FABM (THE BALANCE SHIT) Flashcards
is another term for the
balance sheet
statement of financial position
The format of the statement of financial position follows the
Basic Accounting
Liabilities + Equity
= Assets
bills, coins, bank balances, money orders, and checks.
Cash
used to acquire goods and services or to eliminate
obligations.
Cash
which refers to assets that can be readily converted into cash
Cash equivalent
more likely to retain a large amount of cash on
hand if it routinely deals with cash transactions
Business
One of the basic accounting terms is a
normal balance
the account balance can be
called
Normal
Normal balance of assets
Debit
Normal balance of contra assets
Credit
Normal balance of liability
Credit
Normal balance of owners equity
Credit
Owners drawing or dividends
Debit
Normal balance of Revenues or income
Credit
Normal balance of expenses
Debit
Normal balance of gains
Credit
Normal balance of losses
Debit
the accounts are retained permanently in the SFP until their balances
become zero.
Permanent Accounts
Forms of Statement of financial position
Report Form
Account form
shows asset accounts first and then
liabilities and owner’s equity accounts after.
Report form
shows assets on the left side and
liabilities and owner’s equity on the right side just like the debit
and credit balances of an account
Account form
what are the current assets
cash, cash equivalents, accounts receivable, stock inventory, marketable securities, pre-paid liabilities, and other liquid assets.
What are the non current assets
Intangible assets, property plant and equipment, Land
Office buildings, Manufacturing plants, Vehicles.
Natural resources, Investments, like bonds, Patents and trademarks, Equipment.
What are the current liabilities
accounts payable, payroll due, payroll taxes, accrued expenses, short-term notes payable, income taxes, interest payable, accrued interest, utilities, rental fees, and other short-term debts.
Components of sfp
Assets, liabilities, equity
features the performance and activities of the
company for a certain period. It generally contains the revenues and expenses incurred by an entity
for a specific period.
statement of comprehensive income
would differ based on the
form of business that the company has
Statement of changes in equity (SOCE)
The three forms of business of SOCE
Sole Proprietorship, Partnership and Corporation
It is an entity whose assets, liabilities, income, and expenses are centered or
owned by only one person
Sole Proprietorship
Contents of the SoCE for Sole Proprietorship
Beginning Capital, Additional Investment, Drawings,Net Income/Loss
It is the amount of capital that the company has at
the start of the period.
Beginning Capital
The amount of assets that the owner withdrew from the
business for his/her personal use.
Drawings
– It is the amount of investment that the owner
has added to its business.
Additional Investment
the amount of profit or loss that the company
incurred during the period
Net Income/Loss
Parts of the SoCE of a Sole Proprietorship
Heading, Beginning capital, Increases in Equity,Decreases in Equity, Ending Capital
it includes the name of the company, title of the financial
statement, and the period covered of the financial statement
Heading
the amount of the owner’s capital at the start of the
period
Beginning capital
it includes the additional investment and net
income of the company
Increases in Equity
– it includes withdrawals and net loss of the
company
Decreases in Equity
it is the balance of equity after adding all the increases
and deducting the decreases from the beginning capital
Ending Capital
Ending Capital
partnership
It is an entity whose assets, liabilities, income, and expenses are centered or
owned by two or more persons
Beginning Partners Capital
– It is the amount of investment that each
partner has added to its business
Additional Investment
The amount of assets that each partner withdrew from the
business for his/her personal use.
Drawings
the share of each partner in the profit or loss
of the company
Share in Net Income/Loss
It is an entity whose assets, liabilities, income and expenses are centered or
owned by itself being a legally separate entity from its owners
Corporation
- it is the number of shares issued by the corporation to
its stockholders at original price.
Common Stock
the difference between the issue price and
the original price of the stocks sold.
Additional paid in capital
– it is the accumulated net income of the company
since the start of the operation of the business less the dividends
declared and paid by the company to the stockholders
Retained earnings
It provides an analysis of inflows and/or outflows of cash from/to operating,
investing, and financing activities
Statement of cash flows
Steps in Preparing a Statement of Cash Flows
From the ledger of Cash,
group together the
transactions that have
same nature.
Identify each transaction if
it is an inflow or outflow.
Compute for the net cash
flow from each activity and
add it to get the net
change in cash.
Classify each transaction
according to its activity:
Operating, Investing or
Financing.
Different Parts of Statement of Cash Flows
Operating Activities
Investing Activities
Net Change in Cash
Beginning Cash Balance
Ending Cash Balance
– It include activities that are directly related to the
main revenue-producing activities of the company such as cash from
customers and cash paid to suppliers/employees
Operating activities
It is the amount of investment that the owner has
added to its business.
Investing activities
It is the amount of investment that the owner has
added to its business.
Financing activities
- It is the net amount of change in cash whether it is
an increase or decrease for the current period. The total change
brought by operating, investing, and financing activities.
Net Change in Cash
The balance of the cash account at the
beginning of the accounting period
Beginning Cash Balance
The balance of the cash account at the end of the
accounting period computed using the beginning balance plus the net
change in cash for the current period
Ending Cash Balance
Account used to record transportation cost of merchandise purchased by the company.
Freight In
Account used to record early payments by the company to the supplier of
merchandise.
Purchase Discount
