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IIH Leadership > Accounting Foundations: Fundamentals > Flashcards

Accounting Foundations: Fundamentals Flashcards

1
Q

What is bookkeeping?

A

Gathering the information systematically

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2
Q

What is financial accounting?

A

This is reporting to people outside your organization. Summary reports, not the details, it’s not people who are there everyday, but it’s people who want to know how you’re doing.

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3
Q

What is managerial accounting?

A

Those are the detailed, secret data that individuals use inside their organizations to make decisions, detailed decisions.

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4
Q

What are the 3 Primary Financial Statements?

A

The Balance Sheet The Income Statement The statement of Cash Flows

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5
Q

What is the Accounting Equation?

A

Assets = Liabilities + Equity

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6
Q

What is the purpose of the Accounting Equation?

A

To know the sources of your assets

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7
Q

What is it called when owners invest in their own business out of their own pocket?

A

Paid-in capital

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8
Q

What is Owner’s Equity?

A

Paid-in capital and retained earnings

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9
Q

What is retained earnings?

A

Profits kept in the business and used to buy assets

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10
Q

If you bought a building 50 years ago, that cost 50.000 DKK, but today is worth 2 million DKK, then what do you write on the balance sheet?

A

50.000 DKK - The balance sheet only takes costs into account, not value

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11
Q

Are intangible assets recorded on the balance sheet?

A

No, things like Brand value, logo value, customer lists and so on, does not appear on a balance sheet

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12
Q

What is the difference between book value and market value?

A

The market value is what the market is willing to pay for your company, where as the book value is all the assets you have recorded in the balance sheet

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13
Q

What is a balance sheet?

A

Shows what you have in assets and liabilities at a certain point of time.

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14
Q

What is an Income Statement?

A

Shows how much you made over a period of time

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15
Q

What are the requirements in the United States for large companies in terms of Income Statement?

A

You need to make one every quarter and once a year

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16
Q

What does the Income Statement contain?

A

Revenues - Expenses = Net income

17
Q

What does Revenue mean?

A

The amount of assets created from the sale of goods or services

18
Q

For expenses that will not be paid until next year, are they registered as expenses this year or next year?

A

Yes, they are registered as expenses

19
Q

What is Net Income?

A

Company’s overall measure of economic performance

20
Q

What is EPS / Earnings per share?

A

Net income divided by shares or stocks in the compnay

21
Q

What is top line?

A

Sales

22
Q

What type of Statement is this?

A

Income Statement

23
Q

What is bottom line?

A

Net income

24
Q

Which 3 categories do you have in the Statement of Cash Flows?

A

Operating activities, Investment activities and Financing activities

25
Q

What is this?

A

A Statement of Cash Flows

26
Q

What is this?

A

A Statement of Cash Flows

27
Q

What is the most commonly used reference number in accounting?

A

Earnings per share (EPS)

28
Q

Which 4 types of typical Managerial Accounting applications are there?

A
  • Budgeting
  • Product costing
  • Break even
  • Performance evaluation
29
Q

What is Product Costing?

A

Stating the costs to make a product in

  • Direct materials
  • Direct labor
  • Overhead
30
Q

What are Overhead Costs?

A

The costs that are not directly related to the Product Cost, such as Building, Insurance, Salary to a supervisor, etc.

31
Q

How do you assign Overhead Costs?

A

More worker hours = More overhead

Or

More machine hours = More overhead

32
Q

What is a Contribution Margin?

A

How much you get to keep

33
Q

What is brakeven analysis?

A

Calculation on what you need in sales in order to not loose money / Go breakeven

34
Q

What is the benefit of keeping budgets?

A

Budgets help you identify and solve problems in advance

35
Q

What is this?

A

A budget

36
Q
A

IIH Leadership (2 decks)

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