MODULE 8 Flashcards
What is the end product of the accounting process?
🅰️ The financial statements are the end product of the accounting process.
Why are journals and ledgers not useful to most users on their own?
🅰️ Information from journals and ledgers is meaningless to most users unless summarized and communicated through financial statements.
What is the purpose of an Income Statement?
🅰️ The Income Statement is a formal statement showing the income and expenses of an entity over a period of time.
What does financial performance indicate?
🅰️ Financial performance, also known as the results of operations, indicates whether a business has made a profit or loss.
What is the Statement of Changes in Equity?
🅰️ It is a formal statement showing changes in the equity of a business.
What are the factors that cause changes in equity?
🅰️ Changes in equity are caused by:
Additional investments by the owner
Profit or loss from business operations
Withdrawals made by the owner
What is another name for the Statement of Financial Position?
🅰️ It is also known as the Balance Sheet.
What does the Statement of Financial Position show?
🅰️ It shows the assets, liabilities, and equity of an entity at a specific point in time.
What are examples of assets listed in the Statement of Financial Position?
🅰️ Examples of assets include:
Cash
Accounts Receivable
Supplies
Equipment
What are examples of liabilities in the Statement of Financial Position?
🅰️ Examples of liabilities include:
Accounts Payable
Notes Payable
How is the Total Liabilities and Equity calculated?
🅰️ Total Assets = Total Liabilities + Equity
