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Accounting for Managers > Exam 1, Chapter 1 - Concepts > Flashcards

Exam 1, Chapter 1 - Concepts Flashcards

1
Q

Equation:

Assets

A

Assets = Liabilities + Equites

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2
Q

Define:

Assets

A

Resources to benefit a company that a company controls

Something that you have right now that you will benefit from in the future

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3
Q

Define:

Liabilities

A

Debts owed to creditors, creditors claim to a business

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4
Q

Define:

Equity

A

Owner’s claim to assets

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5
Q

Answer:

Equity increases with ___(a)___ and ___(b)___.

A

a. Capital contribution

b. Revenue

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6
Q

Answer:

Equity decreases with ___(a)___ and ___(b)___.

A

a. Expenses

b. Distributions to owners

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7
Q

Equation:

Income Statement

A

Net Income/Loss = Revenues - Expenses

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8
Q

Answer:

The net income/loss used on the ___(a)___ is obtained from the ___(b)___

A

a. Statement of retained earnings

b. Income Statement

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9
Q

Equation:

Statement of Retained Earnings

A

Retained Earnings = Net Income/Loss - Dividends

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10
Q

Equation:

Balance Sheet

A

Assets = Liabilities + Equity (shareholder equity)

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11
Q

Equation:

Statement of Cash Flows

A

Cash Receipts + Cash Payments

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12
Q

List:

4 Financial statements required by SEC

A
  1. Balance Sheet
  2. Income Statement
  3. Statement of Shareholder Equity
  4. Statement of Cash Flows
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13
Q

List:

3 Elements of a Balance Sheet

A
  1. Assets
  2. Liability
  3. Shareholders’ Equity
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14
Q

Answer:

Regarding the balance sheet, every year the total ___(a)___ must be equal to ___(b)___

A

a. Assets

b. Total Liabilities plus Shareholders’ Equity

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15
Q

Answer:

In the income statement, the company tells you ___(a)___, ___(b)___, and ___(c)___

A

a. How much revenue they earned last year
b. How much expense occurred last year
c. What was the net income (positive or negative)

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16
Q

Answer:

In the statement of shareholders’ equity, the company tells you ______

A

about any changes in shareholders’ interest

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17
Q

Answer:

The balance sheet is a ___(a)___ of the company’s ___(b)___ at a given ___(c)___

A

a. snapshot
b. financial position
c. point in time

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18
Q

Answer:

On the balance sheet, all of the assets and liabilities have to be listed in order of ______

A

liquidity

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19
Q

Define:

Liquidity

A

How quickly a certain item can be converted into cash

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20
Q

Answer:

What is the most liquid asset?

A

cash

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21
Q

List:

Subsections of assets on the balance sheet

A
  1. current assets

2. Non current assets

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22
Q

List:

Subsections of liabilities on the balance sheet

A
  1. current liabilities

2. Non current liabilities

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23
Q

Answer:

On the balance sheet, ___(a)___ have to be listed in front of ___(b)___, and ___(c)___ have to be listed ahead of ___(d)___

A

a. current liabilities
b. concurrent liabilities
c. current assets
d. concurrent assets

24
Q

Answer:

On the balance sheet, the left side of the equation, the ___(a)___ represent all the ___(b)___

A

a. assets

b. economic resources the company has right now

25
Q

Answer:

The right hand side of the balance sheet tells you ________

A

the source of the company’s assets

26
Q

Answer:

Shareholder equity is also called ___(a)___ or ___(b)___

A

a. net asset

b. residual interest

27
Q

Define:

Residual Interest

A

The remainder of assets after liquidation (ex - bankruptcy). Shareholders can claim the residual interest

28
Q

Define:

Accounts Receivable

A

Claims held against customers and others for money for goods or services

Asset

29
Q

Asset/Liability/Expense:

Accounts receivable

A

Asset because it is a claim to cash in the future

30
Q

Define:

Prepaid Expense

A

Payment made for goods or services prior to receiving the goods or services

31
Q

Asset/Liability/Expense:

Prepaid Expense

A

Asset because it gives you the title to enjoy the goods or services in the future

32
Q

List:

Examples of Non-Current Assets

A
  1. Long Term Investments
  2. Property
  3. Plant
  4. Equipment
  5. Intangible Asset
33
Q

Define:

Non-Current Asset

A

Asset that will give you a benefit for longer than one (1) year, for example, you use equipment for longer than a year

34
Q

List:

Types of Liabilities

A
  1. Current Liabilities

2. Long Term Liabilities (non current)

35
Q

Define:

Current Liabilities

A

Liabilities that must be paid off within the current year or within one (1) year

36
Q

Define:

Long Term Liabilities

A

Liabilities you expect to pay off over a period of time, beyond the current year

37
Q

Asset/Liability/Expense:

Deferred Revenue

A

Liabilities because the goods or services are unearned

Ex - deposit for catering services prior to catering event, the deposit is deferred revenue and is a liability until the service is performed and the revenue is earned. It is a service owed

38
Q

Define:

Deferred Revenue

A

Revenue that has not yet been earned, such as a deposit for a service before the service has been earned

Also known as unearned revenue

It is a liability

39
Q

Answer:

What is another term for deferred revenue?

A

Unearned revenue

40
Q

Answer:

The statement of shareholders’ equity records ______

A

any changes in shareholders equity

41
Q

Answer:

Issuing stock is an example of ___(a)___ because you are ___(b)___ which will ___(c)___

A

a. a change in shareholders’ equity
b. actually inviting new shareholders to the company
c. increase the total shareholders interest in the company

42
Q

Answer:

If you earn net income, which is ___(a)___ you ___(b)___ shareholder interest

A

a. positive

b. increase

43
Q

Answer:

If you pay dividends, ___(a)___ are happy, however it will ___(b)___ their interest in the company, so we prepare the financial statement from the perspective of the ___(c)____

A

a. individual shareholders
b. decrease
c. company

44
Q

Answer:

Dividends only appear on which type of financial statement?

A

Statement of Shareholders’ Equity

45
Q

Answer:

Income statement shows the company’s ___(a)___ over a ___(b)___

A

a. performance

b. period (quarter, year, etc.)

46
Q

List:

Four Title Elements of Income Statement

A
  1. Revenue
  2. Expenses (from major operations)
  3. Gains and Losses (from miscellaneous)
  4. Accidental Transactions
47
Q

Answer:

On the income statement, expenses are from ______

A

the major operations

48
Q

Answer:

On the income statement, gains and losses are from ______

A

the miscellaneous

49
Q

Answer:

The income shown on the income statement could be ___(a)___ or ___(b)___

A

a. positive

b. negative

50
Q

Answer:

The statement of cash flows provides information about ___(a)___ and all of the information on the statement is about ___(b)___

A

a. cash

b. cash

51
Q

Asset/Liability/Equity:

Cash

A

Asset

52
Q

Answer:

The statement of cash flows explains the differences in ___(a)___ between ___(b)___ and ___(c)___

A

a. cash
b. last year
c. this year

53
Q

Answer:

Because cash is a/an ___(a)___, it is part of the ___(b)___, so the ___(c)___ and the ___(d)___ are connect to on another

A

a. asset
b. balance sheet
c. balance sheet
d. statement of cash flows

54
Q

Answer:

The statement of shareholders’ equity contains a ___(a)___, which is directly borrowed from the ___(b)___

A

a. net income number

b. income statement

55
Q

Answer:

The statement of shareholders’ equity explains any changes in ___(a)___, and that information is also reflected in the ___(b)___ of the ___(c)___

A

a. shareholder interest
b. equity section
c. balance sheet

56
Q

I solemnly swear I am up to no good

A

Mischief managed

Accounting for Managers (15 decks)

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