finac quiz 1

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Deficit

A negative balance in RE

current liabilities examples

AP (accounts payable) NP (notes payable) Taxes Payable Dividends Payable Misc. Payable Unearned Revenue

Retained earnings (RE)

Amount of earnings (not cash) reinvested in the corporation and not paid out as dividends

Ending RE equation

Beginning RE + Net income - dividends

Current short terms asset types

Cash Prepaid Insurance AR (accounts receivable), NR(notes receivable) Inventory Supplies on Hand Marketable Security

current ratio

Current Assets/Current Liabilities

Liability meaning

Debts/obligations owed to creditors. Creditors' claims to the company assets

Dividends

Distributions of earnings to stockholders - they can be in form of stock or cash - they are not expenses of the organization

long term liabilities

Due over 1 year from the balance sheet date

current liabilities

Due within 1 year or less of the balance sheet date

Established the U.S GAAP (generally accepted accounting principles)

FASB

FASB meaning

Financial Accounting Standards Board

Intangibles

Goodwill (GW) Patents Copyrights Trademarks

IASB

International Accounting Standards Board

What did the IASB establish?

International financial reporting standards

Property, Plant & Equipment

Land Building Machinery Equipment Trucks/Auto Furniture/Fixtures

Faithful Representation acronym

N- Neutral (unbiased) F- Free from error (accurate) C- Completeness (full disclosure)

long term liabilities examples

NP (notes payable) Bonds Pay Mortgage Payment Lease Liability

Net income equation

Net Income = Revenues - Expenses

Who is responsible for a corporation's financial statements?

Outstanding Corporate Management

Relevance acronym

P- predictive value M- Materiality (is it significant) C- Confirmatory Value (feedback)

Established the U.S GAAS (Generally Accepted Auditing Standards)

PCAOB(Public Company Accounting Oversight Board)

Owner's equity examples

Preferred Stock (no voting rights) Common Stock (voting rights) APIC (Addition, Paid-in capital) RE (ending)

What are the primary qualities the information possess?

Relevance and faithful representation

Accrual Accounting

Revenues are recognized when they are earned and expenses are recognized when they are incurred, not necessarily when cash is received or paid

What government agency has regulatory responsibility for the financial information issued by companies whose stock is publicly traded?

SEC(Security and Exchange Commission

In 2002 what act was passed that continues to have major impact on the accounting and auditing profession?

SOX (Sarbanes-oxley)

What are the major forms of business organizations?

Sole proprietor(unicorporate) partnership corporation

Why was the SOX Act passed in 2002

To establish the PCAOB

Most liquid assets

cash Marketable Security AR

SOX requires CEOs and CFOs to

certify that the FS and Footnotes Disclosures are fair and there are no material statements (no fraud)

Owner's equity meaning (AKA STOCKHOLDERS' EQUITY/SHAREHOLDERS' EQUITY)

ownership group's claim on assets, this represents the amount invested in the business by the owners.

Accrual Basis

revenues are recognized when earned and expenses are recognized when incurred

Long term assets (fixed assets)

to be used in the business for >1 year from the balance sheet date

current short term assets

will be used up or converse to cash within 1 year or less from the Balance Sheet date


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