ACC Chapter 1 and 2
how do you write a financial statement header
1.) Name of Company 2.) What kind of balance it is 3.) Date
Classify whether it is Asset, Liability, or Equity Equipment
Asset
What type of account? Asset, Liability, Equity, Revenue, Expense? Account Receivable
Asset
What type of account? Asset, Liability, Equity, Revenue, Expense? Notes Receivable
Asset
What type of account? Asset, Liability, Equity, Revenue, Expense? Prepaid Accounts
Asset
What type of account? Asset, Liability, Equity, Revenue, Expense? Supplies
Asset
Indicate in which Financial statement(s) each item would most likely appear: Income statement, Statement of Owner's Equity, Balance Sheet, Statement of cash flows Equipment
Balance Sheet
Indicate in which Financial statement(s) each item would most likely appear: Income statement, Statement of Owner's Equity, Balance Sheet, Statement of cash flows Liabilities
Balance Sheet
Indicate in which Financial statement(s) each item would most likely appear: Income statement, Statement of Owner's Equity, Balance Sheet, Statement of cash flows Total liabilities and equity
Balance Sheet
Indicate in which Financial statement(s) each item would most likely appear: Income statement, Statement of Owner's Equity, Balance Sheet, Statement of cash flows Cash from operating activities
Cash Flow
Indicate in which Financial statement(s) each item would most likely appear: Income statement, Statement of Owner's Equity, Balance Sheet, Statement of cash flows Net decrease (or increase) in cash
Cash Flow
CEO
Chief Executive Officer
What type of account? Asset, Liability, Equity, Revenue, Expense? Owner's Capital
Equity
What type of account? Asset, Liability, Equity, Revenue, Expense? Owner's Withdrawal
Equity
Classify whether it is Revenues, Expenses, or Withdrawals Rent expense
Expense
Classify whether it is Revenues, Expenses, or Withdrawals Wages expense
Expense
What type of account? Asset, Liability, Equity, Revenue, Expense? Interest Expense
Expense
FASB
Financial Accounting Standards Board
GAAP
Generally Accepted Accounting Principles
Indicate in which Financial statement(s) each item would most likely appear: Income statement, Statement of Owner's Equity, Balance Sheet, Statement of cash flows Expenses
Income Statement
Indicate in which Financial statement(s) each item would most likely appear: Income statement, Statement of Owner's Equity, Balance Sheet, Statement of cash flows Revenues
Income Statement
(internal or external) Non-executive Employee
Internal
(internal or external) Production Manager
Internal
IASB
International Accounting Standards Board
IFRS
International Financial Reporting Standard
Classify whether it is Asset, Liability, or Equity Accounts payable
Liability
What type of account? Asset, Liability, Equity, Revenue, Expense? Accured Liabilities
Liability
What type of account? Asset, Liability, Equity, Revenue, Expense? Notes Payable
Liability
What type of account? Asset, Liability, Equity, Revenue, Expense? Unearned Revenue
Liability
LLC
Limited Liability Company
OE
Owner's Equity
PCAOB
Public Companies Accounting Oversight Board
how do you calculate return on assets
ROA = net income / average total assets OR ROA = income statement/ balance sheet
ROA
Return on Assets
Classify whether it is Revenues, Expenses, or Withdrawals Service revenue
Revenue
SOX
Sarbanes Oxley Act
SEC
Securities and Exchange Commission
Indicate in which Financial statement(s) each item would most likely appear: Income statement, Statement of Owner's Equity, Balance Sheet, Statement of cash flows Withdrawals
Statement of Owner's Equity
Classify whether it is Revenues, Expenses, or Withdrawals Owner Withdrawal
Withdrawal
information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization's business activities
accounting
language of business
accounting
Classify whether it is Asset, Liability, or Equity Account receivable
asset
Classify whether it is Asset, Liability, or Equity Land
asset
What type of account? Asset, Liability, Equity, Revenue, Expense? Land
asset
What type of account? Asset, Liability, Equity, Revenue, Expense? buildings
asset
What type of account? Asset, Liability, Equity, Revenue, Expense? cash
asset
What type of account? Asset, Liability, Equity, Revenue, Expense? equipment
asset
something you own that is going to benefit you in the future
asset
supplies
asset
what is calculate in a balance sheet
assets = liabilities + equity
what is the accounting equation
assets = liabilities + equity
Indicate in which Financial statement(s) each item would most likely appear: Income statement, Statement of Owner's Equity, Balance Sheet, Statement of cash flows Assets
balance sheet
what Demonstrates economic resources as well as debts the company owes
balance sheet
what is calculate in a statements of owner's equity
capital - withdraw + revenue - expenses
a business legally separate from its owner or owners
corporation
Classify whether it is Asset, Liability, or Equity Owner, Capital
equity
net worth;what you are worth
equity
beliefs that distinguish right from wrong
ethics
Classify whether it is Revenues, Expenses, or Withdrawals Cost of sales
expense
Classify whether it is Revenues, Expenses, or Withdrawals Insurance expense
expense
What type of account? Asset, Liability, Equity, Revenue, Expense? Professional fees expense
expense
What type of account? Asset, Liability, Equity, Revenue, Expense? rent
expense
expenses must match revenue
expense recognition/ matching principle
(internal or external) External Auditor
external
(internal or external) Regulator
external
(internal or external) Shareholder
external
not directly involved in running the organization
external users
required to report the details behind financial statements that would impact users' decisions
full disclosure principle
the basis assumptions, concepts, and guidelines for preparing financial statements
general principles
Financial accounting is governed by concepts and rules known as
generally accepted accounting principles (GAAP)
accounting is an information and measurement system that ________, ________ and _________ relevant, reliable, and comparable information about an organization's business activities
identifies, records, and communicates
what demonstrates profitability
income statement
what are the four financial statements (in order of preparation)
income statements statement of owner's equity balance sheet statement of cash flows
(internal or external) CEO
internal
(internal or external) Controller
internal
(internal or external) Executive Employee
internal
those directly involved in managing and operating an organization
internal users
What type of account? Asset, Liability, Equity, Revenue, Expense? Accounts Payable
liability
something that you owe
liability
accounting information based on actual cost
measurement principle/ cost principle
( yes/ no) (proprietorship , partnership, company) Business taxed
no, no, yes
( yes/ no) (proprietorship , partnership, company) Legal entity
no, no, yes
( yes/ no) (proprietorship , partnership, company) Unlimited life
no, no, yes
( yes/ no) (proprietorship , partnership, company) limited liability
no, no, yes
what three factors must exist for a person to commit fraud
opportunity rationalization financial pressure
how do you calculate equity
owner's capital - withdraws + revenues - expenses
a business owned by two or more people
partnership
a business owned by one person and accounted for separately
proprietorship
GAAP aims to make information _______, _______, and ________
relavant, reliable, and comparable
Classify whether it is Revenues, Expenses, or Withdrawals Consulting revenue
revenue
Classify whether it is Revenues, Expenses, or Withdrawals Rental revenue
revenue
What type of account? Asset, Liability, Equity, Revenue, Expense? Professional fees revenue
revenue
recognizes revenue when it is earned
revenue recognition principle
how do you calculate net income
revenues - expenses
what is calculated in an income statement
revenues - expenses = net income
detailed rules used in reporting business transactions and events
specific principles
what shows change in capital balance
statement of owner's equity
what is the goal of accounting
to provide useful information for decisions
( yes/ no) (proprietorship , partnership, company) One owner allowed
yes , no, yes
( yes/ no) (proprietorship , partnership, company) Business entity
yes, yes, yes
