Accounting Chapter 1 Flashcards
What prohibits you from logging your person assets into your company’s balance sheet?
The economic entity assumption
Why do you mark a house at the value you bought it for and not what it’s worth now?
Historic cost principal
or
The cost principle
Why does a company record all of its financial statements in USD?
The monetary unit assumption
What is it when you expect a company to remain in operation for the foreseeable future
The going concern assumption
What does SEC stand for
The securities and exchange commission
internal
What is sole proprietorship
Owner is referred to as a proprietor
What is faithful representation
Asserts that accounting information should be complete, neutral, and free form material error.
Partnership
Has two or more owners (partners)
What is IFRS
Set of global accounting guidelines formulated by the IASB
What is a corporation?
Type of entity that is designed to limit personal liability exposure of owners to entity’s debts
What does audit mean?
An examination of a company’s financial statements and records
What is FASB
Financial accounting standards board
What is a creditor
Person or business lending money
What’s is an SEC
US government agency that oversees the US financial markets
Accounting equation
Assets = Liabilities + equity
Assets
The economic recourses that is expected to be benefit in the future
Balance sheet
Reports on an entity’s revenues, expenses, and net income or loss for the period
Expenses
Decreases in equity that occur in the course of selling goods or services
Income statement
Reports on an entity’s revenues, expenses and net income or loss for the period
Liabilities
Debts that are owed to creditors
Net income
Excess of total revenues over total expenses
Net loss
Excess in total expenses over total revenues
Revenue
Increase in equity that occur in the course of selling goods and services
Statement of cash flow
Reports on a business’s cash receipts and cash payments during a period
Statement of retained earnings
Report how the company’s retained earnings balance changed from the beginning to the end of the period
