Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

ACCT 500 > First Test > Flashcards

First Test Flashcards

1
Q

What is the accounting equation?

A

A=L+E

Assets=Liabilities+Equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Assets

A

Resources controlled by the company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Liabilites

A

Funding from creditors. Represent the obligations of the company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Equity

A

Total of contributed capital and retained earnings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Working Capital

A

difference between current assets and current liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Share Capital

A

common stock and additional paid-in capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are the four financial statements?

A

Income statement
Balance Sheet
Shareholder’s Equity
Statement of Cash Flows

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Statement of Cash Flows report…

A

…inflows and outflows separately for a company’s operating, investing, and financing activities over time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What SEC filing is an annual report? Quarterly report?

A

Annual report is a 10-K, Quarterly report is a 10-Q

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What does GAAP stand for? What is it?

A

Generally Accepted Accounting Principles

It is the rules and regulations for financial accounting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the international accounting standard?

A

IFRS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are the primary desirable qualities of accounting information?

A

Relevance (the capacity of information to affect a decision) and Reliability (must be verifiable [confirm-able], representationally faithful [reflect reality], and neutral [truthful and unbiased])

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

For something to be reliable, it must be…

A

….verifiable (can you confirm it?), representationally faithful (does it reflect reality?), and neutral (is it truthful and unbiased?)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are the secondary desirable qualities of accounting information?

A

Comparability (information is measured in a similar way across companies) and consistency (same method used for similar actions across time)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are the three major limitations of financial statement information?

A

Timeliness
Frequency
Forward-Looking

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Accrual Basis

A

revenues are recognized when a company sells good or renders services, regardless of when cash is received

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Strict Definition of Accruals

A

Sum of accounting adjustments that make net income different from net cash flow

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What two limitations does Accrual Accounting overcome?

A

Timing and Matching

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What two pieces are in the accrual process?

A

Revenue Recognition and Expense Matching

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Revenue Recognition

A

revenues are recognized when both earned and either realized (Cash is acquired) or realizable (company receives an asset that is convertible to cash)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What are the two types of expense matching?

A

Product costs and period costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Business Analysis

A

the evaluation of a company’s prospects and risks for the purpose of making business decisions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What is the goal of business analysis?

A

Improve business decisions by evaluating available information about a company’s financial decisions, management, plans, strategies, and environment

24
Q

Financial statement analysis

A

application of analytical tools and techniques to general-purpose financial statements and related data to drive estimates and inferences useful in business analysis

25
What are the six types of business analysis?
Credit Analysis, Equity Analysis, Accounting Analysis, Financial Analysis, Prospective Analysis, and Valuation
26
Creditors
Lend money to a company in promise of repayment plus interest
27
Trade Creditors
deliver goods or services to a company and expect payment soon (30-60 days)
28
Non-Trade Creditors
Short or long-term creditors, promise made in writing
29
Creditworthiness
ability of a company to honor its credit obligations (bay its bills)
30
Liquidity
Ability of a company to to raise cash in short term to meet its obligations
31
Solvency
long-run viability and ability to pay long-term obligations
32
Equity investors
provide funds in return for the risks and rewards of ownership
33
Accounting analysis
evaluating the extent to which a company's accounting reflects economic reality
34
Financial Analysis
the use of financial statements to analyze a company's financial position and performance, and to asses future financial performance
35
What are the three types of financial analysis?
Profitability analysis - evaluation of a company's ROI Risk analysis - evaluation of a company's ability to meet its commitments Analysis of cash flows - evaluation of a how a company is obtaining and deploying its funds
36
Prospective Analysis
forecasting of future payoffs (earnings, cash flows, or both)
37
Valuation
Process of converting forecasts of future payoffs to to an estimate of company value
38
What four functions does a company use the financial statements for?
1. Planning 2. Financing 3. Investing 4. Operating
39
What are the two sources of external financing?
1. Equity Investors (owners/shareholders) | 2. Creditors (lendors)
40
Earnings distribution
payment of dividend to shareholders
41
Dividend Payout
proportion of earnings distributed (ratio or %of net earnings)
42
What are the two types of creditors?
Debt creditors - lend money directly to the company | Operating creditors -the company owes money to as part of operations
43
Why is creditor financing different than equity financing?
Because it has a contract that establishes required payments with interest on a specific date
44
Investing Activities
A company's acquisition and maintenance of investments for the purpose of selling products and providing services, and for the purpose of reinvesting excess cash
45
Operating Activities
the "carrying out" of business plan given its financing and investing activities. this is a company's primary source of earnings!
46
Agency Problem
conflict of interest between management and creditors
47
7 users of financial statements, and why they care
1. Creditors: They want their money back 2. investors: they get residual profit 3. Government agencies: They want their share. Are the statements accurate? 4. Competitors: How can they beat you? 5. Management: keeping your job and making the bosses happy 6. Employees (and unions): Are they getting paid accordingly? 7. Vendors/Suppliers: Should they keep doing business with you?
48
What financial statements are "for the period ending..."?
Income statement and statement of cash flows
49
What financial statements are "as of..."?
Balance sheet
50
What are the three things you can do with leftover income?
1. Keep it in the company (retained earnings) 2. Reduce Liabilities 3. By back stock (spend it)
51
Depreciation
Realizing the expense over a period of time. Depreciation expense goes on income statement.
52
What are the four types of auditors opinion?
1. Unqualified: you passed 2. Qualified: These are kind of right, under these qualifications 3. Adverse Opinion: These are wrong 4. Disclaimer Opinion: not enough information to determine accuracy
53
What is an SEC 8-K?
SEC Filing of notable happenings in a company
54
Full Disclosure
Entire transaction is reported, and we record everything
55
Materiality
In material, big enough to be reported
56
Economic Income
Accounting income + change is business

ACCT 500 (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions