Statement Terms Flashcards
Communicates information about a business’s financial performance by summarizing revenues less expenses over a period of time
Income Statement
When revenues are greater than expenses, the difference is called
net income or profit
When expenses are greater than revenue
net loss
provides information about how the balances in Share capital and Retained earnings changed during the period
statement of changes in equity
represents how much shareholders have invested
share capital
the sum of all net incomes earned by a corporation over its life
Retained earnings
Distributions of net income to shareholders
dividends
shows a business’s assets, liabilities, and
equity at a point in time
balance sheet
economic resources that provide future benefits to the business
Assets
represent amounts to be collected in cash in the future for
goods sold or services provided to customers on credit
Accounts receivable
assets that are paid in cash in advance and have benefits that apply over future periods
Prepaid expenses
an obligation to pay an asset in the future
liability
obligations to pay a creditor for goods purchased or services rendered
Accounts payable
represents an advance payment of cash from
a customer for services or products to be provided in the future
Unearned revenue
represents the net assets owned by the owners
equity
Assets can be financed through liabilities, also known
debt
explains how the balance in cash changed over a period of time by detailing the sources (inflows) and uses (outflows) of cash by type of activity: operating, investing, and financing
statement of cash flows
the day-to-day processes involved in selling products and/or services to generate net income
Operating activities
the buying of assets needed to generate revenues
Investing activities
the raising of money needed to invest in asset
Financing activities
also referred to as the books
ledger
are a promise to pay an amount on a specific future date plus a predetermined amount of interest
notes payable
are supplies to be used in the future
Office supplies
items to be sold in the future
Merchandise inventory
represents an amount paid in advance for insurance
prepaid insurance
represents an amount paid in advance for rent
prepaid rent
wages owed to employees for work performed
Wages payable
are a debt owed to a bank or other creditor that is normally paid within one year
Short-term notes payable
are a debt owed to a bank or other creditor that is normally paid beyond one year
Long-term notes payable
are payments received in advance of the product or service being provided. In other words, the business owes a customer the product/service
Unearned revenues
