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