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Accounting > financial statement > Flashcards

financial statement Flashcards

1
Q

The key product or the end product of the accounting process

A

FINANCIAL STATEMENTS

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2
Q

Types of Financial Statements

A

Statement of Financial Position
Statement of Comprehensive Income
Statement of Owner`s Equity
Statement of Cash Flows

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3
Q

shows the financial condition/ position of a business as of a given period.

A

Statement of Financial Position

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4
Q

It consists of assets, liabilities, and capital or owner’s equity.

A

Statement of financial position

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5
Q

shows the result of operations for a given period.

A

Statement of comprehensive income

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6
Q

It consists of the revenue, cost, and expenses.

A

Statement of comprehensive income

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7
Q

shows the changes in the capital or owner’s equity as a result of additional investment or withdrawals by the owner, plus or minus the net income or net loss for the year.

A

Statement of Changes in Owner`s Equity

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8
Q

summarizes the cash receipts and cash disbursement for the accounting period.

A

Statement of cash flow

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9
Q

Fundamental Accounting Equation

A

Assets=Liabilities + Owner’s Equity

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10
Q

are economic resources owned by the business expected for future gain. They are property and rights of value owned by the business.

A

Assets

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11
Q

include debts, obligations to pay, and claims of the creditors on the assets of the business

A

Liabilities

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12
Q

includes the interest of the owners on the business, claims of the owners on the assets of the business, and the investment of the owner plus or minus the results of operations.

A

Owner’s equity or capital

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13
Q

Classification of Assets

A

Current Assets
Non current Assets

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14
Q

are assets that can be realized (collected, sold, used up) one year after year-end date.

A

Current assets

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15
Q

are assets that cannot be realized(collected, sold, used up) one year after year-end date.

A

Non current assets

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16
Q

are assets without a physical substance

A

Intangible assets

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17
Q

Classification of Liabilities

A

Current liabilities
Non current liabilities

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18
Q

liabilities that fall due (paid, recognized as revenue) within one year after year-end date.

A

Current liabilities

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19
Q

liabilities that do not fall due (paid, recognized as revenue) within one year after year-end date.

A

Non current liabilities

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20
Q

earned or generated by the business in performing services for a client. Service Income

A

Revenue

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21
Q

include all payments made to employees or workers for rendering services to a company.

A

Salary and wage expense

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22
Q

is an expense related to the use of electricity, water and telecommunication facilities.

A

Utilities expense

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23
Q

used by a business in the conduct of the daily operations.

A

Supplies expense covers office supplies

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24
Q

is the annual portion of the cost of tangible assets such as buildings, machineries, and equipment

A

depreciation Expense

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25
Q

paid on insurance coverage such as premiums paid for health and life insurance, motor vehicles, or other properties.

A

Insurance Expense

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26
Q

is the amount of money charged to the borrower for the use of borrowed funds.

A

Interest expense

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27
Q

Formats of the Income Statement

A

Single step
Multi-step

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28
Q

called ____because all revenues are listed down in one section while all expenses are listed in another.

A

single-step

29
Q

Total revenue minus total expense= Net Income

A

Single step

30
Q

called____ because there are several steps needed in order to arrive at the company`s net income.

A

multi-step

31
Q

Different income in income statement

A

Laundy income
Medical fees
Dental fees
Legal fees
Consultancy fee
Audit fees
Salaries and wages expense
Utilities expense
Supplies expense
Depreciation expense
Insurance expense
Interest expense

32
Q

Laundry service by a laundry shop

A

Laundry income

33
Q

Medical services by a doctor

A

Medical fees

34
Q

Dental services by a dentist

A

Dental fees

35
Q

Legal services by a lawyer

A

Legal fees

36
Q

Advisory services by a consultant

A

Consultancy fees

37
Q

Accounting or auditing services by a certified public accountant

A

Audit fees

38
Q

these are rules and procedures that serve as guide in the practice of accounting.
-these are standards, assumptions, and concepts with general acceptability.

A

Generally Accepted Accounting Principles (GAAP)

39
Q

comprises the methods used by a business to keep records of its financial activities and to summarize these accounts in periodic according reports.

A

Accounting system

40
Q

Fundamental Concepts

A

Entity concept
Periodicty
Going concern

41
Q

the business enterprise as separate and distinct from its owners and from other business enterprises.

A

Entity concept

42
Q

–is the concept behind providing financial accounting information about the economic activities of an enterprise for specified time periods.

A

Periodicity

43
Q

a twelve-month period that starts on January 1 and ends on December 31.

A

Calendar year

44
Q

a twelve-month period that starts on any month of the year other than January and ends twelve months after the starting period.

A

Fiscal year

45
Q

is a concept which assumes that the business enterprise will continue to operate indefinitely.

A

Going concern

46
Q

Basic Accounting Principles

A

Objectivity principle
Historical cost
Accrual principle
Adequate disclosure
Materiality
Consistency

47
Q

states that all business transactions that will be entered in the accounting reports must be duly supported by verifiable evidence.

A

Objectivity principle

48
Q

means that all properties and services acquired by the business must be recorded at their original acquisition cost.

A

Historical cost

49
Q

states that income should be recognized at the time it is earned such as when goods are delivered or when services have been rendered.

A

Accual principle

50
Q

states that all material facts that will significantly affect the financial statements must be indicated.

A

Adequate disclosure

51
Q

this refers to the relative importance of an item or event.

A

Materiality

52
Q

means that approaches used in reporting must be uniformly employed from period to period to allow comparison of results between time periods.

A

Consistency

53
Q

an account that is closed at the end of every accounting period, amd starts a new period with a zero balance

A

Temporary account

54
Q

account with balances that carry over to the next business period.

A

Permanent account

55
Q

Types of Business Organizations

A

Sole/Single Proprietorship
Partnership
Corporation
Cooperatives

56
Q

is a business owned and managed by only one person.

A

Sole/Single Proprietorship

57
Q

is a business organization owned managed by two or more people who agree to contribute money, property, or industry to a common fund of the purpose of earning a profit.

A

Partnership

58
Q

is a form of business organizations managed by an elected board of directors.

A

Corporation

59
Q

is an association of small producers and consumers who come together voluntarily to form a business which they own, manage, and patronize.

A

Cooperative

60
Q

Types of Business Activities

A

Service
Trading/merchandising
Manufacturing

61
Q

is a type of business operation engaged in the rendering of services.

A

Service

62
Q

is a type of business engaged in the buying and selling of goods.

A

Trading/ merchandising

63
Q

Why is it important to separate current assets to non current assets?

A

It is important to separate current assets to non current for managing your company’s balance sheet and also helps you understand a businesses profitability and strategic success

64
Q

5 major accounts

A

Assets
Liabilities
Owner’s equity
Revenue
Expenses

65
Q

Why is it important to separate current liabilities from non current liabilities?

A

It is important separate current from noncurrent liabilities for the portion long term debt listed separately to provide a more accurate view of the company’s current liquidity and the company’s ability to pay current liabilities as they become due.

66
Q

Asset to cash

A

Liquidity

67
Q

Why is it important to create a statement of financial position?

A

It helps reveal the financial position of a company in a particular date

68
Q

Used in a general ledger to reduce the value of a related account when the two are netted(net entry) together

A

Contra purchases

Accounting (4 decks)

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