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