ACCOUNTING Flashcards
The process of reporting, recording, interpreting, and summarizing financial transactions of any business entity.
A wider concept of bookkeeping.
ACCOUNTING
Part of accounting that involve processes like identifying, measuring, recording, and classifying the financial transactions.
BOOKKEEPING
Resources carrying economic value that an individual organization, or a country owns with an expectation if deriving benefit thereof.
ASSETS
A sum of money which is owed by a person or a company. They are payable by the company by way of its assets.
LIABILITIES
The shareholder’s equity held by companies.
OWNER’S EQUITY
Money owed to the business suppliers presented as liability on the company’s balance sheet.
ACCOUNTS PAYABLE
A promise of cash receipt from customers (debtors) to when the firm has made sales.
ACCOUNTS RECEIVABLE
A legal entity or an artificial person per the law.
CORPORATION
Data presenting the company’s assets, liability, and owner’s equity as on specific date (usually year end)
BALANCE SHEET
Business document provide financial date about an entity to the persons and organizations outside the business.
A structured representation of the financial position, financial performance, and cash flow of an entity.
FINANCIAL STATEMENT
Two Accounting Methods
ACCRUAL BASIS AND CASH BASIS
A statement in the form of a list of an entity’s revenues, expenses, and net income or net loss.
INCOME STATEMENT
Excess of total revenue over total expenses.
NET INCOME (NET PROFIT)
Excess of total expenses over total revenues.
NET LOSS
A particular event that affects the financial position of a particular entity.
TRANSACTIONS
Components of Financial Statements
STATMENT OF FINANCIAL POSITION, INCOME STATEMENT, STATEMENT OF CHANGES IN EQUITY, STATMENT OF CASH FLOW
Requires faithful representation of the effects of transactions, other events, and conditions.
FAIR PRESENTATION
Recognizes business revenue and matching expenses when they are generated.
ACCRUAL BASIS
Sometimes called netting. Net presentation of separate assets, liabilities, or income and expenses in the financial statements.
OFFSETTING
An entity shall present a complete set if financial statements at least annually.
REPORTING PERIOD
Gives a snapshot of a business’ asset, liabilities, and equity.
BALANCE SHEET
Accounting Equation
ASSET = LIABILITIES + EQUITY
Marketable Securities
CURRENT ASSET
Short-term investments
CURRENT ASSET
