A100 Chapter 2 Top Hat

According to both GAAP and IFRS what are the four financial statements companies have to present at least once a year?

1. Balance Sheet 2. Income Statement 3. Statement of Retained Earnings 4. Statements of Cash Flows

What are long-term liabilities?

Amounts that the company expects it will not need to pay until after one year from the date on the Balance Sheet. Ex (Notes payable and bonds payable)

What do current assets include?

Cash and other assets that are expected to be converted into cash (or used up) in about one year or less from the Balance Sheet date. Ex (cash, accounts receivable, inventory, and prepaid items, such as prepaid insurance or prepaid rent)

What happens when a long-term liability is within one year of its maturity date?

It is then reclassified as a current liability

What are long-term investments?

assets purchased by the company to be held as an investment and aren't to be used in the operations of the business. Ex (stock investments and bond investments)

What are fixed assets or Property, plant and equipment?

assets that are purchased by the business to be used in its operations but are expected to last longer than one year and are not to be resold in the ordinary operations of the business. Ex (equipment used in the operations of the business, buildings used by the business, and the land on which the building sits)

What account equation is the balance sheet based on?

assets= liabilites + equity

What are the two categories stockholders equity can be divided into

common stock and retained earnings (there are more, but for A100 purposes these are what you need to know)

What are current liabilities?

debts that expected to become due within one year of the balance sheet date Category includes accounts such as accounts payable, wages payable, and utilities payable.

What does the company owns them "outright"?

no debt is associated with these assets

What are intangible assets?

the asset has no physical substance Ex (patents, copyrights, trademarks, and goodwill)

What is common stock

the basic type of stock that all corporations must have

What are retained earnings?

the total profits of the company (minus any losses) and any amounts that have been paid to stockholders over the lifetime of the company.

When are the statements usually prepared?

At the end of the period Such as the end of the month, quarter, or year- however, they could be prepared at any time.

What does double-entry bookkeeping mean?

There are always at least two entries for each transaction of a business

What is equity

a measure of the portion of a company's assets that are owned outright.