Financial Statements Flashcards
Where is Sales and Revenue located on the Income Statement
Top of the line
Where do you find Profits Earnings and Income on the Income Statement?
Bottom Line
What are profit earnings and income?
It is what is left over after all the costs and expenses spent in generating that revenue are subtracted
Costs
Money (mostly for materials and labor spent making a product)
Expenses
Money spent to develop, sell, account and manage the entire making and selling process
Sales is the equivalent to_________.
Revenue
Profit, earnings and income are________.
the same
Revenue and income are _________.
Different
Costs are ______than expenses.
Different
Expenses are ________ from expenditures.
Different
Sales are _________ from orders, but same as __________.
Different, Shipments
Profits are _______from cash.
Different
Solvency is ________from profitability.
Different
Costs and Expenses become ________, when money is sent to vendors to pay for them.
Expenditures
Orders
Signify a request for future delivery of products
When is a sale made?
when shipped
Solvency
Having enough money in the bank to pay bills
Profitability
When sales are greater than costs and expenses
Insolvent
When making money, but still don’t have enough money to pay bills.
Accounting Entity
- Business Unit
- A business entity separate from its owners
- A fictional person called a company for which books are written
Going Concern
Assumption that the life of a business entity is infinitely long.
If concerned about going bankrupt, must issue a qualified opinion.
Measurement
Quantified resources and obligations upon which there is agreed upon value.
Accounting deals with things that can be measured.
Assets - Liabilities =
Owner’s Equity
Units of Measure
U.S dollars are reported in Financial Statements
