Accounting 201Chapter 01 Power Point Flashcards
What is the basic understanding of Accounting?
Accountants communicate information to people, people make decisions about companies, companies report information to accountants. Full Circle.
Business Activities to Measure?
Business Activities = Operating activities1) Operating activities = transactions in primary operations of business.2) Operating activities = Financing activities = funding from external sources. 3) Operating activities = Investing activities = purchase and sale of long-term resources.
Define “communicating through financial statements” and what four statements are used?
1.a. Financial statements are periodic reports published by the company for the purpose of providing information to external users.2.a. Income Statement2.b. Statement of Stockholder’s Equity2.c. Balance Sheet2.d. Statement of Cash Flows
Define an “Income Statement” what it tells, and what it determines.
1.a. Financial statement that reports thecompany’s revenues and expenses overan interval of time. 2.a. Shows whether the company was able togenerate enough revenue to cover theexpenses of running the business.3.a. If Revenues > Expenses then Net IncomeIf Revenues < Expenses then Net Loss.
Define “Statement of Stockholder’s Equity” what it tells and what two elements Stockholder’s Equity consists of:
1.a. Financial statement that summarizes the changes in stockholders’ equity over an interval of time.2.a. Common Stock + Retained Earnings
Define a “Balance Sheet” and Summarize the basic accounting equation:
1.a. Financial statement that presents the financialposition of the company on a particular date.2.a. Assets = Liabilities + Stockholders’ Equity
Define a “Statement of Cash Flow” and what three categories they can be classified as:
1.a. Financial statement that measures activitiesinvolving cash receipts and cash paymentsover an interval of time.2.a. Operating cash flows2.b. Investing cash flows2.c. Financing cash flows
What is the “Importance of Financial Accounting” and break down the processing of the information:
1.a. Financial accounting information is essential tomaking good business decisions.2.a. Investors and creditors review the information then decide whether to invest their money into Company A or Company B.
Define “GAAP” and it’s role or rule:
1.a. GAAP = Generally Accepted Accounting Principles.1.b. Investors & Creditors make their decisionsbased on Financial Accounting Information, Should be based on formal standard: Generally Accepted Accounting Principles, (GAAP).
1) Break down a career in Public Accounting and your role as a Public Accountant: Then:2) Break down a career as a Private Accountant and your role as a Public Accountant:
1.a. Public Accounting Clients: (Big 4 and Non - Big 4) = Corporations, Governments, Nonprofit Organizations, Individuals.1.b. Traditional roles: Auditors, Tax preparers/planners, Business consultants.2.a. Private Accounting: Clients: Your employer.2.b. Traditional roles: Financial accountants, Managerial accountants, Budget analysts, Internal auditors, Tax preparers, Payroll managers.
