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jeremy harmon > Chapter 1 Financial Accounting > Flashcards

Chapter 1 Financial Accounting Flashcards

1
Q

What are 5 examples of long term assets that go on a balance sheet?

A 
Property
Plant (example nuclear plant)
Equipment
Intangible assets
Investments
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2
Q

What does GAAP stand for

A

Generally Accepted Accounting Principles

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3
Q

What are 4 examples of current liabilities that go on a balance sheet?

A

Accounts Payable
Salaries Payable
Taxes Payable
Short-Term Borrowings

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4
Q

Statement of Retained Earnings

A

Shows increases and decreases to retained earnings

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5
Q

Name the 4 types of users of accounting?

A

Individuals
Investors and Creditors
Taxing Authorities
Nonprofit Organizations

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6
Q

Who formulated the U.S. GAAP?

A

Financial Accounting Standards Board

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7
Q

Shareholders’ Equity includes what 2 things?

A

Paid-in Capital

Retained Earnings

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8
Q

Cost

A

Assets are recorded at cost (not fair value or appraised value)

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9
Q

Income Statement

A

Measures operating performance for the period

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10
Q

Stockholders Equity on a balance sheet include what 3 major things?

A

Paid-in capital
Common Stock
Retained Earnings

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11
Q

Reliability

A

Accounting is based on objective evidence

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12
Q

Partnership

A

Two or more owners

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13
Q

What decreases retained earnings?

A

Expenses

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14
Q

What are two examples of intangible assets

A

Patent

Trademark

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15
Q

Statement of Cash Flow

A

shows how cash flows in and out of the company

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16
Q

Balance Sheet

A

Measures financial position

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17
Q

What 2 things is accounting used for?

A
  • An information system

- Accounting is used to make decisions

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18
Q

(Ask Matt) What does 2 major things does the statement of retained earnings show?

A

Increase in net income

Decrease in dividends

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19
Q

Limited Liability Companies

A

Owners are called members

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20
Q

What is a positive of a corporation

A

business is legally distinct from the owners

- someone can only sue the corporation not go after someone’s personal assets like a car

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21
Q

Assets

A

An economic resource that provides a future benieft

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22
Q

Dividends are not —-

A

Expenses

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23
Q

Retained Earnings

A

Amount earned and kept for use in the company

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24
Q

By the Ethics of Accounting what are US companies required to do? (2 things)

A

Report Relevant information

Report Reliable Information

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25
Q

What are two names for Owners Equity?

A

Stockholders Equity

Shareholders Equity

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26
Q

What is an example of notes payable?

A

Bank loan

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27
Q

Net income Equation

A

Revenues - Expenses

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28
Q

List 1 example of people who receive information by managerial accounting

A

Managers of a company

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29
Q

What is a positive of a limited liability company?

A

Members are not personally liable for business debts

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30
Q

What are three categories on a statement of cash flow?

A

Operating Activities
Investing Activities
Financing Activities

31
Q

What are 4 examples of assets that go on a balance sheet?

A

Cash
Short Term Investments
Accounts Receivable
Inventory

32
Q

What is a proprietorship?

A

Business who has a single owner

33
Q

What is the more complex accounting equation?

A

Assets = Liabilities + Common Stock + Revenues - Expenses - Dividends

34
Q

What Equation should be included on an income statement?

A

Revenue - Expenses = Net Income

35
Q

What increases Retained Earnings

A

Revenue

36
Q

Accounts Payable

A

Liability for goods or services purchased on credit

37
Q

Owners’ Equity

A

It is the owners’ claim on a business

38
Q

FASB conceptual framework states that accounting should be: (what 4 things)

A

Relevant
Reliable
Comparable
Consistent

39
Q

What is the general accounting equation?

A

Assets = Liabilities + Owners’ Equity

40
Q

What are the 5 categories on a balance sheet?

A 
Current Liabilities 
Long-Term Liabilities 
Current assets
Long term assets
Stockholders Equity
41
Q

Entity

A

A business is separate from its owners

42
Q

What is the difference between financial and managerial accounting

A

Financial accounting provides information to users outside the company
- Managerial accounting provides information for people inside the company

43
Q

List 3 examples of people who get information by financial accounting

A

Investors
Bankers
Government Agencies

44
Q

Paid-in capital

A

Amounts invested by stockholders

45
Q

What determines owners’ equity?

A

Assets - Liabilities

46
Q

What are 2 examples of liabilities

A

Accounts Payable

Notes Payable

47
Q

What 3 major things does a balance Sheet include?

A

Assets
Liabilities
Shareholders’ Equity

48
Q

Expenses

A

Represents me using up an asset

49
Q

What is the language of business

A

Accounting

50
Q

What are 5 examples of owners equity?

A 
Revenue
Expenses
Retained Earnings
Common Stock
Dividends
51
Q

Monetary Unit

A

Transactions are recorded in a stable currency

52
Q

Dividends

A

Distribution of assets to shareholders

53
Q

What are 5 examples of assets?

A 
Cash
Inventory
Accounts Receivable 
Notes Receivable 
Land
54
Q

Corporation

A

Owners are stockholders

55
Q

What is a negative of a proprietorship?

A

The owner is personally liable for business debts such as someone can sue for the business owners house

56
Q

Name the 4 financial statements in order

A

Income Statement
Statement of Retained Earnings
Balance Sheet
Statement of Cash Flows

57
Q

How is accounting used as an information system? (3 things)

A
  • Measures business activities
  • Processes data into reports
  • Communicates results to people and organizations
58
Q

What Equation should be included on the statement of retained earnings?

A

Retained Earnings Beginning + Net Income - Dividends = Retained Earnings End

59
Q

What is negative of a partnership?

A

Each partner is personally liable for business debts

60
Q

What do dividends not impact?

A

Net income

61
Q

What do dividends decrease?

A

Retained earnings

62
Q

Notes Payable

A

Written promise to pay on a certain date

63
Q

Intangible Assets

A

Non physical assets

64
Q

Kathy Jones owns a coffee shop. Her personal expenses are included in accounting records. What concept is violated?

A

Entity

65
Q

What does FASB stand for?

A

Financial Accounting Standards Board

66
Q

What is another name for a balance sheet?

A

Consolidated statement of financial position

67
Q

What are 2 examples of long term liabilities that go on a balance sheet?

A

Long-term notes payable

Mortgage payable

68
Q

How does a net loss occur?

A

If expenses are greater then revenues

69
Q

Going-Concern

A

Business will continue indefinitely

70
Q

Stockholders equity

A

Corporation’s equity

71
Q

What are the 5 major things an income statement include?

A 
Revenue
Expenses
Resulting net income or net loss
Gains
Losses
72
Q

Liabilities

A

Future economic sacrifices

73
Q

What are 2 positive things about a Limited Liability Company?

A

Offer limited liability to members in LLC

-LLCs are not taxed

jeremy harmon (108 decks)

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