Accounting Basics Flashcards
income statement
presents the revenues and expenses and resulting net income or net loss for a specific period of time
retained earnings statement
summarize the changes in retained earnings for a specific period of time
statement of financial position / balance sheet
reports the assets, liabilities and equity of a company at a specific date
statement of cash flows
summarizes Information about the cash inflows (receipts) and outflows (payments) for a specific period of time
accounting
identifies, records and communicates economic events of an organization to interested users
users of accounting data
internal users:
Finance, HR, Management and Marketing
external users: taxing authorities, labour unions, customers, creditors, regulatory agencies and investors
ethics in financial reporting
are standards of conduct by which one’s actions are judged as right or wrong, honest or dishonest, fair or not fair.
International Accounting Standard Board IASB
International Financial Reporting Standards IFRS
Financial Accounting Standard Board FASB
generally accepted accounting principles US GAAP
types of accounting standards
how detailed
principles only
principle based
rule based
measurement principles
cost principle
fair value principle
most financial Standards mixes the principles
cost principle / historical cost principle
dictates that companies record assets at their costs
fair value principle
states that assets and liabilities should be reported at fair value (price received to sell an asset or settle a liability)
Basic Accounting equation
Assets = Liabilities + Equity
assets
are ressources a business owns and which provide future service or benefits
