Chapter 1 Flashcards
(29 cards)
Net Worth =
equity
businesses need initial financial aid which comes in
loans, investors, creditors
stakeholders are
resource providers
3 types of resources
physical
financial
labor
types of accounting
financial accounting; focused on needs of external users; investors and creditors
managerial accounting; focused on internal users needs; mangers, employees, unions
nonprofit; beneficiaries, legislators
FASB
(The Financial Accounting Standards Board)
generally accepted accounting principles
Assets=
liabilities + stockholders equity
stockholders equity holds
common stock and retained earnings
general ledger
complete collection of a company’s accounts
revenue is
sales
an asset source transaction is
an event that increases total assets and total claims
ex; issuing common stock for cash
who has priority in liquidations
creditors and then investors
going concern doctrine
assumes that a business is able to continue its operations into the foreseeable future
Asset Exchange transation
decrease one asset and increase another
asset use transaction
decrease the total assets and the total claims
income statement
the financial statement showing benefits and sacrifices during accounting period
permanent and
closed accounts
balance sheet records
assets liabilities and stockholders equity
how they use cash is the
statement of cash
stockholders equity may be subdivided into
common stock and retained earnings
stakeholders
are the users of accounting information
Cash flows
Operating Activities
Financial Activities
Investing Activities
Permanent accounts hold
retained earnings
accrual accounting
recognizing revenue when it is earned and expenses when they are incurred, regardless of when cash changes hands
when a company records a sale of goods as revenue when the goods are shipped to the customer, even though the customer has not yet paid for the goods