Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

FACC > Chapter 1: > Flashcards

Chapter 1: Flashcards

1
Q

Which three basic activites does ACCOUNTING consist of

A

Accounting

  • identifes
  • records, and
  • communicates

the economic events of an organization to interested users

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Measurment Principles:

Cost priniciple / Historical Cost Principle

A

Record asset at their cost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Measurment Principle:

Fair Value Principle

A

states that assets and liabilites should be reported at fair value (the price received to sell an asset or settle a liability)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Assumption:

Monetary Unit

A

include in accounting records ONLY transaction data that can be expressed in money terms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Assumption:

Economic Entity

A

requires that activites of the entity be kept seperate and distinct from the activities of its owner and all other economic entities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Proprietorship

A

Form of Business Ownership

  • Generally owned by one person
  • Owner receives any profits, suffers any losses and is personalle liable for all debts
  • Often small service-type buisnesses
  • dt. Einzelunternehmen
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Partnership

A

Form of Business Ownership

  • Owned by two or more persons
  • Often retail and service-type buisnesses
  • Generally unlimited personal liability
  • Partnership agreement
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Corporation

A

Form of Business Ownership

  • Ownership divided into shares
  • Separate legal entity organizd under corporation law
  • Limited liability
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

The (Basic) Accounting Equation

A

Asset = Liabilites + Equity

Assets = Liabilited +[Share Capital + Retained Earnings - Dividends + Revenues - Expenses]

_________________________

Equity = Assets - Lianilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Assets

A
  • Resources a business owns
  • Provide future service or benefits
  • Cash, Inventory, Equipment etc.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Liabilites

A
  • Claims against assets (debts and obligations)
  • Creditors - party wo whom money is owned
  • Accounts payable, Notes Payable etc
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Equity

A
  • Ownership claim on total assets
  • Referred to as residual equity
  • Accounts:
    • Share capital ordinary
    • retaind earnings
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Equity Increases / Decreases

  • Revenue
  • Expenses
  • Investment by shareholders
  • Dividends to shareholders
A
  • Revenue -> INCREASES
  • Expenses -> DECREASES
  • Investment by shareholders -> INCREASES
  • Dividends to shareholders -> DECREASES
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Dividends

A
  • Is the distribution of cash or other assets to shareholders
  • Reduc retained earnings
  • NOT AN EXPENSE!!!!!
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Retained Earnings

A

= Revenues - Expenses - Dividends

= Net Income - Dividends

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Share Capital-Ordinary

A

“Grundkapital” bzw. “Gezeichnetes Kapital”

Investment by shareholders

17
Q

How many finacial statments are being prepared by Companies

A
  • Income Statement
  • Retained Earnings Statement
  • Statement of Financial Position
  • Statement of Cash Flow
  • Comprehensive income statement
18
Q

Name the primary accounting standard-setting bodies

A

Financial Accounting Standards Board

Internationational Financal Reporting Standards

19
Q

Financial Statements

Period of Time or specific Date

A

Period of Time:

  • income statement
  • retained earnings statement
  • statement of cash flow
  • comprehensive income

Specific point in time:

  • statement of financial position
20
Q

Comprehensive income statement

A
  • presents other comprehensive income items thate are NOT included in the determination of net Income
21
Q

Statement of Cash Flow

Name the three Cash Flows

A
  • Cash Flow from operating activites
    • cash reciepts from revenues
    • cash payments from revenues
  • Cash Flow from investing activities
    • purchases of equipment
  • Cash Flow from financing activities
    • sale of ordinary shares
    • Payment of cash dividends
22
Q

Name the Measurement Principles

A

1. Cost Principle (Historical Cost Principle):

  • companies record assets at their COST

2. Fair Value Principle

  • states that assets and liabilities should be reported at fair value (the price received to sell an asset or settle a liability)

In determining which measurement Principle to use, teh factual nature of cost figrue are weighted versus the relevance of fair value. -> reelevance and faithful representation

FACC (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions