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Financial statements

Transactions that are recorded for 4 major statements

1

Reporting period

How often statements are created

2

Fiscal year

One year reporting period, can start at any point of the year

3

Calendar year

Jan 1-dec 31

4

Income statement

Revenue/ sales you bring in

5

Net income

Revenues greater than expenses

6

Net loss

Expenses greater than revenue

7

Heading

Buisness name, type of statement, and time period

8

What appears on the income statement

Revenue and expense

9

Balance sheet (statement of financial statement)

Shows what a buisness looks like a on a specific day

10

What does balance sheet show you

Buisness owns, what it owes, and what is left for owners

11

3 sections in a balance sheet

Assets
Liabilities
Owners equity

12

Assets

Things a buisness owns that can b made into cash

13

Accounts receivable

What customers owe you

14

Liabilities

Debts by the buisness owed to other people

15

Accounts payable

Money you owe suppliers

16

Note payable

Written promise to make future payments on a debt

17

Creditors

Are people you owe money to

18

Examples of liabilities

Bank loan, taxes payable, salary payable , unearned fees

19

Equity

Owners claim on a buisness after all debts paid off

20

Equity equation

Assets-liabilities = equity

21

Totals

Should b double underlined

22

Statement of owners equity

Shows the changes in equity over a period of time

23

Statement of equity equation

Beg equity + income + investments -loss - withdrawals = ending equity

24

What is on statements of owners equity statement

Capital
Investments
Income
Withdrawals
Net loss

25

Cash flow statement

Uses of cash. Hm came in and how it went out

26

Distributions to owners in corporation is called

Dividends

27

When managers are owners

They are only an expense in a corporation

28

Buisness entity principle

Keeping accounting records separate from owner

29

Cost principle

Recorded on actual value of cash paid

30

Objectivity principle

All info must have independent unbiased evidence

31

Going concern principle

Statements reflect a buisness that is going to continue running instead of being sold

32

Monetary unit principle

Transactions are recorded units of money we assume that the currency does not change value and remains the same

33

Revenue recognition principle

Revenue recorded at the time that it is earned

34

Owners equity =

Assets - liabilities

35

Assets =

Liabilities + owners equity

36

Another name for balance sheet

Statement of financial position

37

Buisness activities

Transactions and events that occur in a buisness

38

Economic consideration

Something of value

39

Source documents

Invoices and receipts help record transactions

40

Buisness events

Do not involve exchange of economic consideration and does not effect equation ex. Hiring somebody