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Accounting > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

Accounting

A

language of business, information system

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2
Q

External users

A

people outside the company

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3
Q

Financial accounting

A

provides information for external users

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4
Q

investors

A

people who put money into the business and are at risk

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5
Q

Creditors

A

lends money to the company

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6
Q

Government Agencies

A

(IRS & SEC) Regulate the stock market

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7
Q

Other (external user)

A

non profit organization, employees, customer

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8
Q

Financial statement

A

Financial reports to communicate business transactions to outsiders

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9
Q

Internal users

A

people within the company

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10
Q

Managerial accounting

A

provides information to it’s users

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11
Q

Management

A

only ones who have internal info of the company

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12
Q

GAAP

A

a set of rules accountants use for preparing financial statements (only used in the US)

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13
Q

IFRS

A

international set of rules and guidelines accountants use for preparing financial statements

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14
Q

Principles and Assumptions of Accounting

A

all financial statements perpetrated with GAAP rules are based on 8 principles

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15
Q
  1. Cost Principle (measurement principle)
A

record of the item at the price that was paid

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16
Q
  1. Revenue Recognition Principle
A

Revenue is recognized when earned (when service is done not when price is paid)

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17
Q
  1. Expense Recognition
A

a comoany ahouls record all expenses incurred to generate the revenue reported that month

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18
Q
  1. Full Disclosure
A

a company needs to report the details behind financial statements that would impact users decisions

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19
Q
  1. Continuity (Going concern)
A

assumption that the business will continue operating instead of being closed or sold

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20
Q
  1. Monetary Unit
A

we can express transaction and events in monetary units

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21
Q
  1. Time period
A

a life a company can be divided into time periods

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22
Q
  1. Entity assumption
A

Transactions of the business are accounted separately from the owners transactions

23
Q

Accounting restraints

A

materiality And cost benefits, things that prevent companies from making financial statements

24
Q

Sole proprietorship

A

Not a legal seperare entity, seperatr accounting entity, limited life

25
Q

Partnership

A

same as sole except there’s two people

26
Q

Corporation

A

business owned by 1 or more people. desperate legal entity, limited liability to owners, unlimited life

27
Q

Accounting equation

A

assets = liabilities + equity

28
Q

Assets

A

resources a company owns or controls

29
Q

Liabilities

A

what the company owes

30
Q

Equity

A

claims of the company’s owners

31
Q

Shareholders

A

owner of a corporation

32
Q

Materiality

A

only information that would influence the decisions of a reasonable person need to be disclosed

33
Q

Cost benefits

A

benefits of disclosure should be greater than the costs if providing it

34
Q

Two parts of equity

A

contributed capital and retained earnings

35
Q

Contributed capital

A

the amount stockholders invest in a company

36
Q

Retained earnings

A

accumulated revenues (profits that have been earned from the BEGINNING)

37
Q

Revenue

A

raises retained revenue; amount earned from selling products and services

38
Q

Expenses

A

Loerrst retained earnings; cost of assets or services

39
Q

Dividends

A

Lowers the retained earnings; cash company pays investors

40
Q

Expanded Accounting Equation

A

Assets= Liabilities + common stock + revenue - expenses - dividends

41
Q

common stock

A

increases equity; what investors invest

42
Q

Accounts receivable

A

Asset; Amount costumers owes the company in the future

43
Q

Notes Receivable

A

Asset; amount consumers will pay the company in the future with interest

44
Q

Supplies

A

Asset for chapter 1; the cost of unused supplies

45
Q

Accounts payable

A

Liability; money company promises to pay later

46
Q

Notes payable

A

Liability; money company promises to pay later with interest

46
Q

Notes payable

A

Liability; money company promises to pay later with interest

47
Q

Salaries payable

A

Salaries owed by the company

48
Q

Transaction

A

measurable financial impact on the business

49
Q

Income statement

A

revenues, expenses, and net income

50
Q

Balance sheet

A

company’s financial position at a point of time

51
Q

Ratio Analysus

A

measurement if key relations between financial statements

52
Q

Ratio

A

Return on assets = Net income/ Average total assets

Accounting (10 decks)

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