Chapter 2:basic Financial Accounting And Reporting Flashcards
Pass the exan (20 cards)
Relate to a reporting entity’s financial position
Assets, liabilities and equity
Income and expenses
Relate to a financial entity’s financial performance
Asset
Present economic resource controlled by the entity as the results of past events
Liability
Present obligation of the entity to transfer economic resource as a result of past events
Residual interest in assets of the entity after deducting all its liabilities
Equity
Increase in assets or decrease in liabilities that results in increases in equity
Income
Expenses
Decrease in assets or increase in liabilities that reuuskts in decrease in equity
Basic summary device of accounting
Account
Accounting equation
Assets =liabilities + owner’s equity
Operating cycle
Time between the acquisition of assets for processing and their realization in cash or cash equivalents
Currents assets
Cash Cash equivalents Notes receivable Accounts receivable Inventories Prepaid expenses
Non current assets
Property, plant and equipment
Accumulated depreciation
Intangible assets
Current liabilities
Accounts payable Notes payable accrued liabilities Unearned revenues Current portion of long term debts
Non current liabilities
Mortgage payable
Bonds payable
Owners equity
Withdrawals
Income summary
Revenues
Types and effects of transactions
Source of assets
Exchange of assets
Use of assets
Exchange of claims
An asset account increases and a corresponding claims (L or OE) account increases.
SA
One asset account increases and anouthe asset account decreases
Exchange of assets
Use of assets
An asset account decreases and corresponding claims (L or OE) Account decreases
Exchange of claims
One claims (L or OE)account increases and another claims (L or OE) account decreases.
