Ch 1: Accounting Basics Flashcards
Balance Sheet
The financial picture of a company on a specific date.
a.k.a. Statement of Financial Condition
Assets - Liabilities =
Stockholders’ Equity
What makes an asset liquid?
If it can be sold (turned to cash) quickly w/o a large impact on the market price
Current Liabilities
Those debts that will come due in less than a year. A/P Interest Payable Notes Payable Taxes Payable (Prepaid expenses are an asset)
Unsecured Liabilities
Not backed by b/d’s own assets
Most unsecured liabilities considered AI, unless b/d uses some of its trading inventory as collateral.
Secured Liabilities
Backed by b/d’s own assets.
Generally considered Aggregate Indebtedness.
FOCUS reports
Financial Operations Combined Uniform Single report
Preferred Stock Par Value
$100
Capital Surplus
Amount of premium paid by shareholders above the par value.
Retained Earnings
Represents net profits retained for future use by the corporation.
What is stockholders’ equity
Outstanding stock, retained earnings & capital surplus
Income Statement
Indicates the corporation’s financial performance during a specified period. (Jan 1 - Jan 31)
A.ka. Profit & Loss Statement
Items in the income statement
Revenues
Expenses
General Ledger
Records of all the firm’s asset, liability, capital, income and expense accounts.
Trial Balance
Abstracted from the G/L.
Listing of all accounts in the G/L divided into debit group and credit group
