Final Exam Flashcards
What is accounting?
Accounting is the profession of communicating financial information about a business entity to users such as shareholders and managers. Accountants are persons who perform the accounting work, and also carry out the auditing or checking of a company’s books and records
What is an income statement?
Reports revenues, gains, expenses, losses, net income and other totals for the period of time shown in the heading of the statement; one of the main financial statements (along with the balance sheet, statement of cash flows, and the statement of stockholders’ equity)
What is a balance sheet?
Presents a company’s financial position at the end of a specified date. Can be thought of as a “snapshot” (one moment in time) of the company’s financial position at the time and is often referred simply as the statement of financial position.
What is a statement of retained earnings?
Contained in the general ledger account Retained Earnings
What is a statement of Cash Flows?
Reports the cash generated and used during a time interval specified in its heading
What are the Generally Accepted Accounting Principles (GAAP)?
These are general guidelines, principles, standards, detailed rules, and industry practices that exist for financial reporting
What are current assets?
Any company asset that will be turned into cash WITHIN ONE YEAR from the data shown in the heading of the company’s balance sheet. Includes cash, temporary investments, accounts receivable, inventory, supplies, and prepaid expenses
What are current liabilities?
Any obligation that is due WITHIN ONE YEAR of the date of a company’s balance sheet, will require the use of a current asset or will create another current liability. Includes the portion of notes payable due within one year, accounts payable, payroll taxes payable, income taxes payable, interest payable, and other accrued expenses.
