Chapter 1- Accounting Fundamentals Flashcards
What does the ALOE acronym stand for?
The accounting equation
Assets = Liabilities + Owner’s Equity
What are the four financial statements?
Income Statement
Statement of Retained Earnings
Balance Sheet
Statement of Cash Flows
What does the incomes statement tell us?
How much money the company made
What does the statement of retained earnings tell us?
How much of the money that was made was reinvested in the compnay
What does the balance statement tell us?
It lists all assets, liabilities, and owner’s equity accounts and tells the balance of each account.
What does the statement of cash flows tell us?
The inflow and outflow of a company’s cash for a given time period
What are the steps of the accounting cycles?
Collection and Analysis Journalizing the Transactions Post to General Ledger Unadjusted Trail Balance Adjustments Adjusted Trial Balance Financial Statements Close Accounts Post-Closing Trial Balance
What are assets?
What a company owns
What are liablities
what a company owes
What is Owner’s Equity
How much of a personal investment an owner has placed in something that he owns
What is GAAP
Generally Accepted Accounting Principles
What does GAAP do?
The standard by which items on the balance sheet must be reported.
What is the net income equation?
Revenue - Expenses = Net Income
What are revenues
the amount of money that a company brings in
what are expenses
the amount of money that a company pays outs