Chapter 1 Flashcards
Financial vs Management accounting
Financial = outside the reporting entity Management = Internal ppl
2 Fundamental Qualitative Characteristics
Relevance - info capable of making difference, Influenced by materiality
Faithful Representation - represents economic phenomena without bias
4 Enhancing Qualitative Characteristics
Comparability - over time period
Verifiability - All accountants come to same conclusion
Timelessness - Info available early to investors
Understandability - Clear and Concise
Accrual basis based on
going concern assumption, recognize events when they occur not when money comes in
2 Equity major sub-parts
Share Capital
Retained Earnings
2 Income sub-parts
Revenue - Ordinary course of business
Gains - Outside the ordinary course of
Expenses vs Losses
Expenses - ordinary course of business
Losses - not ordinary course of business
Financial position showed by
Balance sheet
Financial performance by
Income statement
Balance sheet is also known as
Statement of financial position
Financial Statements Order
Income Statement -> Changes in Equity -> Balance sheet -> cash flow statement
Current vs Non-current assets
Current = Expected to be converted to cash within 12 months
Paid-in Capital AKA
share capital, or capital
Gross Profit equation
Revenue- COGS
Operating Income Equation
Gross profit - Operating Expenses
