Week 2 Balance Sheet Flashcards
four primary financial statements used for financial accounting
-Income Statement (or Profits & Losses)
-Statement of Retained Earnings (or Owners’ Equity)
-Balance Sheet (or Financial Position)
-Statement of Cash Flows
a formal financial statement illustrating the assets, liabilities and owners equity of a business as of a specific date
balance sheet
record of the balance sheet data for two or more comparable periods (years) so that the information can be easily compared
comparative balance sheet
a device for recording the changes (increases & decreases) in the fundamental accounting elements
account
the balance sheet shows ____
Assets = Liabilities + Owner’s Equity
(accounting equation)
assets are classified by ____
liquidity (how easily they can be converted to cash)
cash or other assets that will be converted into cash or consumed within one year (the normal business cycle)
current assets
property of a relatively permeant nature used in the operation of a business and not intended for resale
fixed (non-current) assets
coins, currency (paper money), checks, credit card receipts and money orders received from others as well as money deposits in the bank
cash
a fund of currency and coin established for
the payment of small amounts of money
petty cash fund
an unwritten promise by a customer to pay, at a later date, for goods sold or services rendered
accounts receivable (A/R)
items which are considered assets when acquired, but which will become expenses when consumed or expired
prepaid expenses
a type of asset that will be consumed as it is used
supplies
goods purchased for resale at a profit
inventory (merchandise)
assets that can be appraised by value
or seen or touched
tangible assets
assets that cannot be touched or grasped
intangible assets
debts of a business that are generally paid within one year (the normal business cycle)
current liabilities
debts of a business that are not due or payable within one year
long term liabilities
an unwritten promise to pay creditors for property, such as merchandise, supplies, equipment purchased on credit or for services received on credit
accounts payable
a liability representing revenues received in advance
unearned revenue
a written promise that pledges real property as security for payment of debt
mortgage payable
a written promise to pay a creditor a certain amount in the future
notes payable
a long term debt instrument that promises to pay interest periodically and a principal amount at maturity
bonds payable
the amount of value that owner’s have
directly invested into the corporation
capital stock
____ stock and ____ stock are the two kinds of stocks that make up capital stock
common & preferred
the earnings of a corporation that have been retained in the corporation (have not been paid out as a dividend) for future corporation use
retained earnings
