Flashcards
Accounting 1 Test 1
Cards in this deck (34)
- 1Partnership-business owned by two or more individuals whose personal wealth is at risk if the business fails
- 2Sole Proprietorship-a business owned by one person whose personal wealth is at risk if the business fails.
- 3Corporation-a business entity that is legally separate and distinct from its owners
-double taxation - 4Merchandisinga business that obtains and distributes goods to customers
- 5Manufacturing-organized to convert raw materials into finished goods
- 6Service-a business that exists to provide services to customers (clients)
-loaning money, finding investors, and other services for which the bank receives fees - 7Assets-rights to use resources that have expected future economic benefits
- 8Liability-the obligation to transfer economic resources to suppliers of money, goods, and services at some point in the future
- 9Owner's Equity-represents the claims on the business to transfer the residual interest (net assets of the business) to the owners
-after all the business’s liabilities (obligations) are met, any remaining assets (net assets) belong to the owners - 10Revenue-An amount earned from rendering services or transferring resources to customers
- 11Expense-An amount incurred from using resources or services in the effort to generate revenue
- 12Accounting EquationAssets=Liabilities-Owner's Equity
- 13Accrual Basis of Accounting-A system in which income is measured as the difference between the sales (revenues) earned and the expenses incurred during the period, regardless of when cash is paid or received
- 14Net Income-the company’s total revenues less its total expenses for a period of time
- 15Business Entity-the concept that requires that an accounting system reflect only information about economic events that pertain to a particular entity
- 16Going Concern-assumes that, absent any information to the contrary, the business entity will continue into the foreseeable future
-allows business records to continue from one venture and time period to another - 17Monetary Unit-asserts that money is the common measurement unit of economic activity
-allows things to be measured in a common denominator - 18Periodicity-requires that the success or failure of the business be determined at regular intervals
-means the business does not have to cease before the profits of the business can be determined - 19Stakeholders-those people and entities (both internal and external to the company) that have a stake, or interest, in the outcomes of the company
- 20Income Statement-designed to show the net income
-expenses included: cost of sales (cost to produce items), operating expenses (cost of selling products), provision for income tax (cost of generating products) - 21Statement of Owner's Equity-shows the changes that occurred in owners’ equity during the period of time covered by the income statement
-represent all past net income not distributed to shareholders as dividends - 22Statement of Cash Flows-shows the cash inflows and outflows of the company for the same period of time as the income statement
- three main parts—cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities - 23Balance Sheet-designed to show the amounts of the company’s assets, liabilities, and owners’ equity at the end of the fiscal year
- 24Balance Sheet: Current Assets-those likely to be used or consumed within one year
- 25Balance Sheet: Non-current (long term) Assets-those assets that are likely to provide economic benefits for more than one year
-property, plant and equipment
-Cash and cash equivalents (right to use $ in the future), Accounts Receivable (right to receive money from customers in the future), Inventories, - 26Balance Sheet: Current Liabilities-those likely to be paid or otherwise discharged within one year
-Accounts Payable amounts owed to suppliers of goods/services), Accrued Expenses (amounts owed in a year) - 27Balance Sheet: Non-Current Liabilities-those obligations that extend beyond one year
-borrowings from creditors - 28Balance Sheet: Owner's Equity-ndicates the contributions made to the company by owners (shareholders) and earnings reinvested by the company
(retained earnings) - 29How to Calculate Income StatementSales (+)
Less Cost of Sales (-)
Gross Margin (+)
Less selling and administrative expenses (-)
=Net Income - 30How to Calculate Statement of Shareholders' EquityBeginning Balance of Retained Savings
Net Income (+) (income statement)
Dividends Declared (-)
=Ending Balance of Retained Savings - 31How to Calculate Statement of Cash FlowsNet Cash provided/used by operating act.
Net Cash provided/used by investing act.
Net Cash provided/used by financial act (-)
Net change in cash
Beginning Balance of Cash (+)
=Ending Cash Balance - 32How to Calculate Balance SheetAssets (+)
Cash (+ending balance from balance sheet)
Other Current Assets (+)
Long Term Assets (-)
=Total Assets
Liabilities and Shareholders' Equity (+)
Current Liabilities (+)
Shareholders' Capital (+)
Retained Earnings (-)
=Total Liabilities and Shareholders; Equity - 33Current Ratio-measure of company liquidity
Current Assets/Current Liabilities - 34Return of Sales Ratio-measure of company profitability
Net Income/Sales
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- Flashcards on Accounting 1 Test 1, created by megan.feret on 12/02/2015.
- Created by
- megan.feret · Feb 2015
- Updated
- Feb 19, 2016
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