  • inventory records
  • asset records
  • records of accounts
  • tax records

asset records

5

what are the two common divisions of assets?

current assets

long term assets (aka fixed assets)

6

how do business managers use the balance sheet and income statement?

to determine how the business is performing

7

debts that continue for more than one year

long term liabilities

8

lists all cash received and spent by the business

cash records

9

budgets reflect the financial ____ of businesses.  to determine if those ____ have resulted in success, financial records are needed.

budgets reflect the financial plans of businesses.  to determine if those plans have resulted in success, financial records are needed.

10

before computers, preparation and maintenance of financial records were done using ____ documents that had to be done by hand then saved and protected

before computers, preparation and maintenance of financial records were done using paper documents that had to be done by hand then saved and protected

11

shows all purchases and sales made using credit

records of accounts

12

what are some sources of income?

  • the sale of products and services
  • interest earned from investments

13

what is reported on a balance sheet?

assets, liabilities and owner's equity

14

identifies customers that made purchases using credit and the status of each account

accounts receivable record

15

when does a business have a net loss?

when expenses are greater than income

16

what are some expenses?

  • rent
  • supplies
  • inventory
  • payroll
  • utilities (electric, gas)

17

reports that sum up the financial performance of a business

financial statements

18

how often is an income statement (IS) prepared?

every 6 months or 1 year

19

What are the 3 most important elements of a company's financial strength?

assets, liabilities and owner's equity

20

report that shows the revenue, expenses and net income or loss from operations for a specific period - normally covers 6 months or a year

income statement

21

true or false

the two most common and important financial records for businesses are the income statement and the balance sheet

true

22

examples of long term liabilites

loans for land, buildings or expensive equipment

23

current liablities are amounts owed that will be paid in less than

  • one month
  • six months
  • one year
  • five years

one year

24

what is an I.S.?

  • the income statement
  • reports the revenue, expenses and net income or loss from operation for a specific period

25

the assets with a life span of more than one year

long term assets/fixed assets

26

what does owner's equity show us on the balance sheet?

shows how much the business is worth on the date the balance sheet is prepared

27

shows the type of quantity of resources and products on hand along with the current value of each

inventory records

28

shows all taxes collected, owed and paid

tax records

29

when does a business have a net income?

when revenue is greater than expenses

30

_____ is changing the way financial info is collected.  Most info is mow collected using point of production and point of sale technolody like scanners, touch screens and pda's

technology

31

include cash and those items that can be easily converted to cash like inventory and accounts receivable

current assets

32

What are some types of records maintained other than the income statement and balance sheet?

  • asset records
  • depreciation records
  • inventory records
  • records of accounts (accounts payable/accounts receivable)
  • cash records
  • payroll records
  • tax records

33

business managers ____ financial statements carefully to determine how their businesses are performing

business managers review financial statements carefully to determine how their businesses are performing

34

what are the two records of accounts reports?

accounts payable

accounts receivable

35

the current value of investments made by the owners of a business can be found in the

  • income statement
  • balance sheet
  • tax records
  • record of accounts

balance sheet

36

identifies the companies from which credit purchases were made and the amounts purchased, paid and owed

accounts payable record

37

as a part of payroll, employers must _____ a percentage of employees' salaries and wages for income taxes, social security and medicare taxes and sometimes unemployment compensation insurance

as part of payroll, employers must withhold a percentage of employees' salaries or wages for income taxes, social security and medicare taxes and sometimes unemployment compensation insurance

38

what a company owes

liabilities

39

what the company owns

assets

40

what are the two types of liabilites

current liabilities

long term liabilities

41

liabilities that will be paid within a year

current liabilities

42

lists the assets, liabilites, and owner's equity for a specific date

balance sheet

43

identifies the buildings and equipment owned by the business, their original and current value and the amount owed if money was borrowed to purchase the assets

asset records

44

how often is a balance sheet prepared?

every 6 months or 1 time per year

45

in addition to the taxes withheld from employees, _____ must pay the employer's share of social security and medicare taxes and other taxes that are calculated as a percentage of payroll

businesses

46

business now use ______ financial systems that have templates for each financial record.  The software completes the necessary mathematical calculations needed.

computerized

47

examples of current liabilities

  • payments owed to banks for short term loans
  • payments due to supplies for inventory purchases, supplies and inexpensive equipment

48

shows the amount assets have decreased in value due to their age and use

depreciation records

49

business records have to be _____ and should be kept up to date

business records have to be accurate and should be kept up to date