Chapter 16 Flashcards
Accounting?
Process of analyzing, collecting and recording financial information.
Managerial Accounting?
Reports for internal use by company.
Financial Accounting?
Reports used externally by those outside the company, i.e. investors and government.
What was the GAAP?
Generally Accepted Accounting Principles. Standard accounting rules and practices used in Canada until January 2011.
What is the IFRS
International Financial Reporting Standards. Globally accepted accounting practices that replaced the GAAP January 1st 2011 for public enterprises and willing private enterprises.
What is the ASPE?
Accounting Standards for Private Enterprise. GAAP replacement for private industries that didn’t adopt IFRS.
What is an Annual Report?
Yearly document that describes a company’s financial status, activities of the last year and future prospects.
Assets
What a company owns that has value.
Liabilities
Debt
Owner’s Equity
Assets minus Liabilities.
Double Entry Book Keeping
Method of accounting where each entry is recorded twice to maintain balance.
Accounting Equation
Assets = Liabilities + Owner’s Equity.
Current Assets
Possessions of the company that can be converted to cash within the year.
Liquidity
Rate at which assets can turn into cash
Capital Assets
Long term assets used for more than a year i.e. buildings, printers.
Amortization/Depreciation
is the paying off of debt with a fixed repayment schedule in regular installments over a period of time for intangible goods while depreciation is for tangible goods.
Intangible Assets
Non physical assets i.e. ideas, patents, copyrights
Goodwill
Value paid for a company greater than its net tangible assets.
Current Liabilities
Debt that needs to be payed off within the year.
Long-Term Liabilities
Debt that will take more than a year to pay off.
Retrained Earnings
Revenue that is reinvested in the business or used to pay debt instead of being given to shareholders.
Income Statement
Summarizes company’s financial activity over a certain period of time.
Income
Total earnings (Revenue + any other earnings)
Gross Sales
Total dollar amount of company’s sales
Net Sales
Gross Sales - discounts, returns and allowances
Expenses
Cost of making money
Cost of Goods Sold
Total expense of buying/ producing company’s good or services.
Gross Profit
Net Sales - COGS
Operating Expenses
Expenses of running a business not directly related to producing/ buying products
Net Profit
Net Revenue - Net Expenses > 0
Net Loss
Net Revenue - Net Expenses < 0
Statement of Cash Flow
Financial Statement that summarizes input and output of cash during a certain period, usually a year.
