Final Flashcards
Financial Accounting
the branch of accounting that
addresses the needs of
external stakeholders
IFRS
International financial reporting standards
accounting standards that
are used in the preparation
of financial statements
IFRS accountants ensure financial statements
Consistent
Reliable
Comparable
Relevant
Assets =
Liabilities + Owner’s Equity
Balance sheet
summarizes a firm’s financial position at a specific point in time
Net income=
Revenue-Expenses
Income Statement
summarizes a firm’s operations over a given period of time in terms of profit and loss
Statement of Cash Flow big 3
Operations
Investing
Financing
Statement of retained earnings
reports how retained earnings have changed
Shareholders’ equity statement
reports how net income and dividends affect retained earnings
also look at these when looking at financial statements
Auditor’ report
Notes to financial statements
Comparative statements
Managerial accounting
provides reports and analysis to managers to help them make informed decision
Managerial accountant responsibilities
Determining product costs
Performing incremental analysis
Developing budgets
Product Costing
managers assign costs to the products and services
Direct costs can be
directly traced to production
Indirect costs are the result of
general operations
Activity-Based costing
a technique used to assign product costs based on links between activities that drive costs and the production of specific goods
Incremental analysis
evaluates the financial impact of different alternatives in a decision making situation
Do or outsource?
Budgeting
Outlines how ressources will be used to meet goals
Translates goals into measurable quantities and identifies resources
Communication and coordination among managers and employees
Motivates achievement of goals
Monitors progress
Operating budgets
identify sales and production goals
- Sales budget
- Production budget
- Direct labour
Financial budgets
focus on firm’s financial objectives
-Cash budget
-Capital budget
Top down budgeting
top management prepares budget with little or no input from middle and supervisory managers
Bottom up or participatory budgeting
middle and supervisory managers actively participate
Master Budget
brings together all of the budgets to represent the overall plan
M1 money supply
all currency + chequing accounts and traveller’s cheques
M2 money supply
M1 + plus savings accounts, money market accounts and certificates of deposit
BOC
-Manages Canada’s monetary policy
-Provides banking services for other banks and the government
-Coordinates the cheque clearing process
-Maintains the federal gov chequing account
-keeps the currency supply in good condition
Fundamental Rights of capitalism
-The right to own a business and keep after tac profits
-The right to private property
-The right to free choice
-The right to fair competition
4 degrees of competition
Pure competition
Monopolistic competition
Oligopoly
Monopoly
Supply
relationship between price of a good and the quantity that suppliers will offer for sale
Supply curve
a graph of supply curve(upwards)
Demand
Relationship between the price of a good and the quantity buyers will buy
Demand curve
a graph of the demand curve relationship
(downward)
Equilibrium
meeting point
market adjusts to it
Planned economy
Socialism and Communism
Socialism
gov controls key enterprises
higher taxes to distribute wealth
Communism
public ownership of all enterprise
strong central government
Measures to evaluate Economic performance
GDP
Employment level
Business cycle
Price levels
Productivity
Business cycle:
Peak
contraction
trough
recovery
expansion
peak
