Class 1 - Financial Statements Flashcards
What is a financial statement indented to do?
Communicate financial information of the entity to outsiders.
How do cashflow, income and equity holder statements related to the balance sheet?
Together they explain the differences between the two different balance sheet dates.
A = L + OE is applicable to which financial statement?
Balance Sheet
What is the intuitive definition of an ASSET?
An item that an entity controls and that will provide future economic benefits to the company.
Is Intellectual property reported on a financial statement?
Typically no, although there is discussion around inclusion of it due to the rising importance of intellectual property and human capital.
True or false - management accounting is for internal use?
True
What is the intuitive definition of a LIABILITY
An existing obligation that the company has to another entity to provide goods, services or cash.
Intuitively shareholder equity is what?
The net worth of the company. (OE = A - L)
What is disaggregation?
The dividing of assets, liability, and shareholder equity into components.
Why disaggregate?
Because the components convey more information than the totals do.
