Capt 1 & 2 Flashcards
Ethics
beliefs that distinguish right from wrong
Monetary Unit Assumption
Transactions and events are expressed in monetary or money units
Liabilities
A thing for which someone is responsible, especially a debt or financial obligation
Ledger
collection of all accounts and their balances for an accounting system
Assets
resource that is expected to provide a future benefit to its owner
Equity
The amount of capital invested or owned, by the owner of a company
Statement of Cash Flows
lists the cash inflows and cash outflows for the period
Balance Sheets
reports the financial position at a point in time
Statement of Owner’s equity
reports changes in equity over the reporting from the net income(or loss) and from any owner investments or withdrawals over a period of time
Income Statement
reports revenues less expenses incurred by a business over a period of time
Debt Ratio
Total liabilities/ Total Assests
Account Balance
difference between the increases and decreases in an account
Chart of Accounts
list of all accounts and includes an identifying number for each account
Generally Accepted Accounting Principles (GAAP)`
a set of accounting rules and procedures used in standardized financial reporting practices. Wants information to have relevance and faithful representation
Account
is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense
Return on Assets (ROA)
Net Income/Average Total Assets
Going-Concern Assumption
The business is presumed to continue operating instead of being closed or sold
Full Disclosure Principle
A company reports the details behind financial statements that would impact users’ decisions in the notes to the financial statements
Revenue Recognition Principle
when goods / services are provided to customers, the amount expected to be received from the customer
Matching Principle
A company records its expenses incurred to generate the revenue reported
Revenue
payment for a service
Cost Principle
Assets should always be recorded at their cost, when the asset is new and also for the life of the asset. Actual cost = Objective
Accounting
an information and measurement system that identifies, records, and communicates an organization’s business activities. Language of Business
