Chapter 1 Accounting
The two primary functions of financial accounting are to
1. communicate measurements to external parties 2. measure business activities
Balance Sheet (Contains)
Assets, Liabilities, & Stockholder's Equity
() is a term that refers to a code or moral system that provides criteria for evaluating right or wrong.
Ethics
The financial statement that summarizes the profit-generating activities of a company during a particular period of time is the
Income Statement
The Four Financial Statements published to provide information to external users:
Income Statement Balance Sheet Statement of Cash Flows Statement of Stockholder's Equity
Investor:
Owns stock in the company
For a corporation, the owner's claims to the resources of a company are called:
Stockholders' equity
If Expense exceed revenue
You gave a Net Income loss
The purpose of the statement of cash flows is to provide information about the
cash receipts and cash disbursements during a period.
The form of business organization where an entity is legally separate from its owners and issues shares of stock is a
corporation
Which user of financial information contributes financial resources to a company?
creditors
Shareholder's equity arises primarily from amounts invested by shareholders and amounts
earned by the corporation
An essential assumption in accounting is that all economic events can be identified specifically with an individual economic ().
entity
An() is the cost of doing business that is necessary to earn()
expense;revenue
The() assumption anticipates that a business will continue to operate indefinitely.
going concern
Managerial Accounting Provides information to an organization's () users
internal
The () unit assumption states that financial statement elements should be measured in terms of the U.S. dollar.
monetary
A () is a distribution of net income to the stockholders of a corporation.
dividend
Revenues are:
earned by selling goods and services to customers
The Fundamental Model of business valuation is commonly referred to as?
Accounting Equation
What are a company's resources?
Assets
Investors:
Decide whether to purchase stock
Suppliers:
Determine the ability to pay for goods
Generally Accepted Accounting Principles are abbreviated as().
GAAP
Creditor
Lends money to the company
What are the claims to a company's resources?
Liabilities & Stockholder's Equity
Statement of Cash Flows (Contains)
Operating, Investing, and financing activities
The() assumption allows the life of the company to be divided into artificial time periods to provide timely information.
periodicity
Profits earned by company that have not been paid to stockholders are called
retained earnings
What are the four basic assumptions underlying U.S. GAAP
1.Periodicity 2.Economic Entity 3.Monetary Unit 4.Going Concern
What is the Accounting Equation
Assets=Liabilities + Stockholder's Equity
The financial statement that displays a firm's financial position on a particular date is the () ().
Balance Sheet
Name 3 financial statements
Balance Sheet Income Statement Statement of Stockholder's Equity
In financial accounting what are the three types of business activities of a company?
Investing activities Financing activities Operating activities
The two external users of financial accounting information that contribute financial resources to a company are:
creditors investors
Retained Earnings represents
the total net income earned over the life of the company that has not been distributed as dividends.
Competitors:
Decide market share and profitability
Creditors:
Decide whether to lend money
Income Statement (Contains)
Revenues & Expenses
Net Income =
Revenues - Expenses