Fundamentals of Financial Accounting Flashcards
Name the different types of firms
- Proprietorship - One owner
- Partnership - Divided among partners
- Corporation - Stockholders
Which of the different types of firms has no liability for the owner?
Corporation - they are separate legal entities and therefore the owners are not liable
What are the differences between management accounting and financial accounting?
Financial Accounting:
- External purpose
- Low level of detail, yearly basis
- backward looking
Management Accounting:
- Internal purpose
- High detail and frequency
- Forward looking
Name the different financial statements
- Income statement
- Statement of retained earnings
- Balance sheet
- Statement of cash flows
What does the income statement measure?
The income statement measures a company’s performance in terms of income and expenditures. It also shows whether a company is making profit or loss in a given period.
What does the statement of retained earnings measure?
The statement of retained earnings measures the changes in retained earnings over a certain period of time
What does the balance sheet indicate?
The balance sheet summarizes a company’s assets, liabilities and shareholders equity at a specific point of time
What does the cash flow statement indicate?
It indicates all cash inflows and outflows from operating, investing and financing activities over a certain period of time
Debit ____ assets and ____ liability and equity
Debit increases assets and decreases liability and equity
Credit ____ liability and equity and _____ assets
Credit increases liability and equity and decreases assets
What happens if you debit / credit assets?
Debit: Increase
Credit: Decrease
What happens if you debit/credit accumulated depreciation?
Debit: Decrease
Credit: Increase
What happens if you debit/credit liabilities?
Debit: Decrease
Credit: Increase
What happens if you debit/credit share capital?
Debit: Decrease
Credit: Increase
What happens if you debit/credit revenue?
Debit: Decrease
Credit: Increase
