Accounting Wk 1 Flashcards
Elements of the financial statements
Categories or groupings used to record transactions and prepare financial statements.
Equity
Residual interest in the assets of an entity that remains after deducting its liabilities.
Expense
Cost associated with providing goods or services.
Income statement
Financial statement that measures the organization’s financial performance for a given period of time.
Initial public offering (IPO)
When a company issues shares of its stock to the public for the first time.
Intangible asset
Asset with financial value but no physical presence. Examples include copyrights, patents, goodwill, and trademarks.
Inventory
Value of products to be sold or items to be converted into sellable products.
Investment by owner
Exchange of cash or other assets in exchange for an ownership interest in the organization.
Liability
Probable future sacrifice of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events.
Long-term asset
Asset used ongoing in the normal course of business for more than one year that is not intended to be resold.
Long-term liability
Debt settled outside one year or one operating cycle, whichever is longer.
Net income
When revenues and gains are greater than expenses and losses.
Net loss
When expenses and losses are greater than revenues and gains.
Noncurrent asset
Asset that will be used or consumed over more than one year.
Noncurrent liability
Liability that is expected to be settled in more than one year.
Notes payable
Value of amounts borrowed that will be paid in the future with interest.
Notes receivable
Value of amounts loaned that will be received in the future with interest.
Partnership
Legal business structure consisting of an association of two or more people who contribute money, property, or services to operate as co-owners of a business.
Retained earnings
Cumulative, undistributed net income or net loss for the business since its inception.
Revenue
Inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations.
Short-term asset
Asset typically used up, sold, or converted to cash in one year or less.
Short-term liability
Liability typically expected to be paid within one year or less.
Sole proprietorship
Legal business structure consisting of a single individual.
Statement of cash flows
Financial statement listing the cash inflows and cash outflows for the business for a period of time.
