Accounts and Financial Statements

Question 1

Operating Activities

Answer 1

related to day-to-day business

Question 2

Investing Activities

Answer 2

related to acquisition/disposal of long term assets (PPE)

Question 3

Financing Activities

Answer 3

related to obtaining or repaying capital

Question 4

Assets

Answer 4

economic resources of the company

Question 5

Liabilities

Answer 5

creditors’ claims on the company’s resources

Question 6

Owners’ Equity

Answer 6

owners’ residual claim on the company’s resources

Question 7

Revenues

Answer 7

inflows of economic resources to company

Question 8

Expenses

Answer 8

outflows of economic resources to company

Question 9

Acccounts

Answer 9

individual records of +/- in specific asset, liability, owner’s equity, revenue or expense

Question 10

Chart of Accounts

Answer 10

Table of contents of accounts

Question 11

Contra Accounts

Answer 11

Account that is offset or deducted from another account; Ex: accumulated depreciation, sales return, allowance for bad debts

Question 12

Non-Current Assets

Answer 12

assets expected to benefit the company over an extended period of time; Ex: goodwill, PPE, copyrights, etc.

Question 13

Current Assets

Answer 13

assets expected to be consumed or converted into cash in the near future

Question 14

Inventory

Answer 14

unsold units of product on hand

Question 15

Trades Receivable

Answer 15

another term for accounts receivable

Question 16

Other Receivables

Answer 16

amounts owed to the company from parties other than customers

Question 17

Cash/Cash Equivilants

Answer 17

cash on hand/ liquid short term investments maturing in 90 days or less

Question 18

Balance Sheet

Answer 18

a company’s financial position at a particular point in time

Question 19

Residual Claim

Answer 19

owner’s remaining claim on company’s assets after the liabilities are deducted

Question 20

Balance Sheet Equation

Answer 20

Assets = Liabilities + Owners’ Equity

Question 21

Owner’s Equity Equation

Answer 21

Owners’ Equity = Contributed Capital + Retained Earnings

Question 22

Income Statement

Answer 22

performance/activity of a company over a specific period

Question 23

Income Statement Equation

Answer 23

Revenue - Expenses = Net Income (loss)

Question 24

Net Income (loss)

Answer 24

difference between revenues and expenses; net income is when company’s revenue is greater than expenses; net loss is when the expenses are greater than the revenues

Question 25

Gains/Losses vs. Revenues/Expenses

Answer 25

gains and losses aren’t directly related to the primary business, revenues and expenses are related to day-to-day

Question 26

Ending Retained Earnings Equation

Answer 26

Beginning retained earnings + Net Income - Dividends

Question 27

Retained Earnings

Answer 27

earnings retained by the company( aka not distributed as dividends)

Question 28

Statement of Retained Earnings

Answer 28

shows link between balance sheet and income statement

Question 29

Double Entry Accounting

Answer 29

keeps accounting equation in balance; Ex: buying office furniture- cash decreases, assets increase

Question 30

(A)

Answer 30

Assets

Question 31

(L)

Answer 31

Liabilities

Question 32

(E)

Answer 32

Equity

Question 33

(R)

Answer 33

Revenue

Question 34

(X)

Answer 34

Expenses

Question 35

Unclassified Balance Sheet

Answer 35

doesn’t show subtotals for current assets and current liabilities

Question 36

Depriciation

Answer 36

spreading the cost over multiple periods

Question 37

Unearned Fees

Answer 37

fees for services promised, but not yet provided; ex: magazine subscription is unearned until it’s delivered

Question 38

Total Assets Equation

Answer 38

Total Assets = Total Liabilities + Equity

Question 39

Costs of Goods Sold

Answer 39

an expense incurred when you reduce inventory by the value of the production

Question 40

Accruals + Adjustments

Answer 40

decide if revenue/expense items are being counted in the correct accounting period; “a” - denotation

Question 41

Accrual Accounting

Answer 41

expenses recorded when incurred and revenue recorded when earned

Question 42

Direct Format

Answer 42

operating receipts - operating cash disbursements

Question 43

Indirect Format

Answer 43

starts with net income and shows adjustments to infer operation cash flow