Chapter 4 Flashcards
Financial statement that organizes the asset and liability accounts into categories.
CLASSIFIED BALANCE SHEET
Financial statement that only includes three broad account groupings: assets, liabilities, and equity.
UNCLASSIFIED BALANCE SHEET
Resources that the entity expects to convert to cash, or to consume during the next year or within the operating cycle of the entity, whichever is longer.
CURRENT ASSETS
Current assets’ ability to be converted into cash
LIQUIDITY
Assets that will be useful for more than one year (also referred to as long-lived)
NON-CURRENT ASSETS
Assets that are held for more than one year or the operating cycle and include long-term notes receivable and investments in shares and bonds.
LONG-TERM INVESTMENTS
Resources that do not have a physical form and whose value comes from the rights held by the owner. They are used over the long term to produce or sell products and services and include copyrights, patents, trademarks, and franchises.
INTANGIBLE ASSETS
Obligations that must be paid within the next 12 months or within the entity’s next operating cycle, whichever is longer. They are shown first in the liabilities section of the balance sheet and listed in order of their due dates, with any bank loans shown first
CURRENT LIABILITIES
The principal amount of a long-term liability that is to be paid within the next 12 months.
CURRENT PORTION OF A LONG-TERM LIABILITY
Borrowings that do not require repayment for more than one year, such as the long-term portion of a bank loan or a mortgage.
NON-CURRENT LIABILITIES
Form of a classified balance sheet where liabilities and equities are presented to the right of the assets.
ACCOUNT FORM
Form of a classified balance sheet where liabilities and equity are presented below the assets.
REPORT FORM
An integral part of financial statements that provide relevant details that are not included in the body of the financial statements. The notes help external users understand and analyze the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
An external examination of a company’s financial statement information and its system of internal controls; seeks not certainty, but reasonable assurance that the financial statement information is not materially misstated.
AUDIT
The processes instituted by management of a company to direct, monitor, and measure the accomplishment of its objectives. This includes the prevention and detection of fraud and error.
INTERNAL CONTROLS
