Accounting Flashcards
What is the definition of accounting?
Accounting is the language of business. It involves keeping accurate financial records to follow tax and legal rules, track money coming in and going out, and understand a business’s financial situation.
Why is keeping accurate financial records important for a business?
Accurate financial records help with planning budgets, making decisions, avoiding mistakes or fraud, assisting with audits, and building trust with others
What are assets in accounting?
Assets are things a business owns, such as cash, receivables (amounts owed to the firm), inventory, land, buildings, and equipment.
What are liabilities?
Liabilities are amounts a business owes to others, such as unpaid bills, loans, and payables.
What is owner’s equity?
Owner’s equity is the owner’s stake in the business, calculated as assets minus liabilities.
What is the formula for assets, liabilities, and owner’s equity?
Assets = Liabilities + Owner’s Equity.
What is a financial statement?
A financial statement is a formal record of a business’s financial activities and position, including the balance sheet, income statement, and cash flow statement.
What does a balance sheet show?
A balance sheet shows the financial position of a business on a specific date, providing a snapshot of assets, liabilities, and owner’s equity.
What is an income statement?
An income statement is a financial report that shows a company’s performance over a period by detailing revenue, expenses, and profits or losses.
What is the formula for calculating net income on an income statement?
Revenue - Expenses = Net Income (Profit or Loss).
What is the difference between revenue and expense?
Revenue is money coming in, while expenses are money going out. Subtracting expenses from revenue gives the profit or loss.
Name a few key characteristics of an entrepreneur.
Creativity, risk-taking, vision, self-motivation, resilience, adaptability, leadership, problem-solving skills, strong work ethic, resourcefulness, financial awareness, and customer focus.
What is the leadership style of an autocratic leader?
Autocratic leaders have full control over decisions, give direct orders, and employees have little or no chance for feedback or participation.
What are some potential problems with autocratic leadership?
High employee turnover, resentment, and low engagement due to employees feeling undervalued or ignored.
What is the leadership style of a democratic leader?
Democratic leaders encourage dialogue, employee feedback, and teamwork. They involve employees in decision-making while maintaining authority and guidance.
How does a laissez-faire leader manage their team?
Laissez-faire leaders give employees the freedom to complete tasks and make decisions independently with little guidance or supervision.
What are the potential issues with laissez-faire leadership?
It can cause uncertainty or anxiety for employees who need more training or support, especially if they are less experienced.
What is transformational leadership?
Transformational leaders inspire employees to exceed their current performance, foster a sense of purpose, and focus on innovation, growth, and change.
What are the three types of management roles according to Mintzberg?
Interpersonal roles, informational roles, and decisional roles.
