Introduction of Finance & Accounting Flashcards
What is a balance sheet
Financial position of a company at a particular date
What is a comparative statement
It is a document that compares a particular financial statement with prior period statements or with the same financial report generated by another company
What are the 3 balance sheet limitations
1- Assets are recorded at their historical value
2 - Assets that can be expressed in monetary terms are only recognized
3 - Owners equity is usually less than the company’s market value
What is liquidity
How easily a company can convert their assets into cash
What is the other name for income statement
Profit and loss account
What is an income statement
Shows the result of a company’s operation over a period of time
What are the three things in a income statement
Revenue - expenses = net income/net loss
What is the statement of retained earnings
An additional financial statement that identifies changes in retained earnings from one accounting period to the next
What is the formula of retained earnings
Net income - dividends paid = retained earnings
What is statement of cash flows
It reports the amount of cash collected in fade out by a company in operating, investing and financing activities for a period of time
Purpose of financial accounting
provide information about the results of operations, financial position, and cash flows of an organization. This information is used to help make decisions and maintained an efficient, effective and profitable business.
What is a accounting system
Its supervisors recordings, reports and preparation of financial statement that show the financial condition of a business as a whole
