Flashcards
Financial Accounting
Cards in this deck (102)
- 1The 3 principles of business organizationSole Proprietorship
Partnership
Corporation
Sammy Passed Canes
(SPC) - 2Which principle (SPC) is not only considered as an accounting entity, but also a legal entity separate and distinct from its owners?Corporation
- 3Which principles (SPC) are is limited by the participation of the existing owners and how do these end?Sole proprietorship
Partnership - 4Which principle (SPC) exists indefinitely unless formally dissolved?Corporation
- 5Sole proprietorshipOwned by one person
1 employee = owner - 6Which principle (SPC) is the most common in use and why?ease of formation
income tax advantages-included as part of the owner's income - 7Partnershipassociation of 2 or more persons of conducting a business
- 8Types pf partnershipsgeneral partnership
Limited partnership
Limited liability partnership - 9What should partners do as they establish a business?Prevent lawsuits or misunderstandings by stating the rights and obligations of each partner
Income tax advantages-same as sole proprietorship - 10What is another word for corporationStock holders (shareholders)
- 11What is the difference in income taxes when compared by (SPC)S + P = Same - part of owners' income
C = must pay income taxes on their profits - 12How many owners can be in a corporation?1 - unlimited
- 13Example of general partnershipAccounting + Law firms
- 14Example of limited partnershipGeneral partner with limited partners
LP has few risks - 15Example of limited liability partnershipGPs where if one is in trouble, the other partners are not affected
best choice of action when choosing a partnership - 16What can occur when in a general partnership?Joint liability
- 17example of joint liability of a general partnershipLet’s say Partners A, B and C own a landscaping company together. Partner A accidentally injures a client with a lawnmower while out on a job one day. The client sues all three partners and receives a large damages award of $1 million. In court, Partner A discloses having very few personal assets. In states that follow joint and several liability, the client can then recover the damages from the personal assets of Partner B and Partner C even though they had nothing to do with the lawnmower injury.
Later, Partners B and C can sue Partner A to recover money, but it might not be worth their time if Partner A doesn’t have any assets. - 18Textbook answer : Sole P*Easiest to establish
*owner controlled
*tax advantages - 19Textbook answer : Partnership*Easy to establish
*larger skill set
*tax advantages - 20Textbook answer : Corporation*Easy to raise capital
*easiest to transfer ownership
*protection against personal liability (bankruptcy) - 212 types of financing activitiesDebt financing
Equity financing - 22Debt financingborrowing money from other resources (banks) by signing a note payable or by investors (bond payable)
- 23creditorsresources (banks, investors) that lend money to companies
- 24which financial activity uses the "principle"Debt financing, it involves an obligation to repay a creditor both the amount borrowed (principle) and an interest fee for the use of the funds
- 25Equity financingselling shares of stock to investors
investors are are buying an ownership interest in the company - 26Investing activitiesAcquisition and diposition of factories, office furniture, computer + data systems, delivery vehicles, and other resources used to carry out the business plans
- 27operating activitiesday-to-day activities of producing and selling a product OR providing a service
- 28which type of activity is critical for a business?Operating
if investors and stockholders believe you can't generate profit, they are less likely to aid in your growth of business - 29Financing, investing, or operating? Receiving a loan from a bankF
- 30Financing, investing, or operating? selling merchandise onlineO
- 31Financing, investing, or operating? purchasing a delivery truckI
- 32Financing, investing, or operating? purchasing merchandise for resale to customersO
- 33Financing, investing, or operating? issuing shares of stock in exchange for cashF
- 34Financing, investing, or operating? paying employee salariesO
- 35Financial accountinggather and report accounting info that details results from a business of operations, cash flows, and financial position which helps potential investors determine if they want to invest
- 36Examples of External usersPotential investors + current stockholders
Creditors + Lenders
Taxation authorities + regulatores - 37Examples of Internal UsersMarketing Department
Management team
Finance department - 38Are financial statements the primary output of managerial or financial accounting?Financial accounting because external users require info on a business's performance and financial position
- 39Purpose of Managerial accountingprocess of generating and analyzing financial data to use for internal decision making and management of the business
- 40Accountingprocess of measuring economic activity of an entity in monetary terms and communicating results to users
- 41What are the 2 principles of accountingmeasurement
communication - 42Process for measurementIdentify relevant economic activities
quantify these economic activities
record the resulting measures in a systematic manner - 43process for communicationprepare financial reports to meet the needs of the user
help interpret the financial results for the user - 44GAAPGenerally accepted accounting principles
- 45What is the purpose of GAAPfinancial statement users who rely on accounting data expect that all companies will follow the same standards and procedures when preparing their statements
- 46GAASGenerally accepted auditing standards
- 47IFRSInternational financial reporting standards
- 48Income statementreports the results of operations for a business for a given time, usually a quarter or year.
lists the revenues and expenses of a business - 49Sales revenueincreases to a company's resources that result when goods or services are provided to customers
- 50how are the amount of sales revenue earned measured by?the value of the assets received in exchange for the goods and services delivered
- 51net incometotal revenue excceds total expenses
- 52net losstotal expenses exceeds sales revenue
- 53Statement of stockholders equityreports the events causing an increase or decrease in stockholders' equity during a given time period
- 54what are the 2 parts of the "statement of stockholders' equity"?Contributed capital
Earned capital - 55Contributed capitalmeasure of the capital contributed by the stockholders of a company when they purchase ownership shares in the company
- 56What are ownership shares called?common shares
or
common stock - 57Earned capitalmeasure of the capital that is earned by the company, reinvested in the business, and not distributed to its stockholders
- 58retained earningsincreased when operations produce net income and decreased when operations produce a net loss
- 59statement of cash flowsreports a business's cash inflow and cash outflows during a given period of time
- 60what are the 3 business activities in "statement of cash flows"?Operating
investing
financing - 61cash flow from operatingcash received from the sale of goods and services
cash spent on operating expenses - 62cash flow from investingcash payments and receipts from the business buying and selling certain assets that it uses in its operations
- 63cash flow from financingissuance and repurchase of the business's own shares and the amounts borrowed and repaid to creditors
- 64Where we would find the item based off the annual report component Opinion regarding the fair presentation of financial statements? A - management discussion B - Notes to financial statements C - Auditor's reportsC
- 65Where we would find the item based off the annual report component Info regarding the procedures followed to value a company's assets? A - management discussion B - Notes to financial statements C - Auditor's reportsB
- 66Where we would find the item based off the annual report component Discussion of new markets that a company plans to enter? A - management discussion B - Notes to financial statements C - Auditor's reportsA
- 673 types of accountingPrivate
Public
Government - 68Data Analyticsprocess of examining sets of data with the goal of discovering useful info from patterns in the data
- 69Blockchaindistributed digital ledger that provides a secure means, for those that have permission, to view recorded transactions.
- 70Which form of business organization is characterized by limited liability a) Sole proprietorship b) Partnership c) corporation d) both A + BC
- 71Which of the following processes best defines accounting? a) measuring economic activities b) communicating results to interested parties c) preventing fraud d) both A + BD
- 72Generally accepted accounting principles are: a) set of guidelines to aid in financial reporting process b) set of laws to prevent financial fraud c) set of standards of ethical conduct d) set of voluntary "best business practices"A
- 73To which area of accounting are generally accepted accounting principles primarily relevant? a) managerial accounting b) financial accounting c) tax accounting d) financial reporting to all regulatory agenciesB
- 74Which of the following is not one of the 3 types of business activities? a) investing b) financing c) marketing d) operatingC
- 75If assets total $140,000 and liabilities total $50,000, how much are net assets? a) $40,000 b) $90,000 c) $140,000 d$ 50,000B
- 76What are increases in resources that a firm earns by providing goods or services to its customers? a) assets b) revenues c) expenses d) liabilitiesB
- 77Which of the following is not required to be included as part of the company's annual report? a) notes to financial statements b) management discussion and analysis c) detailed history of the company d) auditor's reportC
- 78Which of the following presents ethical challenges to accountants? a) pressure by superiors to produce a "good" number b) avoiding the disclosure of confidential info c) emphasis on short-term results d) all of the aboveD
- 79S, P, or C Tax advantagesS + P
- 80S, P, or C Unlimited liabilityS + P
- 81S, P, or C Shared controlP
- 82S, P, or C most complex to set upC
- 83S, P, or C Easy to raise a large amount of fundsC
- 84S, P, or C Single ownerS
- 85What are the 5 steps in accounting cycleAnalyze
Record
Adjust
report
Close
Annie Really added realistic Clauses - 86What is the accounting equationAssets = Liabilities + stockholders' equity
- 87Accounting transactioneconomic event that must be recorded in the accounting records
- 88How many elements are affected by the accounting transactionAt least 2
- 89What are the 2 primary components of stockholders; equity?amount invested by stockholders (common stock)
cumulative net income of the business that has not been distributed to stockholders as a dividend (retained earnings) - 90Accountindividual record of the increases and decreases in a specific asset, liability, or stockholders' equity
- 91Chart of accountslist of the titles of all accounts in a business's accounting system
- 92What side is debit on an account title?Left
- 93What side is credit on an account title?Right
- 94what is the normal balance?the side on which increases to the account are recorded
- 95What are source documents?printed forms or computer records that are generated when a firm engages in a transaction
- 96journalbook of original entry that is a tabular record in which a business's activities are reflected in terms of debits and credits and recorded in chronological order
- 97General journalrecord with enough flexibility that any type of business transaction can be recorded in
- 98Compound journal entryjournal entry that involves more than 2 accounts
- 99General ledgerlisting of each account of a company and the amounts making up each account
- 100postingprocess of transferring the debit and credit info from the general journal to the general ledger
- 101posting referenceindicated the account to which the related debit or credit has been posted
- 102Trial balancelisting of all accounts from the general ledger with their respective debit or credit balance
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- marketing Flashcards on Financial Accounting, created by Brittany Shurack on 26/08/2021.
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- Brittany Shurack
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