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Accounting > Chapter 1 Vocab > Flashcards

Chapter 1 Vocab Flashcards

1
Q

Assets

A

resources of the company

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2
Q

Liabilities

A

amounts owed

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3
Q

Stockholders’ Equity

A

stockholders’ investment

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4
Q

Accounting Equation

A

A = L + SE

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5
Q

Dividends

A

distributions to stockholders

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6
Q

Revenues

A

sales of products or services

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7
Q

Expenses

A

costs of providing sales

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8
Q

Net Income Equation

A

R - E = NI

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9
Q

Financing Activities

A

transactions the company has w/ investors and creditors

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10
Q

Investing Activities

A

transactions involving the purchase and sale of resources that are expected to benefit the company for several years

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11
Q

Operating Activities

A

transactions that relate to the primary operations of the company

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12
Q

GAAP - Generally Accepted Accounting Principles

A

the rules that Accountants must follow in recording transactions and reporting results

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13
Q

Financial Statements

A

periodic reports published by the company for the purpose of providing information to external users

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14
Q

Income Statement

A

reports the company’s revenues & expenses over an interval of time

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15
Q

Statement of Stockholders’ Equity

A

summarizes the changes in stockholders’ equity over an interval of time

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16
Q

SE Equation

A

SE = Common Stock + Retained Earnings

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17
Q

Balance Sheet

A

presents the financial position of the company on a particular date

18
Q

Statement of Cash Flows

A

measures activities involving cash receipts & cash payments over an interval of time

19
Q

MD&A - Management Discussion & Analysis

A

includes management’s view on significant events, trends, and uncertainties pertaining to the company’s operations and resources

20
Q

Note Disclosures

A

offer additional information either to explain the information in financial statements of to provide information not presented in the financial statements

21
Q

Auditors

A

trained individuals hired by a company as an independent party to express a professional opinion of the extent to which financial statements are prepared in compliance with GAAP & are free of material misstatement

22
Q

What are the 2 fundamental qualitative characteristics that make accounting information useful?

A

Relevance & Faithful Representation

23
Q

Relevance

A

accounting information that should possess confirmatory value and/or predictive value

24
Q

Confirmatory Value

A

information provides feedback on past activities

25
Q

Predictive Value

A

Information is useful in helping to forecast future outcomes

26
Q

Materiality

A

the nature or amount an item has the ability to affect decisions

27
Q

Faithful Representation

A

accounting information is complete, neutral, and free from error.

28
Q

Completeness

A

all information necessary to describe an item is reported

29
Q

Neutrality

A

information that does not bias the decision maker

30
Q

Free from Error

A

reported amount reflect the best available information

31
Q

What are the 4 enhancing qualitative characteristics?

A

Comparability, Verifiability, Timeliness, & Understandability

32
Q

Comparability

A

ability to see the similarities & differences b/w 2 different business activities

33
Q

Verifiability

A

implies a consensus among different measures

34
Q

Timeliness

A

information being available to users early enough to allow them to use it in the decision process

35
Q

Understandability

A

the ability for users to understand the information w/in the context of the decision they are making

36
Q

What are the 4 basic assumptions that must be made to support the existence of GAAP?

A

Economic entity, Monetary unit, Periodicity, Going concern

37
Q

Economic Entity

A

economic events can be identified w/ a particular economic body

38
Q

Monetary Unit

A

a common denominator is needed to measure all business activities

39
Q

Periodicity

A

the economic life of a company can be divided into artificial time intervals for financial reporting

40
Q

Going Concern

A

in the absence of information to the contrary, it is anticipated that the business entity will continue to operate indefinitely

Accounting (5 decks)

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