Week 1 - introductie Flashcards
the 2 types of accounting
- financial accounting (investors)
- managerial accounting (managers)
financial accounting
- Financial info. about business
- Required by law
- Mainly backward-looking
- Purpose: Financial statements
- Users: External (investors, tax authorities, etc.)
- For public firm
2 regulatory bodies
- IFRS (international finance reporting standards)
(amerika)
- GAAP generally accepted accounting principles
the big 4 auditing firms
KPMG
PWC
Deloitte
EY
order to start a business
get capital
buy assets
start sales
earn profits
equity
for example shares, stockholders
money from the founder, partners, venture capitalists
debt
something you owe to somebody else
money from the bank, or friends who lend you
difference between equity and debt
equity = they own (part of) the firm
debt = are not owners
*each year debt holders are paid first
* the rest profit goes to shareholders (is riskier)
balance sheet info
- initial capital (debt + equity)
- assets
income statement info
- sales
- net profit
balance sheet shows what a firm
- owns > assets (such as machines, properties, cashes)
- owes > liabilities (such as debts) and equity
- AT A SPECIFIC DATE
*first you see how the firm spends money > then you see where the firm gets capital
an income statement shows a firm’s
- revenues (also called: sales, turnovers)
- expenses (also called costs)
- net profit (or loss) = revenue - total expenses
- OVER A PERIOD OF TIME
statement of cash flows: shows a firm’s cash flows *over a period of time
- Operating cash flows: CFs related to the operating activities
- Investing cash flows: CFs related to an investment (such as buying a
coffee machine) - Financing cash flows: CF related to financing activities (such as
borrowing new debts)
*more info in week 6
