ACCT 201 Test 1
Relevance
A feature of financial information that allows it to influence a decision
Balance Sheet
AT A POINT IN TIME Assets = Liabilities + Stockholders' Equity
Statement of Retained Earnings
Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings
Financing Activities
Capital contributed by stockholders Cash dividends paid to stockholders Cash borrowed from the bank Activities involving investors and banks
Operating Activities
Cash received from customers Cash paid to suppliers Day-to-day transactions directly related to earning income
Investing Activities
Cash used to buy equipment, buildings, land, tools, etc. Purchasing investments and lending to others Long term Related to the sale/purchase of productive assets
Revenues
Earned by selling goods or services to customers
Comparability
Financial information that can be compared across businesses because similar accounting methods have been applied
Faithful Representation
Financial information that depicts the economic substance of business activities
Statement of Cash Flows
Operating, Investing, and Financing activities as they relate to cash
Income Statement
Reports the amount of revenues less expenses for a period of time Revenues - Expenses = Net Income
Liabilities
The amounts owed by a business
Unit of Measure
The assumption that states that results of business activities should be reported in an inappropriate monetary unit
Expenses
The costs of business necessary to earn revenues
Separate Entity
The financial reports of a business are assumed to include the results of only that business's activities
Assets
The resources owned by a business
Stockholders' Equity
The total amounts invested and reinvested in the business by its owners