Chapter 1 Flashcards
(50 cards)
Decision makers inside company use what type of accounting?
Managerial Accounting
Decision makers outside company use what type of accounting?
Financial Accounting
What are the four business activities all companies engage in?
Plan, Finance, Invest, Operate
What are three external forces affecting a business?
Competition, Regulation, Economic/Market Foces
What is another term for the business activity of ‘planning’?
Strategy or Business Plan
Define the business activity of investing.
Acquiring/disposing of resources to produce/sell goods and services
Define the business activity of financing.
Method companies use to fund investments
Define the business activity of operating.
Produce, promote, sell goods and services
How is equity financing associated with repayment?
Type of financing with no obligation to repay
How is creditor financing associated with repayment?
Type of financing with obligation to repay
How is equity financing associated to ownership?
Funds contributed by owners along with income retained by company
How is creditor financing associated to ownership?
Funds contributed by non-owners and creates liability
What is an asset?
Resource acquired by company for future benefit
What is the accounting equation?
Assets = Liabilities + Equity
On what financial document is revenue found?
Income Statement
On what financial document is expenses found?
Income Statement
On what financial document is profit/loss found?
Income Statement
What financial document reflects operational performance?
Income Statement
What is the most important financial document?
Income Statement
What financial document reflects profit/loss over a period of time?
Income Statement
On what financial document is assets found?
Balance Sheet
On what financial document is liabilities found?
Balance Sheet
On what financial document is equity found?
Balance Sheet
What financial document reflects the accounting equation of ‘investing = financing + owner financing’?
Balance Sheet
