Financial Accounting Flashcards
Accounting
identifying, measuring and communicating economic information to allow decisions to be made by users of the information
Financial Accounting
Preparation of financial statements that are to be used by external sources
Audit
an independent examination of the financial statements to establish that they show a true and fair view of the financial performance (profit) and position(value/worth) of the company
Income Statements
presents revenues and expenses (net income/loss) over a period of time
Statement of Financial Position/Balance Sheet
Reports the assets, liabilities, and equity of a company at a specific data
Equity
The wealth of the company
the net amount of funds invested in a business by its owners
Statement of Cash Flows
Summarise information about cash inflows (receipts) and outflows (payments) for a specific period of time
Revenue
Price * No. of Units (recorded at the moment of sale)
Gross Profit
profit a company makes after deducting manufacturing cost or cost of sales
“a basic guide of how successful the core business of a company is”
Accruals
the accumulation or increase of something over time, especially payments or benefits.
Incorporated Business
a company that can be registered as a private limited company (Ltd) or a public limited company (plc)
Annual Report
this encompasses the income statement, the statement of financial position, the statement of changes in equity, the statement of cash flow
Operating Profit
the profit after deduction operational costs (administration and distribution expenses)
Cost of Sales
Includes all the expenses and costs that are involved in manufacturing and producing the product that the company sells (includes opening inventory, less closing inventory, add purchases, add production costs)
Finance charges
Payments of interest on loans, leases and, overdrafts
the business would be in trouble if finance charges > operating profit
