BSNS115: Accounting and Information Systems Flashcards
What is accounting?
Prices of identifying, measuring and communicating economic information about an entity to a variety of users for decision making purposes
What are business trnasactions?
The external exchange of something of value between 2 or more entities and affects assets, liabilities and equity which can be reliably measured and recorded
What are internal users?
Accounting information is extremely valuable to an entity owner or management
What are external users? (stakeholders)
Are parties outside the entity who use info to make decisions about the entity
What is financial accounting?
The preparation and presentation fo financial statements
Allows users to make economic decision about the entity
Both internal and external
What is management accounting?
Economic info for internal users
reflected in financial accounting statements for external users
predominantly about planning and decision making for future events
What is management accounting?
What is the role of professional bodies?
Play an important role in regulating NZ companies through:
stringent regulation fo their members
and
their input into the standard setting process
What are the main financial statements?
Statement of cash flows
Statement of comprehensive income
Statement of changes in equity
Statement of financial position
What is the statement of cash flows?
Shows the sources and uses of cash for a period
What is the statement of comprehensive income?
Referred to as income statement or profit and loss statement
Measures and reports how much profit has been generated in a period
What is the statement of changes in equity?
Shows all the changes in owners interest in the net assets from transactions during the period
What is the statement of financial position?
Commonly knowns as the balance sheet
Shows the assets of business and claims on those assets
What are assets?
Resources controlled by entity
What are liabilities?
External sources of funds
What is equity?
Internal sources of funds (from owners)
What is a definition of an asset?
Arises as a result from a past event
A resource controlled by the entity
From which future economic benefits are expected to flow to entity
What is a current asset?
Held for no more than one accounting period (one year)
What is a non current asset?
Held for longer than the normal operating cycle
What is the definition of a liability?
A present obligation of the entity
Arising from past events
The settlement of which is expected to result in an outflow from the entity of economic benefits
What is a current liability?
Settled in entities normal operating cylce
Held for purpose of trading
Due to be settled within twelve months after balance sheet date
What is a non current liability?
Expected to be met with the next accounting period or within twelve months of balance sheet date
What is a contingent liability?
Existence confirmed on the outcome of a future event
What is owners equity?
Contributed capital
Retained Earnings
Reserves
What is a dividend?
Distribution of earnings to the owners/shareholders
What is a business transaction?
Occurrences that affect assets, liabilities and equity in an entity
When is a business transaction recorded?
When can be reliably measured in monetary terms and at arms length
What is arms length?
No collision between partiers - everyone acts in their own interests
