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Flashcards in Exam 1 Deck (46):
1

assets

liabilities + owner's equity

2

owner's equity

commont stock + revenues - expenses - dividends

3

assets are increased by

debits

4

assets are decreased by

credits

5

liabilities are decreased by

debits

6

liabilities are increased by

credits

7

common stock is decreased by

debits

8

common stock is increased by

credits

9

revenue is decreased by

debits

10

revenues are increased by

credits

11

expenses are increased by

debits

12

expenses are decreased by

credits

13

dividends are increased by

debits

14

dividends are decreased by

credits

15

revenues - expenses

net income

16

beginning retained earnings + net income/loss - dividends

ending retained earnings

17

common stock + ending retained earnings

total equity

18

proprietorship

single owner

 

19

partnership

2+ owners, each partner personally liable for debts

 

20

limited liability companies (LLCs)

owners are called members

members aren't personally liable - reduces owners' risk

21

corporations

owners are called stockholders

stockholders elect board of directors

board of directors sets policy & appoint officers

formed under state law

pay income taxes

22

GAAP (Generally Accepted Accounting Principles)

formulated by Financial Accounting Standards Board (FASB)

accounting should by relevant, reliable, comparable, & consistent

 

23

accounting concept of entity

business is separate from owners

24

accounting concept of reliability

accounting is based on objective evidence

25

accounting concept of cost

assets are recorded at cost (not fair value)

26

accounting concept of going-concern

business will continue indefinitely

27

accounting concept of monetary unit

transactions are recorded in a stable currency

28

types of assets

cash

inventory

equipment

land

buildings

receivables

29

types of liabilities

debts

payables

30

paid-in capital

amounts invested by stockholders

common stock

31

retained earnings

amounts earned & kept for use in the company

increased by revenues

decreased by expenses

32

dividends

distributions of assets (ususally cash) to shareholders

decrease retained earnings

don't impact net income

33

income statement

measures operating performances for the period

reports revenue & expenses & resulting net income/loss

34

statement of retained earnings

shows increases & decreases to retained earnings

increase: net income

decreases: dividends

35

balance sheet

measures financial position

reports assets, liabilities & shareholders' equity

assets & liabilities are categorized by current & long-term

36

current assets

converted to cash/used w/in 1 year

cash, short-term investments, accounts receivable, inventory

37

long-term assets

property, plant, & equipment

intangible assets

investments

other

38

current liabilities

due w/in 1 year of balance sheet date

accounts payable, salaries payable, taxes payable, short-term borrowings

39

long-term liabilities

long-term notes payable, mortgage payable

40

statement of cash flows

operating activities

investing activities

financing activities

41

operating activities

cash generated from day-to-day business activities

related to selling goods & services to customers

42

investing activities

cash invested in long-term assets

related to purchasing & selling plant assets & investments

43

financing activities

how a company obtains resources to finance business

related to long-term debt & equity (issuing stock)

44

flow of financial statements

A image thumb
45

transactions

any event that impacts the financial position of a business

can be measure reliably

2 sides: business gives something; business receives something

46

double-entry accounting