Introduction To Financial Accounting Flashcards
What is an asset?
Anything a company OWNS that provides future economic BENEFIT
What are examples of assets?
- Cash,
- accounts receivable (money you’re owed),
- inventory (stock a company intends to sell),
- PPE (Property, Plant, Equipment)
What are liabilities?
Something a company OWES that causes future economic SACRIFICE
What are examples of liabilities?
- accounts payable (money a company owes)
- loans payable (loans you’re obliged to repay)
- notes payable (general term for payables)
What is shareholder’s equity?
Shareholder’s equity = assets - liabilities
The shareholder’s ‘piece of the pie’
What goes into the shareholder’s pocket when liabilities are deducted from assets
What are examples of shareholder’s equity?
- Common shares (a share in the company)
- Retained earnings (profits held for future use)
What is revenue?
Money earned from a company’s sales
What are expenses?
Costs involved with a company
What are dividends?
Shares of profit
